EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 28, 2002
among
XXXXXXXX'X INC.,
and
CERTAIN OF ITS SUBSIDIARIES PARTY HERETO,
as the Credit Parties,
THE LENDING INSTITUTIONS NAMED HEREIN,
as the Lenders,
and
BANK OF AMERICA, N.A.,
as Administrative Agent
BANC OF AMERICA SECURITIES LLC,
Sole Lead Arranger and Sole Book Manager
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Syndication Agent
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS............................................................................................1
Section 1.1 Definitions.................................................................................1
Section 1.2 Accounting Terms...........................................................................33
Section 1.3 Interpretive Provisions....................................................................34
ARTICLE 2 CREDIT FACILITIES.....................................................................................35
Section 2.1 Commitments................................................................................35
Section 2.2 Method of Borrowing........................................................................36
Section 2.3 Interest...................................................................................37
Section 2.4 Repayment..................................................................................37
Section 2.5 Notes......................................................................................37
Section 2.6 Additional Provisions Relating to Letters of Credit........................................37
Section 2.7 Additional Provisions Relating to Revolving Loans..........................................42
Section 2.8 Maximum Interest Rate......................................................................43
ARTICLE 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES........................................................45
Section 3.1 Default Rate...............................................................................45
Section 3.2 Continuation and Conversion................................................................45
Section 3.3 Prepayments................................................................................46
Section 3.4 Termination of Credit Facility.............................................................46
Section 3.5 Fees.......................................................................................48
Section 3.6 Taxes, Yield Protection, and Illegality....................................................49
Section 3.7 Pro Rata Treatment.........................................................................52
Section 3.8 Sharing of Payments........................................................................52
Section 3.9 Certain Limitations........................................................................53
Section 3.10 Payments, Computations, Etc...............................................................54
Section 3.11 Evidence of Debt..........................................................................56
Section 3.12 Bank Products.............................................................................57
ARTICLE 4 CONDITIONS............................................................................................57
Section 4.1 Closing Conditions.........................................................................57
Section 4.2 Conditions to all Extensions of Credit.....................................................60
ARTICLE 5 REPRESENTATIONS AND WARRANTIES........................................................................61
Section 5.1 Financial Condition........................................................................61
Section 5.2 No Changes or Restricted Payments..........................................................62
Section 5.3 Organization; Existence; Compliance with Law...............................................62
Section 5.4 Power; Authorization; Enforceable Obligations..............................................62
Section 5.5 No Legal Bar...............................................................................63
Section 5.6 No Material Litigation and Disputes........................................................63
Section 5.7 No Defaults................................................................................63
Section 5.8 Ownership and Operation of Property........................................................63
Section 5.9 Intellectual Property......................................................................64
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Section 5.10 No Burdensome Restrictions................................................................64
Section 5.11 Taxes.....................................................................................64
Section 5.12 ERISA.....................................................................................64
Section 5.13 Use of Proceeds; Governmental Regulations, Etc............................................66
Section 5.14 Subsidiaries..............................................................................66
Section 5.15 Purpose of Extensions of Credit...........................................................66
Section 5.16 Environmental Matters.....................................................................67
Section 5.17 No Material Misstatements.................................................................68
Section 5.18 Labor Matters.............................................................................68
Section 5.19 Security Documents........................................................................68
Section 5.20 Location of Real Property and Leased Premises.............................................69
Section 5.21 Solvency..................................................................................69
Section 5.22 Bank Accounts; Merchant Accounts..........................................................69
ARTICLE 6 AFFIRMATIVE COVENANTS.................................................................................70
Section 6.1 Information Covenants......................................................................70
Section 6.2 Preservation of Existence and Franchises...................................................74
Section 6.3 Books and Records..........................................................................74
Section 6.4 Compliance with Law........................................................................74
Section 6.5 Payment of Taxes and Other Indebtedness....................................................74
Section 6.6 Insurance..................................................................................75
Section 6.7 Maintenance of Property....................................................................75
Section 6.8 Performance of Obligations.................................................................75
Section 6.9 Use of Proceeds............................................................................75
Section 6.10 Audits/Inspections........................................................................76
Section 6.11 Financial Covenants.......................................................................76
Section 6.12 New Subsidiaries; Addition of Subsidiaries as Borrowers and Guarantors....................76
Section 6.13 Guaranties of the Obligations.............................................................77
Section 6.14 Additional Collateral; Further Assurances.................................................77
Section 6.15 Landlord and Mortgagee Agreements.........................................................78
Section 6.16 Bank as Depository........................................................................78
Section 6.17 Implementation of New Computer Systems....................................................78
ARTICLE 7 NEGATIVE COVENANTS....................................................................................79
Section 7.1 Indebtedness...............................................................................79
Section 7.2 Liens......................................................................................80
Section 7.3 Nature of Business.........................................................................80
Section 7.4 Merger and Consolidation, Dissolution, and Acquisitions....................................80
Section 7.5 Asset Dispositions.........................................................................81
Section 7.6 Investments................................................................................82
Section 7.7 Restricted Payments........................................................................82
Section 7.8 Modifications and Payments in Respect of Other Funded Debt.................................82
Section 7.9 Transactions with Affiliates...............................................................82
Section 7.10 Fiscal Year; Organizational Documents.....................................................83
Section 7.11 Ownership of Subsidiaries.................................................................83
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Section 7.12 No Further Negative Pledges...............................................................83
Section 7.13 Limitation on Management Fees.............................................................83
Section 7.14 Limitation on Foreign Subsidiaries........................................................83
Section 7.15 Inventory Classification..................................................................84
ARTICLE 8 EVENTS OF DEFAULT.....................................................................................84
Section 8.1 Events of Default..........................................................................84
Section 8.2 Acceleration; Remedies.....................................................................86
ARTICLE 9 AGENCY PROVISIONS.....................................................................................87
Section 9.1 Appointment and Authorization..............................................................87
Section 9.2 Delegation of Duties.......................................................................88
Section 9.3 Liability of the Agent.....................................................................88
Section 9.4 Reliance by the Agent......................................................................88
Section 9.5 Notice of Default..........................................................................89
Section 9.6 Credit Decision............................................................................89
Section 9.7 Indemnification............................................................................89
Section 9.8 The Agent in Individual Capacity...........................................................90
Section 9.9 Successor Agent............................................................................90
Section 9.10 Withholding Tax...........................................................................91
Section 9.11 Collateral Matters........................................................................93
Section 9.12 Restrictions on Actions by the Lenders; Sharing of Payments...............................94
Section 9.13 Agency for Perfection; Appointment of Collateral Agent....................................94
Section 9.14 Payments by the Agent to the Lenders......................................................95
Section 9.15 Field Audit and Examination Reports; Disclaimer by the Lenders............................95
Section 9.16 Relation Among the Lenders................................................................96
Section 9.17 Settlement................................................................................96
Section 9.18 Syndication Agent.........................................................................99
ARTICLE 10 MISCELLANEOUS........................................................................................99
Section 10.1 Notices...................................................................................99
Section 10.2 Right of Setoff..........................................................................100
Section 10.3 Benefit of Agreement; Assignments........................................................100
Section 10.4 No Waiver; Remedies Cumulative...........................................................103
Section 10.5 Expenses; Indemnification................................................................103
Section 10.6 Amendments, Waivers, and Consents........................................................106
Section 10.7 Counterparts.............................................................................107
Section 10.8 Headings.................................................................................107
Section 10.9 Survival.................................................................................107
Section 10.10 Governing Law; Choice of Forum; Service of Process......................................108
Section 10.11 Waiver of Jury Trial....................................................................110
Section 10.12 Severability............................................................................110
Section 10.13 Entirety................................................................................110
Section 10.14 Binding Effect; Termination.............................................................110
Section 10.15 Confidentiality.........................................................................111
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Section 10.16 Other Security and Guaranties...........................................................111
Section 10.17 Agency of Crescent for Each Other Credit Party..........................................111
Section 10.18 Joint and Several Liability.............................................................112
Section 10.19 Contribution and Indemnification Among the Borrowers....................................113
Section 10.20 Additional Borrowers and Guarantors.....................................................113
Section 10.21 Express Waivers By the Credit Parties in Respect of Cross Guaranties
and Cross Collateralization..........................................................114
Section 10.22 Conflict................................................................................115
Section 10.23 Amendment and Restatement...............................................................115
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SCHEDULES
Schedule 1.1A Existing Letters of Credit
Schedule 1.1B Investments
Schedule 1.1C Liens
Schedule 1.1D Lenders and Commitments
Schedule 5.2 Changes and Restricted Payments
Schedule 5.6 Litigation
Schedule 5.9 Intellectual Property
Schedule 5.14 Subsidiaries
Schedule 5.18 Labor Matters
Schedule 5.20 Real Properties; Locations of Collateral; Chief
Executive Offices/Principal Places of Business
Schedule 5.22 Bank Accounts; Merchant Accounts
Schedule 6.6 Insurance
Schedule 6.17 Computer Systems Upgrade
Schedule 7.1 Indebtedness
Schedule 7.9 Transactions with Affiliates
Schedule 10.1 Lenders' Addresses
EXHIBITS
Exhibit A Form of Revolving Note
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Notice of Continuation/Conversion
Exhibit D Form of Officer's Compliance Certificate
Exhibit E Form of Assignment and Acceptance
v
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 28, 2002
("Agreement"), is by and among the lending institutions from time to time
parties hereto (such lending institutions, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), The CIT Group/Business Credit,
Inc., as syndication agent, Bank of America, N.A., as administrative agent for
the Lenders (in its capacity as the administrative agent, the "Agent"),
Xxxxxxxx'x Inc., a Delaware corporation, and each of its Subsidiaries party
hereto.
RECITALS:
A. Capitalized terms used in this Agreement shall have the meanings
specified in Article 1.
X. Xxxxxxxx'x, certain of its Affiliates, Bank of America, N.A., and
certain other lending institutions are party to that certain Credit Agreement
dated as of September 15, 1999 (as amended, the "Original Credit Agreement")
whereby certain credit facilities were made available to Xxxxxxxx'x on the terms
and conditions set forth therein.
C. The Borrowers have requested that the Original Credit Agreement be
amended and restated to make available to the Borrowers a revolving credit
facility for loans and letters of credit in the aggregate principal amount of
$150,000,000, which extensions of credit the Borrowers will use for the purposes
permitted pursuant to Section 6.9, and to amend certain other provisions as set
forth herein.
D. The Lenders have agreed to amend and restate the Original Credit
Agreement and make available to the Borrowers a revolving credit facility upon
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions.
As used in this Agreement, the following terms shall have the meanings
specified below:
"ACH Transactions" means any cash management or related services
including, without limitation, the automated clearinghouse transfer of funds by
Bank of America for the account of any Borrower pursuant to agreement or
overdrafts.
Page 1
"Acquisition" means the purchase or acquisition by any Person of any
Capital Stock of another Person or all or any substantial portion of the
Property (other than Capital Stock) of another Person, whether or not involving
a merger or consolidation with such other Person.
"Adjusted Base Rate" means the Base Rate plus the Applicable
Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
Applicable Percentage.
"Adjusted Net Earnings from Operations" means, for the Consolidated
Group for any period, the net income after provision for income taxes for such
period, as determined in accordance with GAAP and reported on the financial
statements of the Consolidated Group, excluding any and all of the following
included in such net income: (a) gain or loss arising from the sale of any
capital assets; (b) gain arising from any write-up in the book value of any
asset and any loss arising from any write-down in the book value of Xxxxxxxx'x
$85,000,000 Investment on the Closing Date in Crescent consisting of $35,000,000
of subordinated notes due to Xxxxxxxx'x from Crescent and $50,000,000 of
preferred stock issued by Crescent to Xxxxxxxx'x; (c) earnings of any Person,
substantially all the assets of which have been acquired by a member of
Consolidated Group in any manner, to the extent realized by such other Person
prior to the date of acquisition; (d) earnings of any Person (excluding a member
of the Consolidated Group) in which a member of the Consolidated Group has an
ownership interest unless (and only to the extent) such earnings shall actually
have been received by a member of the Consolidated Group in the form of cash
distributions; (e) earnings of Crescent in which Xxxxxxxx'x or any other Credit
Party has an ownership interest, including any dividends or other payments
received by Xxxxxxxx'x or such other Credit Party with respect to any Capital
Stock of Crescent; (f) interest earned by Xxxxxxxx'x pursuant to the Note
Purchase Agreement, dated as of August 28, 2002, between Xxxxxxxx'x and Crescent
and such other agreements, certificates, documents, and instruments executed or
delivered in connection therewith, as such agreements, certificates, documents,
and instruments may be amended, restated, or otherwise modified from time to
time; (g) earnings of any Person to which assets of a member of the Consolidated
Group shall have been sold, transferred, or disposed of, or into which a member
of the Consolidated Group shall have been merged, or which has been a party with
a member of the Consolidated Group to any consolidation or other form of
reorganization, prior to the date of such transaction; (h) gain arising from the
acquisition of debt or equity securities of a member of the Consolidated Group
or from cancellation or forgiveness of Indebtedness; (i) gain arising from
extraordinary items, as determined in accordance with GAAP, or from any other
non-recurring transaction; and (j) non-cash compensation expenses which shall
not exceed $1,500,000 in the aggregate arising from the forgiveness of principal
and interest of loans made by Xxxxxxxx'x during the Fiscal Year ended in 1995 to
its chairman of the board of directors and its chief executive officer, each in
the original principal amount of $1,500,000.
"Adjusted Tangible Net Worth" means, as of any date and determined in
accordance with GAAP, (a) total assets, minus (b) total liabilities, plus (c)
Subordinated Debt, minus, (d) intangible assets, minus (e) notes receivable from
Affiliates and Investments in Affiliates, minus (f) the aggregate amount of
Installment Contracts for which any portion of a payment is more than ninety
(90) days past due on a "contractual" basis.
Page 2
"Adjusted Tangible Net Worth Requirement" means as of the end of each
Fiscal Period of Xxxxxxxx'x ending after the Closing Date, an amount equal to
the amount specified corresponding to the applicable Fiscal Period end in the
following table, respectively:
Adjusted Tangible Net Worth
Fiscal Period End Requirement
----------------- ---------------------------
Each Fiscal Period ending after the $140,000,000
Closing Date through and including August
23, 2003
Fiscal Period ending September 27, 2003 $140,000,000, plus the cumulative
and each Fiscal Period ending thereafter amount of all Adjusted Tangible Net
Worth Requirement Increases
"Adjusted Tangible Net Worth Requirement Increase" means an amount
determined for Xxxxxxxx'x and its Subsidiaries on a consolidated basis as of the
end of any Fiscal Year, commencing with the Fiscal Year ending September 27,
2003, equal to the sum of (a) fifty percent (50.0%) of the amount (not less than
zero) of Net Income for each Fiscal Year ending after the Closing Date, plus (b)
seventy-five percent (75.0%) of the net amount of all equity proceeds received
by any Credit Party after the Closing Date (other than equity proceeds received
from another Credit Party).
"Administrative Agent's Fee Letter" means that certain letter
agreement, dated concurrently herewith, between the Agent and the Borrowers, as
such letter agreement may be amended, restated, or otherwise modified from time
to time.
"Affiliate" means, with respect to any Person (the "subject Person"),
any other Person (a) directly or indirectly controlling or controlled by or
under direct or indirect common control with the subject Person or (b) directly
or indirectly owning or holding ten percent (10.0%) or more of the Capital Stock
of the subject Person. For purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" has the meaning specified in the introductory paragraph of this
Agreement.
"Agent-Related Persons" means the Agent, together with its Affiliates,
and the officers, directors, employees, counsel, representatives, agents, and
attorneys-in-fact of the Agent and its Affiliates.
"Agents' Fee Letter" means that certain letter agreement, dated
concurrently herewith, among the Agent, CIT (in its capacity as the syndication
agent hereunder), and the Borrowers, as such letter agreement may be amended,
restated, or otherwise modified from time to time.
Page 3
"Aggregate Revolving Commitment Amount" means the aggregate amount of
Revolving Commitments in effect from time to time, such amount being one hundred
fifty million Dollars ($150,000,000) on the Closing Date.
"Agreement" has the meaning specified in the introductory paragraph and
includes, without limitation, all amendments, restatements, or other
modifications hereto from time to time.
"Anniversary Date" means an anniversary of the Closing Date.
"Applicable Lending Office" means, for each Lender, the office of such
Lender (or of an Affiliate of such Lender) as such Lender may from time to time
specify to the Agent and the Borrowers by written notice as the office by which
such Lender's Eurodollar Loans are made and maintained.
"Applicable Percentage" means, as of the Closing Date,
(a) with respect to Base Rate Loans and all other Obligations
other than Eurodollar Loans, 0.00%,
(b) with respect to Eurodollar Loans, 2.25%,
(c) with respect to the Unused Line Fee, 0.375%, and
(d) with respect to the Letter of Credit Fee, 2.25%,
in each case subject to adjustment from time to time thereafter to the
applicable percentage specified corresponding to the Fixed Charge Coverage Ratio
of the Consolidated Group as set forth below, respectively:
Base Rate Eurodollar Unused Line Letter of
Fixed Charge Coverage Ratio Loans Loans Fee Credit Fee
--------------------------- ----- ----- --- ----------
Less than 1.25 to 1.00 0.25% 2.50% 0.50% 2.50%
Greater than or equal to 1.25 to 1.00 0.00% 2.25% 0.375% 2.25%
but less than 1.50 to 1.00
Greater than or equal to 1.50 to 1.00 0.00% 2.00% 0.375% 2.00%
but less than 1.75 to 1.00
Greater than or equal to 1.75 to 1.00 0.00% 1.75% 0.25% 1.75%
For the purpose of determining any such adjustments to the Applicable
Percentage, the Fixed Charge Coverage Ratio shall be determined for the
immediately preceding four (4) Fiscal Quarters based upon the financial
statements of the Consolidated Group for each of the Consolidated Group's
respective Fiscal Quarters, beginning with the Fiscal Quarter ending
Page 4
June 28, 2003, delivered to the Agent and the Lenders as required by Section
6.1(a) (with respect to the financial statements for the last Fiscal Quarters of
each Fiscal Year) or Section 6.1(b) (with respect to the financial statements
for each of the other Fiscal Quarters of each Fiscal Year), and any such
adjustment, if any, shall become effective prospectively on and after the first
day of the calendar month which begins at least five (5) days after the date of
delivery of such financial statements to the Agent and the Lenders. Concurrently
with the delivery of such financial statements, the Borrowers shall deliver to
the Agent and the Lenders a certificate, signed by an Executive Officer of
Xxxxxxxx'x or the treasurer or corporate controller of Xxxxxxxx'x, setting forth
in reasonable detail the basis for the continuance of, or any change in, the
Applicable Percentage. In the event the Borrowers fail to timely deliver any
such financial statements, in addition to any other remedy provided for in this
Agreement, the Applicable Percentage shall be deemed to be equal to the highest
level set forth in the preceding table, until the first day of the first
calendar month following the delivery of such financial statements at which time
the Applicable Percentage shall be determined, prospectively, in accordance with
the terms hereof. If a Default or Event of Default exists at the time any
reduction in the Applicable Percentage is to be implemented, such reduction
shall not occur until the first day of the first calendar month following the
date on which such Default or Event of Default is waived by the requisite
Lenders.
"Asset Disposition" means (a) the sale, lease, or other disposition of
any Property by any member of the Consolidated Group (including the Capital
Stock of a Subsidiary but excluding Capital Stock of Xxxxxxxx'x), and (b)
receipt by any member of the Consolidated Group of any cash insurance proceeds
or condemnation award payable by reason of theft, loss, physical destruction or
damage, taking, or similar event with respect to any of its Property. For
purposes hereof "Asset Disposition" shall not include, in any event, (v) the
sale of inventory in the ordinary course of business, (w) the sale, lease, or
other disposition of machinery and equipment which is obsolete or no longer used
or useful in the conduct of the Borrowers' business, (x) the sale or disposition
of Investments included in clause (a) of the definition of Permitted
Investments, and (y) the issuance of Capital Stock of a Subsidiary to any member
of the Consolidated Group or the issuance of Capital Stock of a Subsidiary pro
rata to all of its holders in a manner that does not dilute the ownership
interest of the members of the Consolidated Group therein.
"Assignment and Acceptance" has the meaning specified in Section
10.3(b).
"Bank of America" means Bank of America, N.A., and its successors.
"Bank Product Reserves" means all reserves which the Agent from time to
time establishes in its sole discretion for the Bank Products then provided or
outstanding.
"Bank Products" means any one or more of the following types of
services or facilities extended to any Credit Party by Bank of America or any
Affiliate of Bank of America in reliance on Bank of America's agreement to
indemnify such Affiliate: (a) credit cards; (b) ACH Transactions; (c) cash
management, including, without limitation, controlled disbursement services; and
(d) Hedging Agreements.
Page 5
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded, or replaced from time to time.
"Bankruptcy Event" means, with respect to any Person, the occurrence of
any of the following with respect to such Person: (a) a court or governmental
agency having jurisdiction shall enter a decree or order for relief in respect
of such Person in an involuntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, or appoint a
receiver, liquidator, assignee, custodian, trustee, or sequestrator (or similar
official) of such Person or for any substantial part of its Property or order
the winding up or liquidation of its affairs; (b) there shall be commenced
against such Person an involuntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, or any case,
proceeding or other action for the appointment of a receiver, liquidator,
assignee, custodian, trustee, or sequestrator (or similar official) of such
Person or for any substantial part of such Person's Property or for the winding
up or liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed, undischarged, or unbonded
for a period of sixty (60) consecutive days; (c) such Person shall commence a
voluntary case under any applicable bankruptcy, insolvency, or other similar law
now or hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee, or
sequestrator (or similar official) of such Person or for any substantial part of
its Property or make any general assignment for the benefit of creditors; or (d)
such Person shall be unable to, or shall admit in writing its inability to, pay
its debts generally as they become due.
"Base Rate" means, for any day, the rate of interest in effect for such
day as publicly announced from time to time by Bank of America in Charlotte,
North Carolina as its "prime rate" (the "prime rate" being a rate set by the
Bank of America based upon various factors including Bank of America's costs and
desired return, general economic conditions, and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate). Any change in the prime rate announced by Bank of America
shall take effect at the opening of business on the day specified in the public
announcement of such change. Each interest rate based upon the Base Rate shall
be adjusted simultaneously with any change in the Base Rate
"Base Rate Loan" means any Loan bearing interest at a rate determined
by reference to the Base Rate.
"Borrower" means, separately and individually, any of Xxxxxxxx'x, FFP,
Stores, and any other Person who becomes a party to this Agreement as a
"Borrower" pursuant to the terms hereof, jointly, severally, and collectively,
and "Borrowers" means more than one or all of the foregoing Persons, jointly,
severally, and collectively, as the context requires.
"Borrowing Base" means, as of any day, an amount equal to the sum of
(a) the Receivables Advance Rate multiplied by the Net Balance of the Borrowers'
Eligible Installment Contracts, plus (b) the lesser of (i) fifty percent (50.0%)
of the Borrowers' Eligible Inventory, (ii) eighty-five percent (85.0%) of the
Net Recovery Value of the Borrowers' inventory, or
Page 6
(iii) $75,000,000, minus (c) Reserves, minus, on any day other than the Closing
Date, $5,000,000.
"Borrowing Base Certificate" has the meaning specified in Section
6.1(d).
"Business Day" means a day other than a Saturday, Sunday, or other day
on which commercial banks in Pasadena, California or Charlotte, North Carolina
are authorized or required by law to close, except that, when used in connection
with a Eurodollar Loan, such day shall also be a day on which dealings between
banks are carried on in Dollar deposits in London, England.
"Businesses" has the meaning specified in Section 5.16(a).
"Capital Adequacy Regulation" means any guideline, request, or
directive of any central bank or other Governmental Authority, or any other law,
rule, or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not paid
during any period) in respect of the cost of any fixed asset or improvement, or
replacement, substitution, or addition thereto, which has a useful life of more
than one year, including, without limitation, those costs arising in connection
with the direct or indirect acquisition of such asset by way of increased
product or service charges or in connection with a Capital Lease or Synthetic
Lease.
"Capital Lease" means, as applied to any Person, any lease of any
Property by that Person as lessee which, in accordance with GAAP, is or should
be accounted for as a capital lease on the balance sheet of that Person.
"Capital Stock" means (a) in the case of a corporation, capital stock,
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights, or other equivalents (however designated) of
capital stock, (c) in the case of a partnership, partnership interests (whether
general or limited), (d) in the case of a limited liability company, membership
interests, and (e) any other units, rights, securities, equity interests,
participations, or equivalent evidences of ownership that confer on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United States is pledged
in support thereof) having maturities of not more than twelve (12) months from
the date of acquisition, (b) Dollar denominated time deposits and certificates
of deposit of (i) any Lender, (ii) any domestic commercial bank of recognized
standing having capital and surplus in excess of $500,000,000, or (iii) any bank
whose short-term commercial paper rating from Standard & Poor's Corporation
("S&P") is at least A-1 or the equivalent thereof or from Xxxxx'x Investor
Service, Inc. ("Xxxxx'x") is at least P-1 or the equivalent thereof (any such
bank being an "Approved Bank"), in each case with maturities of not more than
270 days from the date of acquisition, (c) commercial paper and variable or
fixed
Page 7
rate notes issued by a Lender or any Approved Bank (or by the parent company
thereof) or any variable rate notes issued by, or guaranteed by, any domestic
corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or
the equivalent thereof) or better by Moody's and maturing within six (6) months
of the date of acquisition, (d) repurchase agreements entered into by any Person
with a bank or trust company (including any of the Lenders) or recognized
securities dealer having capital and surplus in excess of $500,000,000 for
direct obligations issued by or fully guaranteed by the United States in which
such Person shall have a perfected first priority security interest (subject to
no other Liens) and having, on the date of purchase thereof, a fair market value
of at least 100% of the amount of the repurchase obligations, and (e)
Investments, classified in accordance with GAAP as current assets, in money
market investment programs registered under the Investment Company Act of 1940,
as amended, which are administered by reputable financial institutions having
capital of at least $500,000,000 and the portfolios of which are limited to
Investments of the character described in the foregoing clauses (a) through (d).
"Change of Control" means the occurrence of any of the following
events: (a) Xxxxxxx Ean Xxxxx shall fail to own and control, directly or
indirectly, Voting Stock of Xxxxxxxx'x in an amount sufficient to elect a
majority of Xxxxxxxx'x board of directors, or (b) during any period of up to
twelve (12) consecutive months, commencing after the Closing Date, individuals
who at the beginning of such twelve (12) month period were directors of
Xxxxxxxx'x (together with any new director whose election by Xxxxxxxx'x board of
directors or whose nomination for election by Xxxxxxxx'x stockholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the directors of Xxxxxxxx'x then in office, or (c) any
Credit Party (other than Xxxxxxxx'x), or any of its Subsidiaries (other than
FCJVLP), ceases to be a wholly-owned Subsidiary of Xxxxxxxx'x, excluding any
such Subsidiary of Xxxxxxxx'x which is the subject of a transaction permitted by
Section 7.4 or Section 7.5.
"CIT" means The CIT Group/Business Credit, Inc., and its successors.
"Closing Date" means the date of this Agreement.
"Collateral" means a collective reference to the collateral which is
identified in, and at any time will be covered by, the Collateral Documents.
"Collateral Adjustment Percent" means, calculated as of the last day of
each Fiscal Period, the sum of (a) the Past Due Percent, plus (b) the Net
Charge-off Percent.
"Collateral Documents" means a collective reference to the Security
Agreements, the Mortgages (if any), and such other documents executed and
delivered in connection with the attachment and perfection of the Agent's Liens
arising thereunder, including, without limitation, UCC financing statements and
patent and trademark filings.
Page 8
"Commitment Period" means the period from and including the Closing
Date to but not including the earlier of (a) the Termination Date or (b) the
date on which the Commitments terminate in accordance with the provisions of
this Agreement.
"Commitments" means any of the Revolving Commitments and/or the LOC
Commitments.
"Consolidated Group" means Xxxxxxxx'x and its Subsidiaries.
"Consumer Protection Laws" means the Truth in Lending Act (and
Regulation Z promulgated thereunder), Equal Credit Opportunity Act, Fair Credit
Reporting Act, Fair Debt Collection Practices Act, Xxxxx-Xxxxx-Xxxxxx Financial
Privacy Act, anti-discrimination and fair lending laws and all other federal and
state laws, regulations, orders, directives, or similar requirements of any
Governmental Authority intended for the protection of consumers in connection
with the extension of consumer credit.
"Continue", "Continuation", and "Continued" refer to the continuation
pursuant to Section 3.2 of a Eurodollar Loan from one Interest Period to the
next Interest Period.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any material agreement, instrument, or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Convert", "Conversion", and "Converted" refer to a conversion pursuant
to Section 3.2 or Section 3.6 of a Base Rate Loan into a Eurodollar Loan or of a
Eurodollar Loan into a Base Rate Loan.
"Credit Documents" means two or more of this Agreement, the Notes, the
LOC Documents (excluding any Letter of Credit), the Guaranty Agreements, the
Administrative Agent's Fee Letter, the Agents' Fee Letter, the Collateral
Documents, any agreement entered into in connection with any Bank Products, and
all other related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto (in each case as the same may be
amended, restated, or otherwise modified from time to time), and "Credit
Document" means any one of them.
"Credit Parties" means, collectively, the Borrowers and the Guarantors,
and "Credit Party" means any one of such Persons.
"Crescent" means Crescent Jewelers, a California corporation, and its
successors and assigns.
"Default" means any event, act, or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
Page 9
"Defaulting Lender" means, at any time, any Lender that (a) has failed
to make a Loan or purchase a Participation Interest required pursuant to the
terms of this Agreement within one Business Day of when due, (b) other than as
set forth in clause (a) preceding, has failed to pay to the Agent or any other
Lender an amount owed by such Lender pursuant to the terms of this Agreement
within one Business Day of when due, unless such amount is subject to a good
faith dispute or discount, or (c) has been deemed insolvent or has become
subject to a bankruptcy or insolvency proceeding or with respect to which (or
with respect to any of the assets of which) a receiver, trustee, or similar
official has been appointed.
"Discretionary Over-Advance" has the meaning specified in Section
2.1(a).
"Dollars" and "$" means dollars in lawful currency of the United
States. Unless otherwise specified, all payments under this Agreement shall be
made in Dollars.
"Domestic Credit Party" means any Credit Party which is incorporated or
organized under the laws of any state of the United States or the District of
Columbia.
"Domestic Subsidiary" means any Subsidiary which is incorporated or
organized under the laws of any state of the United States or the District of
Columbia.
"EBITDA" means, for any period, the sum of (a) Adjusted Net Earnings
from Operations, plus (b) to the extent deducted in determining Adjusted Net
Earnings from Operations, (i) Interest Expense, plus (ii) taxes, plus (iii)
depreciation and amortization, in each case on a consolidated basis determined
in accordance with GAAP.
"Eligible Assignee" means (a) a Lender, (b) an Affiliate of a Lender,
(c) a commercial bank, commercial finance company, or other asset based lender
having total assets in excess of $1,000,000,000, and (d) any other Person
reasonably acceptable to the Agent and, if no Default or Event of Default
exists, the Borrowers; provided, however, that no Borrower nor an Affiliate of
any Borrower shall qualify as an Eligible Assignee.
"Eligible Installment Contracts" means, for each Borrower as of any
date of determination and without duplication, those Installment Contracts which
the Agent, in its reasonable discretion, determines are eligible, but excluding,
without limiting the Agent's discretionary rights (a) any Installment Contract
which is (i) not subject to a perfected, first priority (subject to incohate
Liens for government charges or assessments not yet due) Lien in favor of the
Agent to secure the Total Obligations, (ii) subject to any other Lien that is
not a Permitted Lien, or (iii) evidences a transaction not in compliance with
any Requirement of Law, (b) any Installment Contract for which payment
thereunder is doubtful or is determined to be uncollectible (including, without
limitation, any Installment Contract under which any payment is more than sixty
(60) days past due on a "contractual" basis), (c) any Installment Contract which
is modified or rewritten, (d) any Installment Contract with a term of more than
twenty-four (24) months, (e) any Installment Contract for which the obligations
of the debtor thereunder are evidenced by a note, chattel paper, or other
instrument, unless the covenants set forth in the Security Agreement applicable
to such note, chattel paper, or instrument have been complied
Page 10
with, (f) any Installment Contract for which the debtor thereunder is not
solvent or is subject to any bankruptcy or insolvency proceeding of any kind or
which has died or been declared judicially incompetent, (g) any Installment
Contract for which the debtor thereunder is located outside of the United States
(unless payment for the goods shipped is secured by an irrevocable letter of
credit in form and substance and from an institution acceptable to the Agent and
with respect to which the letter-of-credit rights (as defined in the UCC) have
been assigned to the Agent pursuant to documents in form and substance
acceptable to the Agent), (h) any Installment Contract which is contingent or
which is subject to offset, discount, or deduction (in each case to the extent
of such offset, discount, or deduction) or which is subject to any counterclaim,
dispute, or other defense to payment, (i) any Installment Contract under which
any Subsidiary, employee, or Affiliate of a Borrower is the debtor, (j) any
Installment Contract representing a sale to the government of the United States
or any subdivision thereof unless the Federal Assignment of Claims Act (or other
similar Requirement of Law) has been complied with to the satisfaction of the
Agent with respect to such Installment Contract, (k) any Installment Contract
with respect to which any of the representations, warranties, covenants, and
agreements contained in the Credit Documents are not or have ceased to be
complete and correct or have been breached, (l) any Installment Contract which
represents a sale on a xxxx-and-hold, guaranteed sale, sale and return, sale on
approval, consignment, or other repurchase or return basis, (m) any Installment
Contract arising from a transaction which does not conform to the credit
criteria of a Borrower in effect at the time such Installment Contract is
entered into, (n) any Installment Contract owing from a debtor the Agent
reasonably determines is not creditworthy, (o) any Installment Contract under
which the initial payment is more than forty-five (45) days from the original
date of sale, (p) any Installment Contract under which the merchandise purchased
by the debtor has been repossessed or a Borrower has demanded return of such
merchandise, (q) any Installment Contract arising in a transaction in which the
goods covered thereby have not been delivered, (r) the portion of any sales tax
included in any Installment Contract, and (s) any Installment Contract which has
payment terms which are not fully amortizing within twenty-four (24) months
after the date of sale with respect thereto, and (t) any Installment Contract
which fails to meet such other specifications and requirements as may from time
to time be established by the Agent in its reasonable discretion.
"Eligible Inventory" means, for each Borrower as of any date of
determination and without duplication, the lower of the aggregate book value
(based on a FIFO or a moving average cost valuation, consistently applied) or
fair market value of finished goods inventory owned by such Borrower, less
reserves against inventory shrinkage as are reasonably satisfactory to the Agent
and other appropriate reserves determined in accordance with GAAP. Without
limiting the foregoing, Eligible Inventory excludes any event (a) inventory
which is (i) not subject to a perfected, first priority (subject to inchoate
Liens for government charges or assessments not yet due) Lien in favor of the
Agent to secure the Total Obligations or (ii) subject to any other Lien that is
not a Permitted Lien, (b) inventory which is defective, obsolete, or not in good
or merchantable condition or fails to meet standards for sale or use imposed by
governmental agencies, departments, or divisions having regulatory authority
over such goods, (c) inventory which is not useable or salable at prices
approximating its cost in the ordinary course of the business (including,
without duplication, the amount of any reserves for obsolescence, unsalability,
or decline in value), (d) inventory located outside of the United States or in
transit
Page 11
(other than between locations operated by the Borrowers), (e) inventory which is
leased or on consignment, (f) inventory that has been returned to a Borrower
unless such inventory meets all of the other requirements of eligibility
contained herein or repossessed by a Borrower, (g) inventory that is located in
a public warehouse or in possession of a bailee or in a facility (other than a
retail store operated by a Borrower) leased by a Borrower if the applicable
warehouseman, bailee, or lessor has not delivered to the Agent, if requested by
the Agent, a subordination or waiver agreement, in form and substance
satisfactory to the Agent, (h) inventory that is not finished goods or is raw
materials, work-in-process, chemicals, samples, prototypes, supplies, or packing
and shipping materials, (i) inventory that is subject to a third party's
trademark or other proprietary right, unless the Agent is satisfied that it
could sell such inventory on satisfactory terms during the existence of an Event
of Default, (j) inventory which is to be returned to any vendor, (k) any
capitalized costs included in inventory, and (l) inventory which fails to meet
such other specifications and requirements as may from time to time be
established by the Agent in its reasonable discretion.
"Environmental Laws" means any and all lawful and applicable federal,
state, local, and foreign, statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises, licenses,
agreements, and other governmental restrictions relating to the environment or
to emissions, discharges, releases, or threatened releases of Materials of
Environmental Concern into the environment including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common control with
any member of the Consolidated Group within the meaning of Section 4001(a)(14)
of ERISA, or is a member of a group which includes any member of the
Consolidated Group and which is treated as a single employer under Sections
414(b) or (c) of the Internal Revenue Code.
"ERISA Affiliate Plan" means any employee benefit plan (as defined in
Section 3(3) of ERISA) which is covered by ERISA and with respect to which any
ERISA Affiliate that is not a member of the Consolidated Group is (or, if such
plan were terminated at such time, would under Section 4069 of ERISA be deemed
to be) an "employer" within the meaning of Section 3(5) of ERISA.
"ERISA Event" means (a) with respect to any Plan, the occurrence of a
Reportable Event or the substantial cessation of operations (within the meaning
of Section 4062(e) of ERISA), (b) the withdrawal by any member of the
Consolidated Group from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section 4001(a)(2) of
ERISA), or the termination of a Multiple Employer Plan, (c) the distribution of
a notice of intent to terminate or the actual termination of a Plan pursuant to
Page 12
Section 4041(a)(2) or 4041A of ERISA, (d) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under Section 4042 of
ERISA, (e) any event or condition which might constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, (f) the complete or partial withdrawal of any member of
the Consolidated Group from a Multiemployer Plan, (g) the conditions for
imposition of a lien under Section 302(f) of ERISA exist with respect to any
Plan, or (h) the adoption of an amendment to any Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA.
"Eurodollar Loan" means any Loan that bears interest at a rate based
upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Interest Period, with respect to
Eurodollar Loans, the rate of interest per annum determined pursuant to the
following formula:
Eurodollar Rate = Offshore Base Rate
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means, for any day during any
Interest Period, the reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1.00%) in
effect on such day applicable to member banks under
regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement
(including any emergency, supplemental, or other marginal
reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"). The
Eurodollar Rate for each outstanding Eurodollar Loan shall be
adjusted automatically as of the effective date of any change
in the Eurodollar Reserve Percentage.
"Offshore Base Rate" means the rate per annum appearing on
Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable
to such Interest Period. If for any reason such rate is not
available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such
rates. If for any reason none of the foregoing rates is
available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum determined by the Agent as the rate
of interest at which Dollar deposits in the approximate amount
of the Eurodollar Loan comprising part of such borrowing would
be offered by Bank of America's London Branch to major banks
Page 13
in the offshore Dollar market at their request at or about
11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period for a term comparable to such
Interest Period.
"Event of Default" has the meaning specified in Section 8.1.
"Excess Availability" means, at any time, an amount determined as the
result of (a) the Borrowing Base, minus (b) the Obligations, minus (c) all
accounts payable of the Borrowers which are past due for payment.
"Excluded Property" means, with respect to any member of the
Consolidated Group, including any Person that becomes a member of the
Consolidated Group after the Closing Date, any Property of such member of the
Consolidated Group which, subject to the terms of Section 7.12, is subject to a
Lien of the type described in clause (h) of the definition of "Permitted Liens"
pursuant to documents which prohibit such member of the Consolidated Group from
granting any other Liens in such Property.
"Executive Officer" of any Person means any of the chief executive
officer, chief operating officer, president, chief accounting officer, and chief
financial officer of such Person.
"Existing Letters of Credit" means the letters of credit identified on
Schedule 1.1A.
"Extension of Credit" means, as to any Lender, the making of, or
participation in, a Loan by such Lender (including Continuations and Conversions
thereof) or the issuance or extension of, or participation in, a Letter of
Credit by such Lender.
"FCJVH" means FCJV Holding Corp., a Delaware corporation, and its
successors and assigns.
"FCJVLP" means FCJV, L.P., a Delaware limited partnership, and its
successors and assigns.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1.00%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to Bank of
America on such day on such transactions as determined by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
Page 14
"Fees" means all fees payable by the Borrowers pursuant to Section 3.5.
"FFP" means Xxxxxxxx'x Florida Partnership, a Florida general
partnership, and its successors and assigns.
"FHC" means Xxxxxxxx'x Holding Corp., a Delaware corporation, and its
successors and assigns.
"Fiscal Period" means one of the three fiscal periods in a Fiscal
Quarter, each of which is approximately one calendar month in duration. There
are twelve (12) Fiscal Periods in each Fiscal Year.
"Fiscal Quarter" means one of the four thirteen week, or if applicable
fourteen week, quarters in a Fiscal Year, with the first of such quarters
beginning on the first day of a Fiscal Year and ending on Saturday of the
thirteenth (or fourteenth, if applicable) week in such quarter.
"Fiscal Year" means, with respect to each member of the Consolidated
Group, the Fiscal Year for financial accounting purposes consisting of 52 or 53
weeks ending on the Saturday closest to September 30 of each year.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of
EBITDA divided by Fixed Charges.
"Fixed Charges" means, for any period, the sum of (a) the cash portion
of Interest Expense for such period, plus (b) payments of Funded Debt (including
mandatory commitment reductions, sinking fund payments, payments in respect of
the principal component of Capital Leases, Synthetic Leases, and the like
relating thereto) for such period other than payments of (i) principal of the
Loans and (ii) reimbursement obligations in respect of Letters of Credit, plus
(c) Capital Expenditures, minus any cash received (including the proceeds of any
insurance or condemnation award to the extent such proceeds are used to purchase
or acquire any fixed asset or improvement) upon the disposal of any capital
asset which is not applied to (i) the repayment of any Indebtedness other than
the Loans or reimbursement obligations in respect of Letters of Credit or (ii)
or payment of any fees, costs, and expenses of such disposal, plus (d)
Restricted Payments, plus (e) federal, state, local, and foreign income taxes
paid in cash, in each case determined in accordance with GAAP.
"FMC" means Xxxxxxxx'x Management Corp., a Delaware corporation, and
its successors and assigns.
"Foreign Subsidiary" means a Subsidiary which is not a Domestic
Subsidiary.
"Xxxxxxxx'x" means Xxxxxxxx'x Inc., a Delaware corporation, and its
successors and assigns.
Page 15
"Funded Debt" means, with respect to any Person (the "subject Person"),
without duplication, (a) all obligations of the subject Person for borrowed
money (other than, to the extent it may be included herein, trade debt incurred
in the ordinary course of business), (b) all obligations of the subject Person
evidenced by bonds, debentures, notes, or similar instruments, or upon which
interest payments are customarily made (other than, to the extent it may be
included herein, trade debt incurred in the ordinary course of business), (c)
all purchase money Indebtedness (including for purposes hereof, indebtedness and
obligations in respect of conditional sale or title retention arrangements
relating to Property purchased (other than customary reservations of title under
agreements with suppliers entered into in the ordinary course of business,
including, without limitation, the consignment of inventory and all obligations
issued or assumed as the deferred purchase price of Property or services
purchased), excluding trade debt incurred in the ordinary course of business,
which would appear as liabilities on a balance sheet) of the subject Person,
including, without limitation, the principal portion of all obligations of the
subject Person outstanding under Capital Leases, (d) all Support Obligations of
the subject Person with respect to Funded Debt of another Person, (e) the
maximum available amount of all standby letters of credit issued or bankers'
acceptances facilities for the account of the subject Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed), (f) all
Funded Debt of another Person secured by a Lien on any Property of the subject
Person, whether or not such Funded Debt has been assumed by the subject Person,
provided that for purposes hereof the amount of such Funded Debt shall be
limited to the amount of such Funded Debt as to which there is recourse to the
subject Person or the fair market value of the property which is subject to the
Lien, if less, (g) the outstanding attributed principal amount under any
Securitization Transaction to which the subject Person is a party, (h) the
principal portion of obligations outstanding under Synthetic Leases under which
the subject Person is the lessee, and (i) the maximum amount of all contingent
obligations (including earn-out payments) incurred in connection with Permitted
Acquisitions and Acquisitions consummated prior to the Closing Date. The Funded
Debt of the subject Person shall include the Funded Debt of any partnership or
joint venture in which the subject Person is a general partner or joint
venturer, but only to the extent to which there is recourse to the subject
Person for the payment of such Funded Debt.
"Funding Date" means any date on which any of the following occur: (a)
a borrowing hereunder consisting of Revolving Loans made on the same day by the
Lenders to the Borrowers, or any of them, or (b) by Bank of America in the case
of a borrowing funded by Non-Ratable Loans, or (c) by the Agent in case of a
borrowing consisting of a Discretionary Over-Advance, or (d) the issuance of a
Letter of Credit hereunder.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to the terms of Section 1.2.
"Governmental Authority" means any nation or government, any state,
province, municipality, or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory, or administrative functions of or
pertaining to the government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by and of the
foregoing,
Page 16
and any department, agency, board, commission tribunal, committee, or
instrumentality of any of the foregoing.
"Gross Installment Contract Payments" means, as of any date of
determination with respect to each Installment Contract, the outstanding balance
thereof including all unearned interest, premiums for insurance and product
warranties, and other fees and charges, whether earned or unearned, owing by the
debtor thereunder.
"Guarantors" means Xxxxxxxx'x, FMC, FFP, FHC, Stores, FCJVH, FCJVLP,
and each other Person which may hereafter become a Guarantor by execution of a
guaranty agreement reasonably acceptable to the Agent, together with their
successors and assigns, and "Guarantor" means any one of such Persons.
"Guaranty Agreement" means any agreement executed and delivered by a
Credit Party which guarantees the payment or performance of the Total
Obligations, and "Guaranty Agreements" means two or more of such agreements,
collectively, as any such agreement may be amended, restated, or otherwise
modified from time to time.
"Hedging Agreement" means an interest rate protection agreement or
foreign currency exchange agreement, as such agreement may be amended, restated,
or otherwise modified from time to time.
"Indebtedness" means, with respect to any Person (the "subject
Person"), without duplication, (a) all Funded Debt of the subject Person, (b)
all obligations of such Person under take-or-pay or similar arrangements or
under commodities agreements, (c) 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, or payable out of the proceeds of
production from, Property owned or acquired, whether or not the obligations
secured thereby have been assumed, (d) all Support Obligations with respect to
Indebtedness of another Person, (e) all obligations under Hedging Agreements,
(f) all preferred Capital Stock which by the terms thereof could be (at the
request of the holders thereof or otherwise) subject to mandatory sinking fund
payments, redemption, or other acceleration (other than as a result of a Change
of Control or an Asset Disposition that does not in fact result in a redemption
of such preferred Capital Stock) at any time during the term of this Agreement,
and (g) the Indebtedness of any partnership or unincorporated joint venture in
which such Person is a general partner or a joint venturer.
"Indemnified Liabilities" has the meaning specified in Section 10.5.
"Installment Contract" means any loan agreement, installment sale
contract, or other form of instrument or document evidencing obligations owing
by a retail purchaser to a Borrower with respect to financial accommodations
provided by such Borrower to such purchaser in connection with a sale of
merchandise to such purchaser.
"Intellectual Property" has the meaning specified in Section 5.9.
Page 17
"Interest Expense" means, for any period, interest expense determined
in accordance with GAAP on a consolidated basis and including the amortization
of debt discount and premium, the interest component of Capital Leases and
Synthetic Leases and the implied interest component under Securitization
Transactions.
"Interest Payment Date" means (a) as to any Base Rate Loan, the last
day of each calendar month and the Termination Date, and (b) as to any
Eurodollar Loan, (i) the last day of each Interest Period for such Loan or, with
respect to any Interest Period of greater than three (3) months in duration, the
last day of the third month, (ii) the date of repayment of principal of such
Loan, and (iii) the Termination Date. If an Interest Payment Date falls on a
date which is not a Business Day, such Interest Payment Date shall be deemed to
be the next succeeding Business Day.
"Interest Period" means, with respect to any Eurodollar Loan, a period
of one, two, three, or six months duration, as a Borrower may elect, commencing
in each case on the date of the borrowing (including Conversions, Continuations,
and renewals), provided, however, (a) if any Interest Period would end on a day
which is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day (except that if the next succeeding Business Day falls
in the next succeeding calendar month, then on the next preceding Business Day),
(b) no Interest Period shall extend beyond the Termination Date, and (c) if an
Interest Period begins on a day for which there is no numerically corresponding
day in the calendar month in which the Interest Period is to end, such Interest
Period shall end on the last day of such calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute thereto, as interpreted by
the rules and regulations issued thereunder, in each case as in effect from time
to time. References to sections of the Internal Revenue Code shall be construed
also to refer to any successor sections.
"Investment" in any Person means (a) the acquisition (whether for cash,
property, services, assumption of Indebtedness, securities, or otherwise) of
Capital Stock, bonds, notes, debentures, partnership, joint ventures, or other
ownership interests or other securities of such Person, (b) any deposit with, or
advance, loan, or other extension of credit to, such Person (other than deposits
made in connection with the purchase of equipment or other assets in the
ordinary course of business), or (c) any other capital contribution to or
investment in such Person, including, without limitation, any Support
Obligations (including any support for a letter of credit issued on behalf of
such Person) incurred for the benefit of such Person, but excluding any
Restricted Payment to such Person.
"Issuing Lender" means Bank of America.
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph of this Agreement.
"Letter of Credit" means any Existing Letter of Credit and any letter
of credit issued by the Issuing Lender for the account of a Borrower in
accordance with the terms of Section 2.1(b).
Page 18
"Letter of Credit Fee" has the meaning specified in Section 3.5(b).
"Leverage Ratio" means, as of any date and determined in accordance
with GAAP, the ratio of (a) total liabilities divided by (b) Adjusted Tangible
Net Worth.
"Licenses" means all licenses, permits, and other grants of authority
obtained or required to be obtained from any Governmental Authority in
connection with the management or operation of the business of the members of
the Consolidated Group or the ownership, lease, license, or use of any Property
of the members of the Consolidated Group.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority, or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed by a Person authorized to do so
under the UCC as adopted and in effect in the relevant jurisdiction or other
similar recording or notice statute, and any lease in the nature thereof).
"Loan" or "Loans" means the Revolving Loans (including the Non-Ratable
Loans and the Discretionary Over-Advances) and the Base Rate Loans and
Eurodollar Loans comprising such Loans.
"LOC Commitment" means the commitment of the Issuing Lender to issue,
and of the Lenders to participate in, Letters of Credit and LOC Obligations
hereunder.
"LOC Committed Amount" means the maximum amount of LOC Obligations
hereunder as specified in Section 2.1(b).
"LOC Documents" means, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in connection
therewith, any application therefor, and any agreements, instruments,
guarantees, or other documents (whether general in application or applicable
only to such Letter of Credit) governing or providing for (a) the rights and
obligations of the parties concerned or at risk or (b) any collateral security
for such obligations.
"LOC Obligations" means, at any time, the sum of (a) the maximum amount
which is, or at any time thereafter may become, available to be drawn under
Letters of Credit then outstanding, assuming compliance with all requirements
for drawings referred to in such Letters of Credit plus (b) the aggregate amount
of all drawings under Letters of Credit honored by the Issuing Lender but not
reimbursed by the Borrowers.
"Margin Stock" means "margin stock" or any "margin security" as defined
in Regulation T, Regulation U, and Regulation X.
"Material Adverse Effect" means a material adverse effect on (a) the
condition (financial or otherwise), operations, business, assets, or liabilities
of the Consolidated Group taken as a
Page 19
whole, (b) the ability of any Credit Party or other party thereto to perform any
material obligation under the Credit Documents to which it is a party, or (c)
the material rights and remedies of the Agent and the Lenders under the Credit
Documents.
"Materials of Environmental Concern" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Laws, including, without limitation, asbestos,
polychlorinated biphenyls, and urea-formaldehyde insulation.
"Maximum Rate" means, at any time, the maximum rate of interest the
Lenders may lawfully contract for, charge, or receive in respect of the Total
Obligations as allowed by any Requirement of Law.
"Merchant Account" means, in respect of a Credit Party, any account,
agreement or arrangement between such Credit Party and another Person pursuant
to which such other Person gives or makes available credit to such Credit Party
in respect of credit card transactions generated by such Person.
"Merchant Account Agreement" means an agreement evidencing a Merchant
Account, and any renewal, extension, modification, amendment or restatement
thereof.
"Minimum Excess Availability Requirement" means, as of any day, an
amount equal to the amount specified corresponding to the applicable calendar
month in the following table, respectively:
Minimum Excess Availability
Calendar Month Requirement
-------------- ---------------------------
June, July, August, September $20,000,000
December $50,000,000
All other calendar months $25,000,000
"Mortgaged Property" means the Property which is the subject of a
Mortgage as referenced therein.
"Mortgages" means those mortgages, deeds of trust, security deeds, or
like instruments given to the Agent, for the benefit of the Agent and the
Lenders, to secure the Total Obligations, as such agreements may be amended,
restated, or otherwise and modified from time to time.
"Multiemployer Plan" means a Plan which is a "multiemployer plan" as
defined in Sections 3(37) or 4001(a)(3) of ERISA.
Page 20
"Multiple Employer Plan" means a Plan (other than a Multiemployer Plan)
which any member of the Consolidated Group or any ERISA Affiliate and at least
one employer other than the members of the Consolidated Group or any ERISA
Affiliate are contributing sponsors.
"Net Balance" means, as of any date of determination, the Gross
Installment Contract Payments of an Installment Contract, less all unearned
interest, fees, and charges (including premiums for insurance and product
warranties) owing by the debtor thereunder.
"Net Charge-off Percent" means the percent, calculated as of the last
day of each Fiscal Period, equal to (a) the aggregate amount of all Net
Charge-offs of the Borrowers during each of the six (6) Fiscal Periods
immediately preceding the date of calculation, multiplied by two (2), divided by
(b) the sum of the Net Balance owing under all Installment Contracts of the
Borrowers outstanding as of the last day of each such Fiscal Period, divided by
six (6).
"Net Charge-offs" means, for any period, the aggregate amount of all
unpaid payments under Installment Contracts which have been charged-off by the
Borrowers during such period, as reduced by the amount of all cash recoveries
with respect to Installment Contracts which have been charged-off during
previous periods or such period.
"Net Income" means, for any period, the net income of the Consolidated
Group determined on a consolidated basis in accordance with GAAP.
"Net Recovery Value" means, with respect to any inventory, the net
recovery value thereof in an orderly liquidation net of all costs of liquidation
thereof, as reasonably determined by the Agent based upon a written appraisal
prepared by an experienced and reputable independent appraiser acceptable to the
Agent on a valuation basis, and in form and substance, satisfactory to the
Agent.
"Non-Ratable Loan" and "Non-Ratable Loans" have the meanings specified
in Section 2.7(e).
"Note" or "Notes" means any of the Revolving Notes.
"Notice of Borrowing" means a written notice of borrowing, in
substantially the form of Exhibit B, as required by Section 2.2(a)(i).
"Notice of Continuation/Conversion" means a written notice of
Continuation or Conversion, in substantially the form of Exhibit C, as required
by Section 3.2.
"Obligations" means, collectively, the Revolving Loans and the LOC
Obligations.
"Operating Lease" means, as applied to any Person, any lease by such
Person as lessee (including, without limitation, leases which may be terminated
by the lessee at any time) of any Property which is not a Capital Lease.
Page 21
"Original Credit Agreement has the meaning specified in Recital B.
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges, or similar levies (excluding, in
the case of each Lender and the Agent, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by each Lender's or the Agent's
net income) which arise from any payment made hereunder or from the execution,
delivery, or registration of, or otherwise with respect to, this Agreement or
any other Credit Documents.
"Participant" means any commercial bank, financial institution, or
other Person not an Affiliate of the Credit Parties who shall have been granted
the right by any Lender to participate in the financing provided by such Lender
under this Agreement, and who shall have entered into a participation agreement
in form and substance satisfactory to such Lender.
"Participation Interest" means the purchase by a Lender of a
participation in LOC Obligations as provided in Section 2.6(b), and in Loans as
provided in Section 3.8.
"Past Due Percent" means the percent, calculated as of the last day of
each Fiscal Period, equal to (a) the Gross Installment Contract Payments owing
under all Installment Contracts owing to the Borrowers (excluding Installment
Contracts which have been charged-off or for which the subject merchandise has
been repossessed or demanded to be returned) as to which any portion of an
installment due thereunder is thirty (30) days or more past due as determined on
a "contractual" basis as of the last day of each of the six (6) Fiscal Periods
immediately preceding the date of calculation, divided by (b) the Gross
Installment Contract Payments owing under all Installment Contracts (excluding
Installment Contracts which have been charged-off or for which the subject
merchandise has been repossessed or demanded to be returned) as of the last day
of each of the six (6) Fiscal Periods immediately preceding the date of
calculation.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereof.
"Permitted Acquisition" means any Acquisition that satisfies each of
the following requirements:
(a) such Acquisition is not a hostile or contested
Acquisition;
(b) the business acquired in connection with such Acquisition
is (i) located in the United States, (ii) organized under Requirements
of Law of the United States, and (iii) not engaged, directly or
indirectly, in any line of business other than the businesses in which
the Borrowers are engaged on the Closing Date and any business
activities that are substantially similar, related, or incidental
thereto;
(c) both immediately before and immediately after giving
effect to such Acquisition and the Extensions of Credit (if any)
requested to be made in connection therewith, each of the
representations and warranties in the Credit Documents is true and
Page 22
correct (except (i) any such representation or warranty which relates
to a specified prior date, and (ii) to the extent the Agent and the
Lenders have been notified in writing by the Credit Parties that any
representation or warranty is not correct and the Required Lenders have
explicitly waived in writing compliance with such representation or
warranty) and no Default or Event of Default exists or will exist or
would result therefrom;
(d) (i) as soon as available, but not less than thirty (30)
days prior to such Acquisition, the Borrowers have given the Agent (A)
notice of such Acquisition (B) a copy of all business and financial
information reasonably requested by the Agent including financial
statements, statements of cash flow, and projections of availability
(i.e. Borrowing Base minus the Obligations) prepared on a Pro Forma
Basis for the twelve (12) Fiscal Periods ended as of the most recent
Fiscal Period end and for each of the subsequent twelve (12) Fiscal
Periods, such financial information to be reasonably satisfactory to
the Agent, (C) if the Installment Contracts and inventory acquired in
connection with such Acquisition are proposed to be included in the
determination of the Borrowing Base, the Agent shall have conducted a
field audit and appraisal of the business and property of the acquired
entity, including its Installment Contracts and inventory, and (D) a
certificate of an Executive Officer of Xxxxxxxx'x certifying (and
showing the calculations therefor in reasonable detail) that the Credit
Parties will be in compliance with each of the covenants set forth in
Section 6.11 on a Pro Forma Basis for the twelve (12) Fiscal Periods
ended as of the most recent Fiscal Period end before and after giving
effect to such Acquisition and (ii) as soon as available, the
information provided to the board of directors of Xxxxxxxx'x with
respect to such Acquisition;
(e) the aggregate consideration in connection with any such
Acquisition (whether paid in cash, constituting assumed or acquired
Indebtedness, or otherwise, but excluding any Capital Stock of
Xxxxxxxx'x) does not exceed $7,000,000 and the aggregate consideration
paid in connection with all such Acquisitions (whether paid in cash,
constituting assumed or acquired Indebtedness, or otherwise, but
excluding any Capital Stock of Xxxxxxxx'x) does not exceed $14,000,000
during the term of this Agreement;
(f) if such Acquisition is an Acquisition of the Capital Stock
of a Person, the Acquisition is structured so that the acquired Person
shall become a wholly-owned Subsidiary of a Borrower and (if
applicable), subject to Section 10.20, a Credit Party pursuant to the
terms of this Agreement;
(g) no Credit Party shall, as a result of or in connection
with any such Acquisition, assume or incur any direct or contingent
liabilities (whether relating to environmental, tax, litigation, or
other matters) that could reasonably be expected, as of the date of
such Acquisition, to result in the existence or occurrence of a
Material Adverse Effect;
(h) in connection with an Acquisition of the Capital Stock of
any Person, all Liens, other than any Liens which constitute Permitted
Liens hereunder, on Property of
Page 23
such Person shall be terminated, and in connection with an Acquisition
of the assets of any Person, all Liens on such assets, other than Liens
which constitute Permitted Liens hereunder, shall be terminated; and
(i) Xxxxxxxx'x shall certify (and provide the Agent and the
Lenders with a calculation prepared on a Pro Forma Basis in form and
substance reasonably satisfactory to the Agent) to the Agent and the
Lenders that, immediately before and immediately after giving effect to
completion of such Acquisition, the Excess Availability is not less
than the Minimum Excess Availability Requirement.
"Permitted Distributions" means (a) any Restricted Payment by a Credit
Party to a Borrower or by Credit Party that is not a Borrower to another Credit
Party that is not a Borrower, (b) cash dividends payable by Xxxxxxxx'x to the
holders of its Capital Stock; provided that all such dividends under this clause
(b) shall not exceed $2,500,000 during any Fiscal Year and no such dividends
shall be paid if before or after making such payment any Default or Event of
Default exists or would exist, including any Default or Event of Default under
Section 6.11 on a Pro Forma Basis determined for the preceding twelve (12)
Fiscal Periods after giving effect thereto, and (c) Permitted Stock Repurchases.
"Permitted Investments" means Investments which are (a) cash and Cash
Equivalents, (b) accounts receivable created, acquired, or made in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms, (c) Investments consisting of Capital Stock, obligations,
securities, or other Property received in settlement of accounts receivable
(created in the ordinary course of business) from bankrupt obligors, (d)
Investments existing as of the Closing Date and set forth in Schedule 1.1B, (e)
advances or loans to directors, officers, and employees in the ordinary course
of business for reasonable business expenses that do not exceed $1,000,000 in
the aggregate at any one time outstanding, (f) Investments by members of the
Consolidated Group in their Subsidiaries and Affiliates existing on the Closing
Date; provided that such Investments in Crescent shall not at anytime exceed
$95,000,000 in the aggregate as follows: (i) an initial investment of
$85,000,000 on the Closing Date; (ii) an additional Investment not in excess of
$5,000,000 in the aggregate at anytime after the Closing Date if the Excess
Availability immediately after giving effect to the making of such Investment is
equal to or greater than $10,000,000; provided that if such additional
Investment is made in December the Excess Availability immediately after giving
effect to the making of such Investment shall be equal to or greater than
$35,000,000; and (iii) an additional Investment not in excess of $5,000,000 in
the aggregate if the Excess Availability immediately after giving effect to the
making of such Investment is equal to or greater than the Minimum Excess
Availability Requirement, (g) Investments by members of the Consolidated Group
in and to Domestic Credit Parties, (h) Investments which constitute Permitted
Acquisitions, (i) Investments in Persons that do not become Subsidiaries after
giving effect to such Investments, representing the formation of strategic
alliances or other similar arrangements in an amount not to exceed $6,000,000 in
the aggregate at any time outstanding; provided that at the time of making any
such Investment, Excess Availability is equal to or in excess of the Minimum
Excess Availability Requirement immediately after giving effect to such
Investment, and no Default or Event of Default exists,
Page 24
and (j) other Investments of a nature not contemplated in clauses (a) through
(j) preceding in an amount not to exceed $3,000,000 in the aggregate at any time
outstanding.
"Permitted Liens" means:
(a) Liens in favor of the Agent to secure the Total
Obligations;
(b) Liens in favor of Bank of America or an Affiliate of Bank
of America pursuant to a Hedging Agreement permitted hereunder, but
only (i) to the extent such Liens secure obligations under such Hedging
Agreement permitted under Section 7.1, (ii) to the extent such Liens
are on the same collateral as to which the Agent, for the benefit of
the Agent and the Lenders, also has a Lien, and (iii) so long as the
obligations under such Hedging Agreement and the indebtedness,
liabilities, and obligations of the Credit Parties hereunder and under
the other Credit Documents shall share pari passu in the collateral
subject to such Liens;
(c) Liens (other than Liens created or imposed under ERISA)
for taxes, assessments, or governmental charges or levies not yet due
or Liens for taxes being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with
GAAP have been established (and as to which the Property subject to any
such Lien is not yet subject to foreclosure, sale, or loss on account
thereof);
(d) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, and materialmen and other Liens imposed by law
or pursuant to customary reservations or retentions of title arising in
the ordinary course of business, provided that such Liens secure only
amounts not yet due and payable or, if due and payable, are unfiled and
no other action has been taken to enforce the same or are being
contested in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been established (and
as to which the Property subject to any such Lien is not yet subject to
foreclosure, sale, or loss on account thereof);
(e) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made by any member of the Consolidated Group in
the ordinary course of business in connection with workers'
compensation, unemployment insurance, and other types of social
security, or to secure the performance of tenders, statutory
obligations, bids, leases, government contracts, performance and
return-of-money bonds, and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(f) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the attachments or
the judgments secured shall, within thirty (30) days after the entry
thereof, have been discharged or execution thereof stayed pending
appeal, or shall have been discharged within thirty (30) days after the
expiration of any such stay;
Page 25
(g) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title, and other
similar charges or encumbrances not, in any material respect, impairing
the use of the encumbered Property for its intended purposes;
(h) Liens on Property of any Person securing purchase money
Indebtedness (including Capital Leases and Synthetic Leases) of such
Person to the extent permitted under Section 7.1(c), provided that any
such Lien attaches only to the Property financed or leased and such
Lien attaches concurrently with or within ninety (90) days after the
acquisition thereof;
(i) leases or subleases granted to others not interfering in
any material respect with the business of any member of the
Consolidated Group;
(j) any interest or title of a lessor under, and Liens arising
from UCC financing statements (or equivalent filings, registrations, or
agreements in foreign jurisdictions) relating to, leases not prohibited
by this Agreement;
(k) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(l) Liens deemed to exist in connection with Investments in
repurchase agreements which constitute Permitted Investments;
(m) normal and customary rights of setoff upon deposits of
cash in favor of banks or other depository institutions;
(n) Liens of a collection bank arising under Section 4-210 of
the UCC on items in the course of collection;
(o) Liens existing as of the Closing Date and set forth on
Schedule 1.1C; provided that no such Lien shall at any time be extended
to or cover any Property other than the Property subject thereto on the
Closing Date, and provided further, notwithstanding the foregoing, any
such Lien which purports to cover proceeds of consigned goods described
in clause (p) following shall not be a Permitted Lien after the
expiration of forty-five (45) days after the Closing Date;
(p) Liens on goods consigned to a Borrower in connection with
consignment arrangements, provided, that such consignment arrangement
is evidenced by a written agreement in form and substance satisfactory
to the Agent and such Lien does not attach to proceeds of such goods.
(q) extension, renewal, or replacement (or successive
extensions, renewals, or replacements), in whole or in part, of Liens
referred to in the foregoing clauses; provided that the Lien given in
connection any such extension, renewal, or replacement shall be
Page 26
limited to the property securing the Lien prior to extension, renewal,
or replacement and where such Lien secures Funded Debt, the Lien given
in connection with such extension, renewal, or replacement shall not
secure indebtedness in an amount exceeding the principal amount secured
immediately prior to the extension, renewal, or replacement;
(r) mortgage Liens securing mortgage Indebtedness permitted
under Section 7.1(g); provided that such Liens do not extend to any
Property other than the Property with the proceeds of such mortgage
Indebtedness together with any improvements thereon;
(s) Liens comprised of any exclusion or exception under any
title insurance policy provided to the Agent in accordance with the
Credit Documents (which policy shall be in form and content reasonably
satisfactory to the Agent); and
(t) Liens on equipment, Real Estate, and fixtures acquired in
connection with a Permitted Acquisition.
"Permitted Stock Repurchase" means a purchase by Xxxxxxxx'x of Capital
Stock of Xxxxxxxx'x; provided that at the time of making such purchase and
immediately after giving effect thereto (a) no Default or Event of Default
exists, (b) the Excess Availability equals or exceeds the Minimum Excess
Availability Requirement, and (c) the aggregate amount of all such repurchases
during the term of this Agreement does not exceed $ 5,000,000.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
(whether or not incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of
ERISA) which is covered by ERISA and with respect to which any member of the
Consolidated Group or any ERISA Affiliate is (or, if such plan were terminated
at such time, would under Section 4069 of ERISA be deemed to be) an "employer"
within the meaning of Section 3(5) of ERISA.
"Pro Forma Basis" means that, for purposes of determining compliance
with any provision of this Agreement, including the financial covenants set
forth in Section 6.11, on a "Pro Forma Basis", that any transaction shall be
deemed to have occurred as of the first day of the applicable measurement period
ending as of the most recent Fiscal Period end immediately preceding the date of
such transaction with respect to which the Agent has received the Required
Financial Information. As used herein, "transaction" means (a) any Acquisition
as referred to in the definition of Permitted Acquisition, (b) any payment of
investment banking fees pursuant to Section 6.1(h), (c) any Asset Disposition
allowed by Section 7.5, and (d) any Restricted Payment allowed by Section 7.7.
In connection with any calculation of the financial covenants set forth in
Section 6.11, upon giving effect to a transaction on a Pro Forma Basis (w) any
Indebtedness assumed or acquired in connection with a Permitted Acquisition (A)
shall be deemed to have been incurred as of the first day of the applicable
period and (B) if such Indebtedness has a floating or formula rate, shall have
an implied rate of interest for the applicable period (for
Page 27
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, (x) income statement items (whether positive or negative)
attributable to the Property acquired in connection with a Permitted Acquisition
shall be included beginning as of the first day of the applicable period, (y)
income statement items (whether positive or negative) attributable to the
Property disposed of in any such Asset Disposition shall be excluded, and (z)
any Indebtedness which is retired in connection with any such Asset Disposition
shall be excluded and deemed to have been retired as of the first day of the
applicable period.
"Pro Forma Compliance Certificate" means a certificate of an Executive
Officer of Xxxxxxxx'x delivered to the Agent in connection with (a) any merger
or consolidation allowed by Section 7.4, (b) any Asset Disposition allowed by
Section 7.5, or (c) any Permitted Acquisition, as applicable, and containing
reasonably detailed calculations, upon giving effect to the applicable
transaction on a Pro Forma Basis, of the EBITDA as of the most recent Fiscal
Period end preceding the date of the applicable transaction with respect to
which the Agent shall have received the Required Financial Information.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Real Property" means, with respect to any member of the Consolidated
Group, any real property (wherever located) which (a) is owned or leased by such
member of the Consolidated Group and (b) is not Excluded Property.
"Receivables Advance Rate" means sixty-five percent (65.0%); provided
that the Receivables Advance Rate shall be reduced by one percent (1.0%) for
each whole percentage that the Collateral Adjustment Percent for the Fiscal
Period ending immediately preceding the date of determination exceeds sixty-five
percent (65.0%).
"Register" has the meaning specified in Section 10.3(g).
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation Z" means Regulation Z of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
Page 28
"Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the advance or thirty (30) day
notice requirement has been waived by regulation.
"Required Financial Information" means the annual and periodic
compliance certificates and related financial statements and information
required by the provisions of Section 6.1(a), Section 6.1(b), and Section
6.1(c).
"Required Lenders" means, at any time, Lenders having more than
sixty-five percent (65.0%) of the aggregate Commitments, or if the Commitments
have been terminated, Lenders having more than sixty-five percent (65.0%) of the
aggregate principal amount of the Obligations outstanding (taking into account
in each case Participation Interests or obligations to participate therein);
provided that the Commitments of, and outstanding principal amount of
Obligations (taking into account Participation Interests therein) owing to, a
Defaulting Lender shall be excluded for purposes hereof in making a
determination of Required Lenders.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule, regulation, or ordinance (including, without
limitation, Consumer Protection Laws and Environmental Laws) or determination of
an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or to which any of its material
Property is subject.
"Reserves" means reserves that limit the availability of credit
hereunder, consisting of reserves against borrowing availability established by
the Agent from time to time in the Agent's reasonable discretion as a result of
negative forecasts and/or trends in the Borrowers' business, industry,
prospects, profits, operations, or financial condition or other issues,
circumstances or facts that could reasonably be expected to negatively and
materially impact the Collateral or the Borrowers' business, prospects, profits,
operations, industry, financial condition, or assets. Without limiting the
generality of the foregoing, the following reserves shall be deemed to be a
reasonable exercise of the Agent's discretion: (a) Bank Product Reserves; (b)
reserves for accrued, unpaid interest on the Loans; (c) reserves for rent at
leased locations; (d) reserves for customs charges; (e) reserves for dilution of
accounts; (f) reserves for warehousemen's or bailees' charges; (g) reserves for
taxes, fees, assessments, and other governmental charges which are due and
unpaid; and (h) reserves for accounts payable to any Person who has any interest
in the proceeds of the sale of any consigned goods sold by a Borrower,
notwithstanding that such interest may be a Permitted Lien hereunder.
"Restricted Payment" means (a) any dividend or other payment or
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any member of the Consolidated Group, now or hereafter
outstanding (including, without limitation, any payment in connection with any
dissolution, merger, consolidation, or disposition involving any member of the
Consolidated Group), or to the holders, in their capacity as such, of any shares
of any class of Capital Stock of any member of the Consolidated Group, now or
hereafter outstanding (other than dividends or distributions payable in the same
class of Capital Stock of the applicable
Page 29
Person or dividends or distributions payable to any Borrower (directly or
indirectly through Subsidiaries)), (b) any redemption, retirement, sinking fund
or similar payment, purchase, or other acquisition for value, direct or
indirect, of any shares of any class of Capital Stock of any member of the
Consolidated Group (including, without limitation, any Permitted Stock
Repurchase), now or hereafter outstanding, and (c) any payment made to retire,
or to obtain the surrender of, any outstanding warrants, options, or other
rights to acquire shares of any class of Capital Stock of any member of the
Consolidated Group, now or hereafter outstanding.
"Revolving Commitment" means the commitment of each Lender to make its
ratable share of Revolving Loans hereunder.
"Revolving Commitment Percentage" means, for each Lender, a fraction
(expressed as a percentage) the numerator of which is the Revolving Committed
Amount of such Lender at such time and the denominator of which is the Aggregate
Revolving Commitment Amount at such time. The Revolving Commitment Percentages
are specified in Schedule 1.1D, which may be amended by the Agent from time to
time to reflect assignments by one Lender to another Lender.
"Revolving Committed Amount" means, individually, the maximum Revolving
Commitment of each Lender, and collectively, the aggregate maximum amount of all
the Revolving Commitments of the Lenders hereunder. The Revolving Committed
Amounts are specified in Schedule 1.1D, which may be amended by the Agent from
time to time to reflect assignments by one Lender to another Lender.
"Revolving Loans" has the meaning specified in Section 2.1(a).
"Revolving Note" or "Revolving Notes" means the promissory notes of the
Borrowers, in substantially the form attached as Exhibit A, in favor of each of
the Lenders evidencing the Revolving Loans, individually or collectively, as
appropriate, as each such promissory note may be amended, restated, or otherwise
modified from time to time.
"Sale and Leaseback Transaction" means any arrangement pursuant to
which any member of the Consolidated Group, directly or indirectly, becomes
liable as lessee, guarantor, or other surety with respect to any lease, whether
an Operating Lease or a Capital Lease, of any Property (a) which such member of
the Consolidated Group has sold or transferred (or is to sell or transfer) to a
Person which is not a member of the Consolidated Group or (b) which such member
of the Consolidated Group intends to use for substantially the same purpose as
any other Property which has been sold or transferred (or is to be sold or
transferred) by such member of the Consolidated Group to another Person which is
not a member of the Consolidated Group in connection with such lease.
"Securities Exchange Act" means the Securities Exchange Act of 1934 and
the regulations promulgated thereunder.
"Securitization Transaction" means, with respect to any Person (the
"subject Person"), any financing transaction or series of financing transactions
that have been or may be entered into
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by the subject Person pursuant to which the subject Person may sell, convey, or
otherwise transfer to a Subsidiary, Affiliate, or any other Person, any accounts
receivable, notes receivable, rights to future lease payments or residuals, or
other similar rights to payment (herein, the "Securitization Receivables")
(whether such Securitization Receivables are then existing or arising in the
future) of the subject Person, and any assets related thereto, including,
without limitation, all security interests in merchandise or services financed
thereby, the proceeds of such Securitization Receivables, and other assets which
are customarily sold or in respect of which security interests are customarily
granted in connection with securitization transactions involving such assets.
"Security Agreement" means each Security Agreement, executed and
delivered by any Credit Party to secure the Total Obligations, as such agreement
may be amended, restated, or otherwise modified from time to time, and "Security
Agreements" means two or more of such agreements, collectively.
"Single Employer Plan" means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.
"Solvent" means, when used with respect to any Person, that at the time
of determination:
(a) the assets of such Person, at a fair valuation, are in
excess of the total amount of its debts (including contingent
liabilities);
(b) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured;
(c) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Stores" means FI Stores Limited Partnership, a Georgia limited
partnership, and its successors and assigns.
"Subject Properties" has the meaning specified in Section 5.16.
"Subordinated Debt" means any Indebtedness of a member of the
Consolidated Group which by its terms is expressly subordinated in right of
payment to the prior payment of the Total
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Obligations on the terms and conditions and evidenced by documentation
satisfactory to the Agent and the Required Lenders.
"Subsidiary" means, with respect to any Person (the "subject Person"),
(a) any corporation, partnership, association, limited liability company, joint
venture, or other business entity of which more than fifty percent (50.0%) of
the voting Capital Stock or other Capital Stock, is owned or controlled directly
or indirectly by the subject Person, or one or more of the Subsidiaries of the
subject person, or a combination thereof; provided that Crescent shall not be a
Subsidiary of any Credit Party unless such Credit Party (or the Credit Parties
collectively) beneficially owns or controls a majority of the Capital Stock of
Crescent having ordinary voting power (other than by reason of the happening of
a contingency) for the election of the members of the board of directors of
Crescent. Unless the context otherwise clearly requires, "Subsidiary" or
"Subsidiaries" shall refer to a Subsidiary or Subsidiaries of Xxxxxxxx'x.
"Support Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including, without limitation, any
obligation, whether or not contingent, (a) to purchase any such Indebtedness or
any Property constituting security therefor, (b) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency, or other balance sheet condition of such
other Person (including, without limitation, keep well agreements, maintenance
agreements, comfort letters, or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (c) to lease or
purchase Property, securities, or services primarily for the purpose of assuring
the holder of such Indebtedness, or (d) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount of any
Support Obligation hereunder shall be deemed to be an amount equal to the
outstanding principal amount (or maximum principal amount, if larger) of the
Indebtedness in respect of which such Support Obligation is made.
"Supporting Letter of Credit" has the meaning specified in Section
2.6(i).
"Synthetic Lease" means any synthetic lease, tax retention operating
lease, off-balance sheet loan, or similar off-balance sheet financing product
where such transaction is considered borrowed money indebtedness for tax
purposes but is classified as an Operating Lease under GAAP.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding, in the case of the Agent and each Lender, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by the Agent's or
such Lender's income in the jurisdiction (whether federal, state, or local and
including any political subdivision thereof) under the laws of which the Agent
or such Lender, as the case may be, is organized or maintains a lending office.
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"Termination Date" means August 28, 2005, or such later date as to
which the Agent, the Lenders, and the Borrowers may in their sole discretion by
written consent agree.
"Total Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrowers
and the other Credit Parties, to the Agent and/or any Lender, arising under or
pursuant to this Agreement or any of the other Credit Documents, whether or not
evidenced by any note, or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification, or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including all principal, interest, charges, expenses, fees,
attorneys' fees, filing fees, and any other sums chargeable to any Credit Party
hereunder or under any of the other Credit Documents. "Total Obligations"
includes, without limitation, (a) all Obligations now or hereafter arising and
(b) all debts, liabilities, and obligations now or hereafter arising from or in
connection with Bank Products.
"UCC" means the Uniform Commercial Code (or any successor statute), as
in effect from time to time, of the State of New York or of any other state the
laws of which are required as a result thereof to be applied in connection with
the issue of perfection of security interests; provided that to the extent that
the UCC is used to define any term herein or in any other Credit Document and
such term is defined differently in different Articles or Divisions of the UCC,
the definition of such term contained in Article or Division 9 shall govern.
"United States" means the United States of America.
"Unused Line Fee" has the meaning specified in Section 3.5(a).
"Voting Stock" means, with respect to any Person, Capital Stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
"Wholly Owned Subsidiary" of any Person means any Subsidiary 100% of
whose Voting Stock is at the time owned by such Person directly or indirectly
through other Wholly Owned Subsidiaries.
Section 1.2 Accounting Terms. Except as otherwise expressly provided
herein, all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Lenders hereunder shall be prepared, in accordance with GAAP
applied on a consistent basis. All calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with the most recent annual or periodic financial statements of the Consolidated
Group delivered pursuant to Section 6.1 (or, prior to the delivery of the first
financial statements of the Consolidated Group pursuant to Section 6.1,
consistent with the annual audited financial statements referenced in Section
5.1(a)); provided, however, if (a) the Borrowers shall object to determining
such
Page 33
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or the rules promulgated with respect thereto or (b)
the Agent or the Required Lenders shall so object in writing within sixty (60)
days after delivery of such financial statements, then such calculations shall
be made on a basis consistent with the most recent financial statements
delivered by the Borrowers to the Lenders as to which no such objection shall
have been made.
Section 1.3 Interpretive Provisions. Wherever used in this Agreement:
(a) The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms. Terms used herein
that are defined in the UCC and are not otherwise defined herein shall
have the meanings specified therefor in the UCC.
(b) The words "hereof," "herein," "hereunder," and similar
words refer to this Agreement as a whole and not to any particular
provision of this Agreement. Section, Subsection, Schedule, and Exhibit
references are to this Agreement unless otherwise specified. The term
"documents" includes any and all instruments, documents, agreements,
certificates, indentures, notices, and other writings, however
evidenced. The term "including" is not limiting and means "including,
without limitation." In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including," the words "to" and "until" each mean "to but excluding"
and the word "through" means "to and including." The word "or" is not
exclusive.
(c) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments,
restatements, and other modifications thereto, but only to the extent
such amendments, restatements, and other modifications are not
prohibited by the terms of any Credit Document, and (ii) references to
any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing, or interpreting the statute or regulation.
(d) This Agreement and the other Credit Documents may use
several different limitations, tests, or measurements to regulate the
same or similar matters. All such limitations, tests, and measurements
are cumulative and shall each be performed in accordance with their
terms.
(e) For purposes of Section 8.1, a breach of a financial
covenant contained in Section 6.11 shall be deemed to have occurred as
of any date of determination thereof by the Agent or as of the last day
of any specified measuring period, regardless of when the Financial
Statements reflecting such breach are delivered to the Agent and the
Lenders.
(f) This Agreement and the other Credit Documents are the
result of negotiations among and have been reviewed by counsel to the
Agent, each Lender, and the Credit Parties and are the products of all
parties. Accordingly, this Agreement and the other Credit Documents
shall not be construed against the Agent, the Lender, or the Credit
Parties merely because of their respective involvement in their
preparation.
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ARTICLE 2
CREDIT FACILITIES
Section 2.1 Commitments.
(a) Revolving Commitment. During the Commitment Period,
subject to the terms and conditions hereof, each Lender severally
agrees to make revolving loans (the "Revolving Loans"; such Revolving
Loans to include Non-Ratable Loans made by Bank of America pursuant to
Section 2.7(e)) to the Borrowers in the amount of such Lender's
Revolving Commitment Percentage of such Revolving Loans for the
purposes hereinafter set forth; provided that (i) with regard to the
Lenders collectively, the aggregate principal amount of Obligations
(excluding Discretionary Over-Advances) at any time shall not exceed
the lesser of (A) the Aggregate Revolving Commitment Amount or (B) the
Borrowing Base, and (ii) with regard to each Lender individually, such
Lender's Revolving Commitment Percentage of Obligations (excluding
Discretionary Over-Advances) at any time shall not exceed the lesser of
(A) such Lender's Revolving Committed Amount or (B) such Lender's
Revolving Commitment Percentage of the Borrowing Base. Notwithstanding
the foregoing, the Agent may make Revolving Loans in its discretion
("Discretionary Over-Advances") for and on behalf of the Lenders in an
aggregate principal amount outstanding at any time not to exceed
$5,000,000, even though (1) a Default or Event of Default then exists
and has not been waived or cured, (2) the other conditions to
Extensions of Credit under Section 4.2 have not or cannot be satisfied,
or (3) after giving effect thereto, the Obligations then outstanding
will be in excess of the Borrowing Base (but not in excess of the
Aggregate Revolving Commitment Amount), if in the reasonable business
judgment of the Agent, such advances are necessary or advisable for the
protection or preservation of the Collateral or in order to improve the
likelihood of repayment of the Total Obligations (including financing
working capital needs). The Agent will give prompt notice to the
Lenders of any Discretionary Over-Advances and the circumstances giving
rise thereto, and each Lender will promptly reimburse the Agent for its
ratable share of such advance. The right and ability of the Agent to
make Discretionary Over-Advances hereunder are subject to revocation by
written notice to the Agent from the Required Lenders. Revolving Loans
may consist of Base Rate Loans or Eurodollar Loans, or a combination
thereof, as the Borrowers may request, and may be repaid and reborrowed
in accordance with the provisions hereof.
(b) Letter of Credit Commitment. During the Commitment Period,
subject to the terms and conditions hereof and of the LOC Documents, if
any, and such other terms and conditions which the Issuing Lender may
reasonably require, the Agent shall cause the Issuing Lender to issue,
and the Lenders shall participate severally in (to the extent of their
respective Revolving Commitment Percentages), such standby and
documentary Letters of Credit as any of the Borrowers may request, in
form acceptable to the Issuing Lender, for the purposes hereinafter set
forth; provided that (i) the aggregate amount of LOC Obligations shall
not exceed $10,000,000 at any time (the "LOC Committed Amount"), (ii)
with regard to the Lenders collectively, the aggregate principal amount
of
Page 35
Obligations (excluding Discretionary Over-Advances) at any time shall
not exceed the lesser of (A) the Aggregate Revolving Commitment Amount
or (B) the Borrowing Base, and (iii) with regard to each Lender
individually, such Lender's Revolving Commitment Percentage of
Obligations (excluding Discretionary Over-Advances) at any time shall
not exceed the lesser of (A) such Lender's Revolving Committed Amount
or (B) such Lender's Revolving Commitment Percentage of the Borrowing
Base.
Section 2.2 Method of Borrowing.
(a) Notice of Request for Extensions of Credit. Any Borrower
may request an Extension of Credit hereunder by written notice (or
telephonic notice promptly confirmed in writing) as follows:
(i) Revolving Loans. In the case of Revolving Loans,
to the Agent not later than 10:00 a.m. (Pasadena, California
time) on the Business Day of the requested borrowing in the
case of Base Rate Loans, and on the third Business Day prior
to the date of the requested borrowing in the case of
Eurodollar Loans. Each such request for borrowing shall be
irrevocable and shall specify (A) that a Revolving Loan is
requested, (B) the date of the requested borrowing (which
shall be a Business Day), (C) the aggregate principal amount
to be borrowed, and (D) whether the borrowing shall be
comprised of Base Rate Loans, Eurodollar Loans, or a
combination thereof, and if Eurodollar Loans are requested,
the duration of the Interest Period(s) therefor.
(ii) Letters of Credit. The Borrowers must notify the
Agent of any request for issuance of a Letter of Credit by
10:00 a.m. (Pasadena, California time) at least three (3)
Business Days prior to the proposed issuance date. Such notice
shall be irrevocable and must specify the original face amount
of the Letter of Credit requested, the Business Day of
issuance of such requested Letter of Credit, whether such
Letter of Credit may be drawn in a single or in partial draws,
the Business Day on which the requested Letter of Credit is to
expire, the purpose for which such Letter of Credit is to be
issued, and the beneficiary of the requested Letter of Credit.
The Borrowers shall attach to such notice the proposed form of
the Letter of Credit.
(b) Minimum Amounts. Each request for a Revolving Loan which
is a Eurodollar Loan (including Continuations and Conversions) shall be
in a minimum principal amount of $5,000,000 and integral multiples of
$1,000,000 in excess thereof.
(c) Information Not Provided. If in connection with any such
request for a Loan, the requesting Borrower shall fail to specify (i)
an applicable Interest Period in the case of a Eurodollar Loan, such
Borrower shall be deemed to have requested an Interest Period of one
month, or (ii) the type of Loan requested, such Borrower shall be
deemed to have requested a Base Rate Loan.
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(d) Maximum Number of Eurodollar Loans. No more than seven (7)
borrowings of Eurodollar Loans shall be outstanding at any time. For
purposes hereof, Eurodollar Loans with separate or different Interest
Periods will be considered as separate Eurodollar Loans even if their
Interest Periods expire on the same date.
Section 2.3 Interest. Subject to Section 2.8 and Section 3.1, the Loans
and other Total Obligations shall bear interest at a per annum rate, payable in
arrears on each applicable Interest Payment Date (or at such other times as may
be specified herein), as follows:
(a) Base Rate Loans. During such periods as the Loans shall be
comprised of Base Rate Loans, the Adjusted Base Rate;
(b) Eurodollar Loans. During such periods as the Loans shall
be comprised of Eurodollar Loans, the Adjusted Eurodollar Rate; and
(c) Other Total Obligations. At all times for any other Total
Obligations which remain unpaid, the Adjusted Base Rate.
Section 2.4 Repayment. The Borrowers shall repay the outstanding
principal balance of the Loans, together with all other Total Obligations,
including all accrued and unpaid interest thereon, on the Termination Date. In
addition, and without limiting the generality of the foregoing, upon demand the
Borrowers shall pay to the Agent, for the account of the Lenders, the amount, if
any and without duplication, by which the Obligations exceed the lesser of the
Borrowing Base or the aggregate Revolving Commitments.
Section 2.5 Notes. The Borrowers shall execute and deliver to each
Lender a Revolving Note. Each Revolving Note shall be in the principal amount of
the applicable Lender's Revolving Committed Amount, dated as of the Closing Date
or the date of any assignment of a portion of any Lender's Revolving Commitment.
Each Revolving Note shall represent the obligation of the Borrowers to pay the
amount of the applicable Lender's Revolving Committed Amount, or, if less, such
Lender's Revolving Commitment Percentage of the aggregate unpaid principal
amount of all Revolving Loans made to the Borrowers together with interest
thereon as prescribed in this Agreement.
Section 2.6 Additional Provisions Relating to Letters of Credit.
(a) Amounts Outside Expiration Date. The Agent shall not have
any obligation to cause the Issuing Lender to issue any Letter of
Credit at any time if: (i) the maximum face amount of the requested
Letter of Credit is greater than the unused portion of the aggregate
LOC Committed Amount at such time; (ii) the maximum undrawn amount of
the requested Letter of Credit and all commissions, fees, and charges
due from the Borrowers in connection with the opening thereof exceeds
the lesser of (A) the Borrowing Base or the Aggregate Revolving
Commitment Amount, minus (B) the Obligations at such time; or (iii)
such Letter of Credit has an expiration date later than (A) the
Termination Date or (B) more than twelve (12) calendar months from the
date of issuance (except as any Letter of Credit may be extended
pursuant to an "evergreen" or
Page 37
automatic renewal provision, provided that any such extension shall not
be for an expiration date beyond the Termination Date).
(b) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in
Article 4, the obligation of the Agent to cause the Issuing Lender to
issue any Letter of Credit is subject to the following conditions
precedent having been satisfied in a manner reasonably satisfactory to
the Agent:
(i) the Borrowers shall have delivered to the Issuing
Lender, at such times and in such manner as the Issuing Lender
may prescribe, an application in form and substance
satisfactory to the Issuing Lender and reasonably satisfactory
to the Agent for the issuance of the Letter of Credit and such
other documents as may be required pursuant to the terms
thereof, and the form, terms, and purpose of the proposed
Letter of Credit shall be satisfactory to the Agent and the
Issuing Lender (provided that in the event any term of such
application or any other document is inconsistent with the
terms of this Agreement the terms of this Agreement shall be
controlling); and
(ii) as of the date of issuance, no order of any
court, arbitrator, or Governmental Authority shall purport by
its terms to enjoin or restrain money center banks generally
from issuing letters of credit of the type and in the amount
of the proposed Letter of Credit, and no law, rule, or
regulation applicable to money center banks generally and no
request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over money
center banks generally shall prohibit, or request that the
Issuing Lender refrain from, the issuance of letters of credit
generally or the issuance of such proposed Letters of Credit.
(c) Issuance of Letters of Credit.
(i) Responsibilities of the Agent; Issuance. The
Agent shall determine, as of the Business Day immediately
preceding the requested issuance date of the Letter of Credit
set forth in the notice from the Borrower pursuant to Section
2.2(a)(ii), whether the conditions set forth in Section 2.6(a)
have been met as of such date. If the Agent determines that
such conditions are met, the Agent shall cause the Issuing
Lender to issue the requested Letter of Credit on the
requested issuance date so long as the other conditions hereof
are met.
(ii) Extensions and Amendments. The Agent shall not
be obligated to cause the Issuing Lender to extend or amend
any Letter of Credit issued pursuant hereto unless the
requirements of this Section 2.6 are met as though a new
Letter of Credit were being requested and issued. With respect
to any Letter of Credit which contains any "evergreen" or
automatic renewal provision, each Lender shall be deemed to
have consented to any such extension or renewal unless such
Lender shall have provided to the Agent, written notice that
it declines to consent to any
Page 38
such extension or renewal at least thirty (30) days prior to
the date on which the Issuing Lender is entitled to decline to
extend or renew the Letter of Credit; provided that,
notwithstanding the foregoing, if all of the requirements of
this Section 2.6 are met and no Default or Event of Default
has occurred and is continuing, no Lender may decline to
consent to any such extension or renewal.
(d) Payments Pursuant to Letters of Credit. The Borrowers
agree to reimburse the Issuing Lender promptly upon demand for any draw
under any Letter of Credit and to pay the Issuing Lender promptly upon
demand the amount of all other charges and fees payable to the Issuing
Lender under or in connection with any Letter of Credit when due,
irrespective of any claim, setoff, defense, or other right which the
Borrowers may have at any time against the Issuing Lender or any other
Person. Each drawing under any Letter of Credit shall constitute a
request by the Borrower for an borrowing of a Base Rate Loan in the
amount of such drawing. The Funding Date with respect to such borrowing
shall be the date of such drawing.
(e) Indemnification; Exoneration; Power of Attorney.
(i) Indemnification. The Borrowers agree to protect,
indemnify, pay, and save the Lenders, the Agent, and the
Issuing Lender harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges, and
expenses (including attorneys' fees and expenses) which any
Lender, the Agent, or the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of the
issuance of any Letter of Credit except to the extent that it
shall be determined in a final, nonapealable judgment by a
court of competent jurisdiction that any such claims, demands,
liabilities, damages, losses, costs, charges, and expenses
resulted from the gross negligence or willful misconduct of
the Lenders, the Agent, or the Issuing Lender, respectively.
The Borrowers' obligations under this Section 2.6(e) shall
survive payment of all of the other Total Obligations.
(ii) Assumption of Risk by the Borrowers. As among
the Borrowers, the Lenders, the Agent, and the Issuing Lender,
the Borrowers assume all risks of the acts and omissions of,
or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and
not in limitation of the foregoing, the Lenders, the Agent,
and the Issuing Lender shall not be responsible for: (A) the
form, validity, sufficiency, accuracy, genuineness, or legal
effect of any document submitted by any Person in connection
with the application for and issuance of and presentation of
drafts with respect to any of the Letters of Credit, even if
it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged; (B) the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) the failure of the beneficiary
of any Letter of Credit to comply duly with conditions
required in order to draw upon such Letter of Credit; (D)
errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph,
Page 39
telex, or otherwise, whether or not they be in cipher unless
such errors, omissions, interruptions, or delays are the
result of the gross negligence or willful misconduct of the
Issuing Lender, (E) errors in interpretation of technical
terms; (F) any loss or delay in the transmission or otherwise
of any document required in order to make a drawing under any
Letter of Credit or of the proceeds thereof unless such loss
or delay is the result of the gross negligence or willful
misconduct of the Lender; (G) the misapplication by the
beneficiary of any Letter of Credit of the proceeds of any
drawing under such Letter of Credit; (H) any consequences
arising from causes beyond the control of the Lenders or the
Agent, including any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto
Governmental Authority; or (I) the Issuing Lender's honor of a
draw for which the draw or any certificate fails to comply
with the terms of the Letter of Credit unless such failure to
comply is the result of the gross negligence or willful
misconduct of the Issuing Lender. None of the foregoing shall
affect, impair, or prevent the vesting of any rights or powers
of the Agent, any Lender, or the Issuing Lender under this
Section 2.6(e).
(iii) Exoneration. Without limiting the foregoing, no
action or omission whatsoever by the Agent or any Lender
(excluding the Issuing Lender acting in such capacity) under
or in connection with any of the Letters of Credit or any
related matters shall result in any liability of the Agent or
any Lender to the Borrowers, or relieve the Borrowers of any
of their obligations hereunder to any such Person.
(iv) Rights Against Issuing Lender. Nothing contained
in this Agreement is intended to limit the Borrowers' rights,
if any, with respect to the Issuing Lender which arise as a
result of the letter of credit application and related
documents executed by and between the Borrowers and the
Issuing Lender.
(v) Account Party. The Borrowers hereby authorize and
direct the Issuing Lender to name any Borrower as the "Account
Party" in any Letter of Credit and to deliver to the Agent all
instruments, documents, and other writings and property
received by the Issuing Lender pursuant to each such Letter of
Credit, and to accept and rely upon the Agent's instructions
and agreements with respect to all matters arising in
connection with each such Letter of Credit or the application
therefor.
(vi) Power of Attorney. In connection with all
inventory financed by any Letter of Credit, the Borrowers
hereby appoint the Agent, or the Agent's designee, as its
attorney, with full power and authority: (A) to sign and/or
endorse any Borrower's name upon any warehouse or other
receipts; (B) to sign any Borrower's name on bills of lading
and other negotiable and non-negotiable documents; (C) to
clear inventory through customs in the Agent's or any
Borrower's name, and to sign and deliver to customs officials
powers of attorney in any Borrower's name for such purpose;
(D) to complete in any Borrower's or the Agent's name, any
order, sale, or transaction, obtain the necessary documents
Page 40
in connection therewith, and collect the proceeds thereof; and
(E) to do such other acts and things as are necessary in order
to enable the Agent to obtain possession or control of such
inventory and to obtain payment of the Total Obligations.
Neither the Agent nor its designee, as any Borrower's
attorney, will be liable for any acts or omissions, nor for
any error of judgment or mistakes of fact or law other than
for gross negligence or willful misconduct. This power, being
coupled with an interest, is irrevocable until all Total
Obligations have been paid and satisfied.
(vii) Control of Inventory. In connection with all
inventory financed by Letters of Credit, the Borrowers will,
at the Agent's request, instruct all suppliers, carriers,
forwarders, customs brokers, warehouses, or others receiving
or holding cash, checks, inventory, documents, or instruments
in which the Agent holds a security interest to deliver them
to the Agent and/or subject to the Agent's order, and if they
shall come into any Borrower's possession, to deliver them,
upon request, to the Agent in their original form. The
Borrowers shall also, at the Agent's written request,
designate the Agent as the consignee on all bills of lading
and other negotiable and non-negotiable documents.
(f) Participation. Each Lender, with respect to the Existing
Letters of Credit, hereby purchases a participation interest in such
Existing Letters of Credit, and with respect to Letters of Credit
issued on or after the Closing Date, upon issuance of a Letter of
Credit, shall be deemed to have purchased without recourse a risk
participation from the Issuing Lender in such Letter of Credit and the
obligations arising thereunder, in each case in an amount equal to such
Lender's pro rata share of the obligations under such Letter of Credit
(based on the Revolving Commitment Percentages of such Lender) and
shall absolutely, unconditionally, and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to the Issuing
Lender therefor and discharge when due, such Lender's pro rata share of
the obligations arising under such Letter of Credit. Without limiting
the scope and nature of each Lender's participation in any Letter of
Credit, to the extent that the Issuing Lender has not been reimbursed
as required hereunder or under any such Letter of Credit, each Lender
shall pay to the Issuing Lender its pro rata share of such unreimbursed
drawing in same day funds pursuant to the provisions of clause (c)
following. The obligation of each Lender to reimburse the Issuing
Lender shall be absolute and unconditional and shall not be affected by
the occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or
otherwise impair the obligation of the Borrowers to reimburse the
Issuing Lender under any Letter of Credit, together with interest as
hereinafter provided.
(g) Uniform Customs and Practices. The Issuing Lender may have
the Letters of Credit be subject to The Uniform Customs and Practice
for Documentary Credits (the "UCP") or the International Standby
Practices 1998 (the "ISP98"), in either case as published as of the
date of issue by the International Chamber of Commerce, in which case
the UCP or the ISP98, as applicable, may be incorporated therein and
deemed in all respects to be a part thereof.
Page 41
(h) Responsibility of Issuing Lender. It is expressly
understood and agreed that the obligations of the Issuing Lender
hereunder to the Lenders are only those expressly set forth in this
Agreement and that the Issuing Lender shall be entitled to assume that
the conditions precedent set forth in Section 4.2 have been satisfied
unless it shall have been notified by the Borrowers or a Lender (other
than the Issuing Lender in its capacity as the Agent or a Lender) that
any such condition precedent has not been satisfied; provided, however,
that nothing set forth in this Section 2.6 shall be deemed to prejudice
the right of any Lender to recover from the Issuing Lender any amounts
made available by such Lender to the Issuing Lender pursuant to this
Section 2.6 in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit
constituted gross negligence or willful misconduct on the part of the
Issuing Lender.
(i) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 2.1(b), any Letter of Credit
is outstanding upon the termination of this Agreement, then upon such
termination the Borrowers shall deposit with the Agent with respect to
each such Letter of Credit then outstanding, as the Agent in its
discretion shall specify, either (i) a standby letter of credit (a
"Supporting Letter of Credit") in form and substance satisfactory to
the Agent, issued by an issuer satisfactory to the Agent in an amount
equal to the greatest amount for which such Letter of Credit may be
drawn plus any fees and expenses associated with such Letter of Credit,
under which Supporting Letter of Credit the Agent is entitled to draw
amounts necessary to reimburse the Agent and the Lenders for payments
to be made by the Agent and the Lenders under such Letter of Credit and
any fees and expenses associated with such Letter of Credit or (ii)
cash in an amount necessary to reimburse the Agent and the Lenders for
payments to be made by the Agent and the Lenders under such Letter of
Credit and any fees and expenses associated with such Letter of Credit.
Such Supporting Letter of Credit or deposit of cash shall be held by
the Agent, for the benefit of the Agent and the Lenders, as security
for, and to provide for the payment of, the aggregate undrawn amount of
such Letters of Credit remaining outstanding.
Section 2.7 Additional Provisions Relating to Revolving Loans.
(a) Disbursement. The Agent is authorized and directed by the
Borrowers to transfer the proceeds of the Loans requested hereunder to
an account maintained with Bank of America as specified by the
Borrowers (the "Designated Account"). The Borrowers may designate a
replacement Designated Account from time to time by written notice to
the Agent. Any designation by the Borrowers of the Designated Account
must be reasonably acceptable to the Agent.
(b) Reliance Upon Authority; No Liability. The Agent is
entitled to rely conclusively on any individual's request for
Extensions of Credit on behalf of any Borrower, so long as the proceeds
thereof are to be transferred to the Designated Account. The Agent
shall have no duty to verify the identity of any individual
representing himself or herself as a person authorized by the Borrowers
to make such requests on their behalf. The Agent shall not incur any
liability to the Borrowers as a result of acting upon any
Page 42
notice referred to in Section 2.2, which the Agent reasonably believes
to have been given by an officer or other person duly authorized by the
Borrowers to request Extensions of Credit on behalf of the Borrowers or
for otherwise acting under this Section 2.7. The crediting of Loans to
the Designated Account shall conclusively establish the obligation of
the Borrowers to repay such Loans as provided herein.
(c) The Agent's Election. Subject to the requirements of
Section 2.7(e), promptly after receipt of a request for an Extension of
Credit (other than a request for a Eurodollar Loan) in compliance with
Section 2.2(a), the Agent shall elect in its discretion to have the
terms of Section 2.7(d) or Section 2.7(e) apply to such requested
borrowing. If Bank of America declines in its sole discretion to make a
Non-Ratable Loan pursuant to Section 2.7(e), the terms of Section
2.7(d) shall apply to the requested borrowing.
(d) Making of Revolving Loans. If the Agent elects to have the
terms of this Section 2.7(d) apply to a requested borrowing or if the
requested borrowing is for a Eurodollar Loan, then promptly after
receipt of a Notice of Borrowing or telephonic notice in lieu thereof,
the Agent shall notify the Lenders by telecopy, telephone, or e-mail of
the requested borrowing. Subject to satisfaction of the applicable
conditions precedent set forth in Article 4, each Lender shall transfer
its Revolving Commitment Percentage of the requested borrowing to the
Agent in immediately available funds, to the account from time to time
designated by the Agent, not later than 12:00 noon (Pasadena,
California time) on the applicable Funding Date. After the Agent's
receipt of the proceeds of such requested borrowing, the Agent shall
make the proceeds of such requested borrowing available to the
applicable Borrower on the applicable Funding Date by transferring same
day funds to the Designated Account.
(e) Making of Non-Ratable Loans. Subject to Section 2.7(c), if
the Agent elects, with the consent of Bank of America, to have the
terms of this Section 2.7(e) apply to a requested borrowing, Bank of
America shall make a Loan in the amount of such requested borrowing
available to the applicable Borrower on the applicable Funding Date by
transferring same day funds to the Designated Account. Each Revolving
Loan made solely by Bank of America pursuant to this Section 2.7(e) is
referred to hereinafter as a "Non-Ratable Loan," and such Loans are
collectively referred to as the "Non-Ratable Loans." Each Non-Ratable
Loan shall be subject to all the terms and conditions applicable to
other Loans except that all payments thereon shall be payable to Bank
of America solely for its own account. The aggregate amount of
Non-Ratable Loans outstanding at any time shall not exceed $5,000,000.
The Agent shall not request Bank of America to make any Non-Ratable
Loan if the Agent has received written notice from any Lender that one
or more of the applicable conditions precedent set forth in Article 4
will not be satisfied on the requested Funding Date for the applicable
borrowing. The Non-Ratable Loans shall be secured by the Agent's Liens
in and to the Collateral and shall constitute Base Rate Loans and
Obligations hereunder.
Section 2.8 Maximum Interest Rate. If any of the interest rates set
forth in Section 2.3 and Section 3.1 (collectively herein, the "Interest Rate"),
absent the limitation set forth in this Section 2.8, would have exceeded the
Maximum Rate, then the Interest Rate shall be the
Page 43
Maximum Rate, and, if in the future, the Interest Rate would otherwise
be less than the Maximum Rate, then the Interest Rate shall remain at
the Maximum Rate until such time as the amount of interest paid
hereunder equals the amount of interest which would have been paid if
the same had not been limited by the Maximum Rate. In the event that,
upon payment in full of the Total Obligations, the total amount of
interest paid or accrued under the terms of this Agreement and the
other Credit Documents is less than the total amount of interest which
would, but for this Section 2.8, have been paid or accrued if the
Interest Rate otherwise set forth in this Agreement had at all times
been in effect, then the Borrowers shall, to the extent permitted by
Requirements of Law, pay the Agent, for the account of the Lenders, an
amount equal to the excess of (a) the lesser of (i) the amount of
interest which would have been paid or accrued if the Maximum Rate had,
at all times, been in effect or (ii) the amount of interest which would
have been paid or accrued had the interest rate otherwise set forth in
this Agreement, at all times, been in effect over (b) the amount of
interest actually paid or accrued under this Agreement. Each of the
Agent, each Lender, the Issuing Lender, and each of the Borrowers
acknowledges, agrees, and declares that it is its intention to
expressly comply with all Requirements of Law in respect of limitations
on the amount or rate of interest that can legally be contracted for,
charged, or received under or in connection with the Credit Documents.
Notwithstanding anything to the contrary contained in any Credit
Document (even if any such provision expressly declares that it
controls all other provisions of the Credit Documents), in no
contingency or event whatsoever shall the amount of interest (including
the aggregate of all charges, fees, benefits, or other compensation
which constitutes interest under any applicable law) under the Credit
Documents paid by the Borrowers, received by the Agent, any Lender, or
the Issuing Lender or agreed to be paid by the Borrowers, or requested
or demanded to be paid by the Agent, any Lender, or the Issuing Lender
exceed the Maximum Rate, and all provisions of the Credit Documents in
respect of the contracting for, charging, or receiving compensation for
the use, forbearance, or detention of money shall be limited as
provided by this Section 2.8. In the event any such interest is paid to
the Agent, any Lender, or the Issuing Lender by the Borrowers in an
amount or at a rate which would exceed the Maximum Rate, the Agent,
such Lender, or the Issuing Lender, as the case may be, shall
automatically apply such excess to any unpaid amount of the Total
Obligations other than interest, in the inverse order of maturity, or
if the amount of such excess exceeds said unpaid amount, such excess
shall be paid to the Borrowers, as applicable. All interest paid, or
agreed to be paid, by the Borrowers, or taken, reserved, or received by
the Agent, any Lender, or the Issuing Lender, shall be amortized,
prorated, spread, and allocated in respect of the Total Obligations
throughout the full term of this Agreement. Notwithstanding any
provision contained in any of the Credit Documents, or in any other
related documents executed pursuant hereto, neither the Agent, any
Lender, or the Issuing Lender shall ever be entitled to charge,
receive, take, reserve, collect, or apply as interest any amount which,
together with all other interest under the Credit Documents would
result in a rate of interest under the Credit Documents in excess of
the Maximum Rate and, in the event the Agent, any Lender, or the
Issuing Lender ever charges, receives, takes, reserves, collects, or
applies any amount in respect of the Borrowers that otherwise would,
together with all other interest under the Credit Documents, be in
excess of the Maximum Rate, such amount shall automatically be deemed
to be applied in reduction of the unpaid principal balance of the Total
Obligations (other than interest), if such principal balance is paid in
full, any remaining excess shall forthwith be paid to the Borrowers, as
applicable. The Borrowers, the Agent, the Lenders, and the Issuing
Lender shall, to the
Page 44
maximum extent permitted under any Requirement of Law, (A) characterize any
non-principal payment as a standby fee, commitment fee, prepayment charge,
delinquency charge, expense, or reimbursement for a third-party expense rather
than as interest and (B) exclude prepayments, acceleration, and the effects
thereof. Nothing in any Credit Document shall be construed or so operate as to
require or obligate the Borrowers to pay any interest, fees, costs, or charges
greater than is permitted by any Requirement of Law. Subject to the foregoing,
the Borrowers hereby agree that the actual effective rate of interest from time
to time existing under the Credit Documents, including all amounts agreed to by
the Borrowers or charged or received by the Agent, the Lenders, or the Issuing
Lender pursuant to and in accordance with the Credit Documents, which may be
deemed to be interest under any Requirement of Law, shall be deemed to be a rate
which is agreed to and stipulated by the Borrowers and the Lenders in accordance
with Requirements of Law.
ARTICLE 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
Section 3.1 Default Rate. Subject to Section 2.8, during the existence
of an Event of Default, upon the election of the Agent or the Required Lenders
(a) the principal of and, to the extent permitted by law, interest on the Loans
and any other amounts owing hereunder or under the other Credit Documents shall
bear interest, payable on demand, at a per annum rate two percent (2.00%)
greater than the rate which would otherwise be applicable (or if no rate is
applicable, whether in respect of interest, fees, or other amounts, then the
Adjusted Base Rate plus two percent (2.00%)) and (b) the Letter of Credit Fee
shall accrue at a per annum rate two percent (2.00%) greater than the rate which
would otherwise be applicable.
Section 3.2 Continuation and Conversion. The Borrowers shall have the
option, on any Business Day, to continue existing Loans into a subsequent
permissible Interest Period (a "Continuation") or to convert Loans into Loans of
another interest rate type (a "Conversion"); provided, however, that (a)
Eurodollar Loans may be Continued as Eurodollar Loans for new Interest Periods
only on the last day of the Interest Period applicable thereto, (b) Eurodollar
Loans may be paid prior to the last day of the relevant Interest Period or
Converted into Base Rate Loans only upon payment of the amounts determined in
accordance with Section 3.6(d), (c) without the consent of the Required Lenders,
Eurodollar Loans may be Continued, and Base Rate Loans may be Converted into
Eurodollar Loans, only if the conditions precedent set forth in Section 4.2 are
satisfied on the date of Continuation or Conversion, (d) Loans Continued as, or
Converted into, Eurodollar Loans shall be subject to the terms of the definition
of "Interest Period" and shall be in such minimum amounts as provided in Section
2.2(b), and (e) any request for Continuation of a Eurodollar Loan or Conversion
of a Base Rate Loan into a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month. Each such Continuation or Conversion shall be effected by a Borrower by
giving a Notice of Continuation/Conversion (or telephonic notice promptly
confirmed in writing) to the office of the Agent specified in Section 10.1, or
at such other office as the Agent may designate in writing, prior to 10:00 a.m.
(Pasadena, California time) on the Business Day of, in the case of the
Conversion of a Eurodollar Loan into a Base Rate Loan, and on the third Business
Day prior to, in the case of the Continuation of a Eurodollar Loan as, or
Conversion of a Base Rate Loan
Page 45
into, a Eurodollar Loan, the date of the proposed Continuation or Conversion,
specifying the date of the proposed Continuation or Conversion, the Loans to be
so Continued or Converted, the types of Loans into which such Loans are to be
Converted and, if appropriate, the applicable Interest Periods with respect
thereto. Each request for Continuation or Conversion shall be irrevocable and
shall constitute a representation and warranty by the Borrowers of the matters
specified in Section 4.2(a), Section 4.2(b), and Section 4.2(c). In the event
the Borrowers fail to request Continuation or Conversion of any Eurodollar Loan
in accordance with this Section or any such Conversion or Continuation is not
permitted or required by this Section then such Eurodollar Loan shall, at the
end of the Interest Period applicable thereto, be automatically Converted to a
Base Rate Loan. The Agent shall give each Lender notice as promptly as
practicable of any such proposed Continuation or Conversion affecting any Loan.
Section 3.3 Prepayments.
(a) Voluntary Prepayments. The Loans may be repaid in whole or
in part without premium or penalty; provided that (i) Eurodollar Loans
may be prepaid only upon three (3) Business Days prior written notice
to the Agent and must be accompanied by payment of any amounts owing
under Section 3.6, (ii) such notice shall be provided by 10:00 a.m.
(Pasadena, California time) on the date of such prepayment, in the case
of Base Rate Loans, or on the date three Business Days prior to such
prepayment, in the case of Eurodollar Loans, and (iii) partial
prepayments of the Eurodollar Loans shall be minimum principal amounts
of $5,000,000 and integral multiples of $1,000,000 in excess thereof.
(b) Mandatory Prepayments.
(i) Revolving Commitments. If at any time (A) the
aggregate principal amount of Obligations shall exceed the
lesser of (1) the Aggregate Revolving Commitment Amount or (2)
the Borrowing Base or (B) the aggregate amount of LOC
Obligations shall exceed the LOC Committed Amount, the
Borrowers shall make payment promptly on demand on the
Revolving Loans and/or to a cash collateral account in respect
of the LOC Obligations in an amount sufficient to eliminate
the difference.
(ii) Asset Dispositions. The Borrowers shall prepay
the Obligations hereunder in an amount equal to the net
proceeds of any Asset Disposition upon receipt thereof.
Prepayments under this clause (ii) shall not result in a
commitment reduction and amounts paid on account thereof may
be reborrowed subject to the availability and the other
conditions to Extensions of Credit hereunder.
(c) Application. Unless otherwise specified, prepayments on
the Obligations shall be applied first to Base Rate Loans and then to
Eurodollar Loans in direct order of Interest Period maturities.
Section 3.4 Termination of Credit Facility.
Page 46
(a) The Borrowers may terminate this Agreement upon at least
twenty (20) days prior written notice thereof to the Agent and the
Lenders, upon (i) the payment in full of all outstanding Loans,
together with accrued and unpaid interest thereon, and the cancellation
and return of all outstanding Letters of Credit (or alternatively, with
respect to each such Letter of Credit, the furnishing to the Agent, in
the Agent's discretion, of a Supporting Letter of Credit or cash
deposit, in each case in amounts and in the manner required by Section
2.6(i)), (ii) the payment in full of the early termination fee set
forth in the following sentence, (iii) the payment in full of all
reimbursable expenses and other Total Obligations together with accrued
and unpaid interest thereon, and (iv) the payment in full of any amount
due under Section 3.6. The aggregate amount of the Revolving Commitment
Amount shall not be reduced except in connection with termination of
the credit facility provided pursuant to this Agreement. Subject to
Section 2.8, if this Agreement is terminated at any time prior to the
second Anniversary Date, whether pursuant to this Section or pursuant
to Section 8.2, the Borrowers shall pay to the Agent, for the account
of the Lenders, an early termination fee determined in accordance with
the following table:
Period during which early
termination occurs Early Termination Fee
------------------------- ---------------------
On or prior to the first Anniversary Date 2.00% of the aggregate Revolving
Committed Amount
After the first Anniversary Date but on or 1.00% of the aggregate Revolving
prior to the second Anniversary Date Committed Amount
Notwithstanding the foregoing, no such early termination fee shall be
payable in the event this Agreement is terminated (A) after the first
Anniversary Date in connection with refinancing of the Total
Obligations in a transaction in which another lending group of Bank of
America or another lending group of CIT or any of their respective
Affiliates provides or arranges replacement financing or (B) more than
eighteen months after the Closing Date, in connection with a public
offering of debt or equity securities of any Credit Party either
arranged or underwritten by Bank of America, an Affiliate of Bank of
America, or another investment banking firm (provided that Bank of
America was offered the opportunity to lead such offering and has
declined to lead such offering).
(b) The term of this Agreement shall end on the Termination
Date unless sooner terminated in accordance with the terms hereof. The
Agent upon direction from the Required Lenders may terminate this
Agreement, without notice to the Credit Parties, during the existence
of an Event of Default. Upon the effective date of termination of this
Agreement for any reason whatsoever, the Total Obligations (including
all unpaid principal, accrued and unpaid interest, and any early
termination or prepayment fees but excluding indemnification
obligations to the extent no claim with respect thereto has been
asserted and remains unsatisfied) shall become immediately due and
payable and the Borrowers shall immediately arrange for the
cancellation and return of all Letters of
Page 47
Credit then outstanding or, if permitted by the Agent in its
discretion, presentation to the Agent of a Supporting Letter of Credit
or cash collateral as specified in Section 2.6(k). Notwithstanding the
termination of this Agreement, until the Total Obligations are
indefeasibly paid and performed in full in cash, the Credit Parties
shall remain bound by the terms of this Agreement and the other Credit
Documents, as applicable, and shall not be relieved of any of their
obligations hereunder or under any other Credit Document, and the Agent
and the Lenders shall retain all their rights and remedies hereunder
and under the other Credit Documents (including, without limitation,
the Agent's Liens in and all rights and remedies with respect to all
then existing and after-arising Collateral).
Section 3.5 Fees.
(a) Unused Line Fee. Subject to Section 2.8, until the Loans
have been paid in full and this Agreement terminated, the Borrowers
agree to pay to the Agent for the ratable benefit of the Lenders, in
accordance with their respective Revolving Commitment Percentages, on
the first day of each calendar month and on the Termination Date, a fee
(the "Unused Line Fee") at a per annum rate equal to the Applicable
Percentage for the Unused Line Fee multiplied by the amount by which
the Revolving Committed Amount exceeded the sum of the average daily
amount of the Revolving Loans and the average daily undrawn face amount
of all outstanding Letters of Credit during the immediately preceding
month or shorter period if calculated for the first month after the
Closing Date or on the Termination Date. For purposes of computing the
Unused Line Fee, (i) any payment received by the Agent (if received
prior to 11:00 a.m. (Pasadena, California time)) shall be deemed to be
credited to the Borrowers' loan account on the Business Day following
the date such payment is received by the Agent and (ii) Non-Ratable
Loans shall not be counted toward or considered usage under the
Revolving Committed Amount.
(b) Letter of Credit Fees. Subject to Section 2.8 and Section
3.1, the Borrowers agree to pay to the Agent, for the account of the
Lenders, in accordance with their respective Revolving Commitment
Percentages, on the first day of each calendar month and on the
Termination Date, a fee (the "Letter of Credit Fee") at a per annum
rate equal to the Applicable Percentage for Letters of Credit,
multiplied by the average daily undrawn face amount of all Letters of
Credit outstanding during the immediately preceding month or shorter
period if calculated for the first month after the Closing Date or on
the Termination Date. The Borrowers also agree to pay all reasonable
out-of-pocket costs, fees, and expenses incurred by the Issuing Lender
in connection with the application for, processing of, issuance of, or
amendment to any Letter of Credit, which costs, fees, and expenses
shall include a "fronting fee" in an amount equal to one-quarter
percent (0.25%) of the face amount of such Letter of Credit, payable to
the Issuing Lender on the date of issuance of each Letter of Credit.
(c) Administrative Fees. The Borrowers agree to pay to the
Agent, for its own account, the fees referred to in the Administrative
Agent's Fee Letter.
Page 48
Section 3.6 Taxes, Yield Protection, and Illegality.
(a) Taxes.
(i) Any and all payments by the Borrowers, or any of
them, to the Agent or any Lender under this Agreement and any
other Credit Document shall be made free and clear of, and
without deduction or withholding for, any Taxes. In addition,
subject to Section 9.10(e), the Borrowers shall pay all Other
Taxes
(ii) The Borrowers agree to indemnify and hold
harmless the Agent and each Lender for the full amount of
Taxes or Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this
Section 3.6(a)) paid by the Agent or any Lender and any
liability (including penalties, interest, additions to tax,
and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be
made within thirty (30) days after the date the Agent or any
Lender makes written demand therefor.
(iii) If the Borrowers shall be required by law to
deduct or withhold any Taxes or Other Taxes from or in respect
of any sum payable hereunder to the Agent or any Lender, then:
(A) the sum payable shall be increased as
necessary so that after making all required
deductions and withholdings (including, without
limitation, deductions and withholdings applicable to
additional sums payable under this Section 3.6(a))
the Agent or such Lender, as the case may be,
receives an amount equal to the sum it would have
received had no such deductions or withholdings been
made;
(B) the Borrowers shall make such deductions
and withholdings;
(C) the Borrowers shall pay the full amount
deducted or withheld to the relevant taxing authority
or other authority in accordance with any applicable
law; and
(D) the Borrowers shall also pay to the
Agent, for the account of each Lender, or each Lender
at the time interest is paid, all additional amounts
which the respective Lender specifies as necessary to
preserve the after-tax yield such Lender would have
received if such Taxes or Other Taxes had not been
imposed.
(iv) Within thirty (30) days after the date of any
payment by the Borrowers of Taxes or Other Taxes, the
Borrowers shall furnish the Agent the original or a certified
copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
Page 49
(v) If the Borrowers are required to pay additional
amounts to the Agent or any Lender pursuant to Section
3.6(a)(iii), then the applicable Lender shall use reasonable
efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Applicable Lending Office so as
to eliminate any such additional payment by the Borrowers
which may thereafter accrue, if such change in the judgment of
such Lender is not otherwise disadvantageous to such Lender.
(vi) For any period with respect to which a Lender
has failed to provide the Borrowers and the Agent with the
appropriate forms pursuant to Section 9.10(a) (unless such
failure is due to a change in treaty, law, or regulation
occurring subsequent to the date on which a form originally
was required to be provided), such Lender shall not be
entitled to indemnification under this Section with respect to
Taxes imposed by the United States.
(b) Illegality.
(i) If any Lender determines that the introduction of
any Requirement of Law, or any change in any Requirement of
Law, or in the interpretation or administration of any
Requirement of Law, has made it unlawful, or that any central
bank or other Governmental Authority has asserted that it is
unlawful, for such Lender or its Applicable Lending Office to
make Eurodollar Loans, then, on notice thereof by such Lender
to the Borrowers through the Agent, any obligation of such
Lender to make Eurodollar Loans shall be suspended until the
circumstances giving rise to such determination no longer
exist.
(ii) If a Lender determines that it is unlawful to
maintain any Eurodollar Loans, the Borrowers shall, upon
receipt of notice of such fact and demand from such Lender
(with a copy to the Agent), prepay in full such Eurodollar
Loans of such Lender then outstanding, together with accrued
and unpaid interest thereon and amounts required under Section
3.6(d), either on the last day of the Interest Period thereof,
if such Lender may lawfully continue to maintain such
Eurodollar Loans to such day, or immediately, if such Lender
may not lawfully continue to maintain such Eurodollar Loans.
If the Borrowers are required to so prepay any Eurodollar
Loans, then concurrently with such prepayment, the Borrowers
shall borrow from the affected Lender, in the amount of such
repayment, a Base Rate Loan.
(c) Increased Costs and Reduction of Return.
(i) If any Lender determines that due to either (A)
the introduction of or any change in the interpretation of any
Requirement of Law or (B) the compliance by such Lender with
any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of
law), there shall be any increase in the cost to such Lender
of agreeing to make or making, funding, or maintaining any
Eurodollar Loans, then the Borrowers shall be liable for, and
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shall from time to time, upon demand (with a copy of such
demand to be sent to the Agent), pay to the Agent for the
account of such Lender, additional amounts as are sufficient
to compensate such Lender for such increased costs.
(ii) If any Lender shall have determined that (A) the
introduction of any Capital Adequacy Regulation, (B) any
change in any Capital Adequacy Regulation, (C) any change in
the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or
(D) compliance by such Lender or any corporation or other
entity controlling such Lender with any Capital Adequacy
Regulation, affects or would affect the amount of capital
required or expected to be maintained by such Lender or any
corporation or other entity controlling such Lender and
(taking into consideration such Lender's or such corporation's
or other entity's policies with respect to capital adequacy
and such Lender's desired return on capital) determines that
the amount of such capital is increased as a consequence of
its Revolving Commitment, Loans, credits, or obligations under
this Agreement, then, upon demand of such Lender to the
Borrowers through the Agent, the Borrowers shall pay to such
Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender for
such increase.
(d) Funding Losses. The Borrowers shall reimburse each Lender
and hold each Lender harmless from any loss or expense which such
Lender may sustain or incur as a consequence of:
(i) the failure of the Borrowers to make on a timely
basis any payment of principal of any Eurodollar Loan;
(ii) the failure of the Borrowers to (i) borrow any
requested Eurodollar Loan, (ii) Continue any Eurodollar Loan,
or (iii) Convert a Base Rate Loan to a Eurodollar Loan after
any Borrower has given (or is deemed to have given) a Notice
of Borrowing or a Notice of Continuation/Conversion with
respect thereto (except as permitted by Section 3.6(e); or
(iii) the prepayment or other payment (including
after acceleration thereof) of any Eurodollar Loans on a day
that is not the last day of the relevant Interest Period;
including any such loss of anticipated profit and any loss or expense
arising from the liquidation or reemployment of funds obtained by such
Lender to maintain its Eurodollar Loans or from fees payable to
terminate the deposits from which such funds were obtained. The
Borrowers shall also pay any customary administrative fees charged by
any Lender in connection with the foregoing.
(e) Inability to Determine Rates. If the Agent determines that
for any reason adequate and reasonable means do not exist for
determining the Eurodollar Rate for any
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requested Interest Period with respect to a proposed Eurodollar Loan,
or that the Eurodollar Rate for any requested Interest Period with
respect to a proposed Eurodollar Loan does not adequately and fairly
reflect the cost to the Lenders of funding such Loan, the Agent will
promptly so notify the Borrowers and each Lender. Thereafter, the
obligation of the Lenders to make or maintain Eurodollar Loans
hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of a notice pursuant to the first sentence of
this Section, the Borrowers may revoke any Notice of Borrowing or
Notice of Continuation/Conversion then submitted by any of them. If the
Borrowers do not revoke any such Notice of Borrowing or Notice of
Continuation/Conversion, the Lenders shall make, Convert, or Continue
the Loans, as proposed by the Borrowers, in the amount specified in the
applicable notice submitted by the Borrowers, but such Loans shall be
made, Converted, or Continued as Base Rate Loans instead of Eurodollar
Loans.
(f) Certificates of the Agent. If any Lender claims
reimbursement or compensation under this Section 3.6, the Agent shall
determine the amount thereof and shall deliver to the Borrowers (with a
copy to the affected Lender) a certificate setting forth in reasonable
detail the amount payable to the affected Lender, and such certificate
shall be conclusive and binding on the Borrowers in the absence of
manifest error.
(g) Survival. The agreements and obligations of the Borrowers
in this Section 3.6 shall survive the payment of the Total Obligations.
Section 3.7 Pro Rata Treatment. Except to the extent otherwise provided
herein:
(a) Loans. Each Revolving Loan advance, each payment or
prepayment of principal of any Revolving Loan (other than Non-Ratable
Loans and Discretionary Over-Advances) or reimbursement obligations
arising from drawings under Letters of Credit, each payment of interest
on the Revolving Loans or reimbursement obligations arising from
drawings under Letters of Credit, each payment of early termination fee
each payment of Unused Line Fees, each payment of the Letter of Credit
Fee, each reduction of the Revolving Committed Amount (if any), and
each Continuation or Conversion of any Revolving Loan shall be
allocated pro rata among the Lenders in accordance with their
respective Revolving Commitment Percentages.
(b) Advances. No Lender shall be responsible for the failure
or delay by any other Lender in its obligation to make its ratable
share of a borrowing hereunder; provided, however, that the failure of
any Lender to fulfill its obligations hereunder shall not relieve any
other Lender of its obligations hereunder.
Section 3.8 Sharing of Payments. The Lenders agree among themselves
that, in the event that any Lender shall obtain payment in respect of any Loan,
LOC Obligations, or any other obligation owing to such Lender under this
Agreement through the exercise of a right of setoff, banker's lien, or
counterclaim, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency, or other similar law or
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otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Agreement, such Lender shall promptly purchase
from the other Lenders a Participation Interest in such Loans, LOC Obligations,
and other obligations in such amounts, and make such other adjustments from time
to time, as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim, or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by repurchase of a Participation Interest theretofore sold,
return its share of that benefit (together with its share of any accrued
interest payable with respect thereto) to each Lender whose payment shall have
been rescinded or otherwise restored. The Borrowers agree that any Lender so
purchasing such a Participation Interest may, to the fullest extent permitted by
law, exercise all rights of payment, including setoff, banker's lien, or
counterclaim, with respect to such Participation Interest as fully as if such
Lender were a holder of such Loan, LOC Obligations, or other obligation in the
amount of such Participation Interest. Except as otherwise expressly provided in
this Agreement, if any Lender or the Agent shall fail to remit to the Agent or
any other Lender an amount payable by such Lender or the Agent to the Agent or
such other Lender pursuant to this Agreement on the date when such amount is
due, such payments shall be made together with interest thereon for each date
from the date such amount is due until the date such amount is paid to the Agent
or such other Lender at a rate per annum equal to the Federal Funds Rate. If
under any applicable bankruptcy, insolvency, or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section 3.8 applies,
such Lender shall, to the extent practicable, exercise its rights in respect of
such secured claim in a manner consistent with the rights of the Lenders under
this Section 3.8 to share in the benefits of any recovery on such secured claim.
Section 3.9 Certain Limitations. The provisions of Section 3.6(a),
Section 3.6(b), Section 3.6(c), and Section 3.6(d) shall be subject to the
following:
(a) Each Lender that desires compensation or indemnification
under Section 3.6(a), Section 3.6(b), Section 3.6(c), or Section 3.6(d)
shall notify the Borrowers through the Agent of any event occurring
after the Closing Date entitling such Lender to compensation or
indemnification under any of such Sections as promptly as practicable,
but in any event within ninety (90) days after the occurrence of the
event giving rise thereto; provided that (i) if any such Lender fails
to give such notice within ninety (90) days after the occurrence of
such an event, such Lender shall only be entitled to compensation or
indemnification in respect of such event accruing under Section 3.6(a),
Section 3.6(b), Section 3.6(c), or Section 3.6(d) with respect to the
period from and after the date ninety (90) days prior to the date that
such Lender does give notice.
(b) Any notice given by a Lender pursuant to clause (a)
preceding shall certify (i) that one of the events described in Section
3.6(a), Section 3.6(b), Section 3.6(c), or Section 3.6(d) has occurred,
describing in reasonable detail the nature of such event, (ii) as to
the increased cost, reduced amount receivable, or loss or expense
resulting from such event, and (iii) as to the additional amount
demanded by such Lender, attaching a reasonably detailed explanation of
the calculation thereof. Such a certificate as to any
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compensation or indemnification payable pursuant to Section 3.6(a),
Section 3.6(b), Section 3.6(c), or Section 3.6(d), submitted by such
Lender through the Agent to the Borrowers, shall be conclusive and
binding on the parties hereto in the absence of manifest error.
(c) If any Lender requests compensation or indemnification
from the Borrowers under Section 3.6(a), Section 3.6(b), Section
3.6(c), or Section 3.6(d), the Borrowers may, at their option, within
fifteen (15) days after receipt by the Borrowers of written demand from
the affected Lender for payment of such compensation or
indemnification, notify the Agent and such affected Lender of their
intention to replace the affected Lender. So long as no Event of
Default shall have occurred and be continuing, the Borrowers may
obtain, at the Borrowers' expense, a replacement Lender (which must be
an Eligible Assignee reasonably acceptable to the Agent) for the
affected Lender. If the Borrowers obtain a replacement Lender within
ninety (90) days following notice of their intention to do so, the
affected Lender must sell and assign its loans and obligations and any
Commitments to such replacement Lender pursuant to Section 10.3, for an
amount equal to the principal balance of all Revolving Loans held by
the affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale, provided that the Borrowers
shall have paid to such affected Lender the compensation or
indemnification that it is entitled to receive under Section 3.6(a),
Section 3.6(b), Section 3.6(c), or Section 3.6(d), through the date of
such sale and assignment. Notwithstanding the foregoing, the Borrowers
shall not have the right to obtain a replacement Lender if the affected
Lender rescinds its demand for such compensation or indemnification
within fifteen (15) days following its receipt of the Borrowers' notice
of intention to replace such affected Lender. Additionally, if the
Borrowers give a notice to the Agent and an affected Lender of the
Borrowers' intention to replace such affected Lender and the Borrowers
do not so replace such affected Lender within ninety (90) days
thereafter, the Borrowers' rights under this Section 3.9(c) shall
terminate and the Borrowers shall promptly pay all compensation or
indemnification demanded by such affected Lender pursuant to Section
3.6(a), Section 3.6(b), Section 3.6(c), and Section 3.6(d).
Section 3.10 Payments, Computations, Etc.
(a) Generally. Except as otherwise specifically provided
herein, all payments hereunder shall be made to the Agent in Dollars in
immediately available funds, without setoff, deduction, counterclaim,
or withholding of any kind, at the Agent's office specified in Section
10.1 not later than 10:00 a.m. (Pasadena, California time) on the date
when due; provided that no Default or Event of Default shall be deemed
to have occurred in connection with payments made on the due date but
received after such cut-off time, even though credited for receipt on
the following Business Day. Payments received after such time shall be
deemed to have been received on the next succeeding Business Day. The
Agent may (but shall not be obligated to) debit the amount of any such
payment which is not made by such time to any ordinary deposit account
of the Borrowers or any Guarantor maintained with the Agent (with
notice to the Borrowers or such Guarantor). Each Borrower shall, at the
time it makes any payment under this Agreement, specify to
Page 54
the Agent the Loans, LOC Obligations, Fees, interest, or other amounts
payable by such Borrower hereunder to which such payment is to be
applied (and in the event that such Borrower fails so to specify, or if
such application would be inconsistent with the terms hereof, the Agent
shall distribute such payment to the Lenders in such manner as the
Agent may determine to be appropriate in respect of obligations owing
by the Borrowers hereunder, subject to the terms of Section 3.7). The
Agent will distribute such payments to such Lenders, if any such
payment is received prior to 10:00 a.m. (Pasadena, California time) on
a Business Day in like funds as received prior to the end of such
Business Day and otherwise the Agent will distribute any such payment
to such Lenders on the next succeeding Business Day. Whenever any
payment hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for
the period of such extension), except that in the case of Eurodollar
Loans, if the extension would cause the payment to be made in the next
following calendar month, then such payment shall instead be made on
the next preceding Business Day. Subject to Section 2.8, unless
expressly provided otherwise herein, all computations of interest and
fees shall be made on the basis of actual number of days elapsed over a
year of 360 days. Interest shall accrue from and include the date of
borrowing, but exclude the date of payment.
(b) Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Agreement to the contrary,
during the existence of an Event of Default, all amounts collected or
received on or in respect of the Total Obligations shall be paid over
or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket
costs and expenses (including, without limitation, reasonable
attorneys' fees) of the Agent actually incurred in connection
with enforcing the rights and remedies of the Agent and the
Lenders under the Credit Documents (including, without
limitation, exercising rights and remedies in respect of the
Collateral) and any protective advances (including any
Discretionary Over-Advances) made with respect thereto,
excluding any of the foregoing solely relating to Bank
Products;
SECOND, to payment of any fees and expenses
(including, without limitation, fees and expenses owing
pursuant to Section 10.5(a)) owed to the Agent under the
Credit Documents and not paid pursuant to clause "FIRST"
preceding, excluding any of the foregoing solely relating to
Bank Products;
THIRD, to the payment of all accrued interest and
fees on or in respect of the Obligations;
FOURTH, to the payment of the outstanding principal
amount of the Obligations hereunder (including the payment or
cash collateralization of the outstanding LOC Obligations);
FIFTH, to the payment of all amounts due with respect
to Bank Products;
Page 55
SIXTH, to all other obligations hereunder and other
obligations which shall have become due and payable under the
Credit Documents otherwise and not repaid pursuant to clauses
"FIRST" through "FIFTH" preceding; and
SEVENTH, to the payment of the surplus, if any, to
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in
the numerical order provided until exhausted prior to application to
the next succeeding category, (ii) except as otherwise provided, the
Lenders shall receive amounts ratably in accordance with their
respective pro rata share (based on the proportion that the then
outstanding Obligations held by such Lenders bears to the aggregate
amount of Obligations then outstanding) of amounts available to be
applied pursuant to clauses "THIRD", "FOURTH", and "SIXTH" preceding,
and (iii) to the extent that any amounts available for distribution
pursuant to clause "FOURTH" preceding are attributable to the issued
but undrawn amount of outstanding Letters of Credit, such amounts shall
be held by the Agent in a cash collateral account and applied (A)
first, to reimburse the Issuing Lender for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters
of Credit, to all other obligations of the types described in clauses
"THIRD" and "FOURTH" preceding in the manner provided in this Section
3.10(b).
Section 3.11 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts
evidencing each Loan made by such Lender to the Borrowers from time to
time, including the amounts of principal and interest payable and paid
to such Lender from time to time under this Agreement. Each Lender will
make reasonable efforts to maintain the accuracy of its account or
accounts and to promptly update its account or accounts from time to
time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section
10.3(g), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type,
and Interest Period of each such Loan hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable to
each Lender hereunder, and (iii) the amount of any sum received by the
Agent hereunder from or for the account of the Borrowers or any
Guarantor and each Lender's share thereof. The Agent will make
reasonable efforts to maintain the accuracy of the subaccounts referred
to in the preceding sentence and to promptly update such subaccounts
from time to time, as necessary.
(c) The entries made in the accounts, Register, and
subaccounts maintained pursuant to clause (b) preceding (and, if
consistent with the entries of the Agent, clause (a)) shall be prima
facie evidence of the existence and amounts of the obligations of the
Borrowers and the Guarantors therein recorded absent manifest error;
provided, however, that the failure of any Lender or the Agent to
maintain any such account, such Register, or such subaccount, as
applicable, or any error therein, shall not in any manner
Page 56
affect the obligation of the Borrowers or the Guarantors to repay the
Loans and obligations owing hereunder and under the other Credit
Documents to such Lender.
Section 3.12 Bank Products. The Borrowers may request and the Agent
may, in its sole and absolute discretion, arrange for the Credit Parties to
obtain Bank Products from Bank of America or any Affiliate of Bank of America
although no Credit Party is required to do so. To the extent Bank Products are
provided by an Affiliate of Bank of America, the Borrowers agree to indemnify
and hold the Agent, Bank of America, and the Lenders harmless from any and all
costs and obligations now or hereafter incurred by the Agent, Bank of America,
or any of the Lenders which arise from any indemnity given by the Agent to its
Affiliates related to such Bank Products; provided, however, nothing contained
herein is intended to limit any Credit Party's rights, with respect to Bank of
America or its Affiliates, if any, which arise as a result of the execution of
documents by and between such Credit Party and Bank of America or its Affiliates
which relate to Bank Products. The agreement contained in this Section shall
survive termination of this Agreement. The Borrowers acknowledge and agree that
the obtaining of Bank Products by the Credit Parties from Bank of America or
Bank of America's Affiliates (a) is in the sole and absolute discretion of Bank
of America or Bank of America's Affiliates, and (b) is subject to all rules and
regulations of Bank of America or Bank of America's Affiliates.
ARTICLE 4
CONDITIONS
Section 4.1 Closing Conditions. The obligation of the Lenders to enter
into this Agreement and to make the initial Extensions of Credit shall be
subject to satisfaction of the following conditions (in form and substance
acceptable to the Lenders).
(a) Executed Credit Documents. The Agent shall have received:
(i) multiple counterparts of this Agreement, (ii) a Revolving Note for
each Lender, and (iii) multiple counterparts of the Collateral
Documents and Guaranty Agreements (if any), in each case executed by a
duly authorized officer of each party thereto and in each case
conforming to the requirements of this Agreement.
(b) Legal Opinions. The Agent shall have received multiple
counterparts of opinions of counsel for the Credit Parties relating to
the Credit Documents and the transactions contemplated therein, in form
and substance satisfactory to the Agent and the Lenders, and including,
among other things, opinions regarding enforceability of the Credit
Documents and the perfection of the security interests created thereby.
(c) Financial Information. The Lenders shall have received of
such financial information regarding the members of the Consolidated
Group as may be requested by, and in each case in form and substance
satisfactory to, the Agent and the Lenders.
(d) Personal Property Collateral. The Agent shall have
received each of the following:
Page 57
(i) UCC financing statements for each jurisdiction as
is necessary or appropriate, in the Agent's discretion, to
perfect the Agent's Liens in the Collateral;
(ii) original certificates evidencing the Capital
Stock which is pledged as Collateral pursuant to any Credit
Document, together with undated stock transfer powers executed
in blank;
(iii) such patent, trademark, and copyright notices
and filings as necessary or appropriate, in the Agent's
discretion, to perfect the security interests of the Agent in
the Credit Parties' Intellectual Property;
(iv) a landlord's or mortgagee's waiver and consent
agreement, in form and substance satisfactory to the Agent,
duly executed on behalf of each landlord or mortgagee, as the
case may be, of Real Property, excluding retail store
locations, on which any Collateral is located (provided that
the Agent may, in its discretion, waive or defer such
requirement or establish a Reserve with respect to any
Collateral located on any Real Property for which the Agent
has not received an acceptable waiver and consent agreement);
and
(v) bailee agreements with each Person as the Agent
determines are necessary, in form and substance satisfactory
to the Agent, with respect to any Installment Contracts held
by any such bailee (provided that the Agent may, in its
discretion, establish a Reserve with respect to any such
Installment Contracts held by any bailee for which the Agent
has not received an acceptable bailee agreement).
(e) Evidence of Insurance. The Agent shall have received
evidence, in form, scope, and substance, reasonably satisfactory to the
Agent, of all insurance coverage as required by this Agreement together
with loss payable endorsements in form acceptable to the Agent.
(f) Absence of Legal Proceedings. There shall not exist any
action, suit, investigation, or proceeding pending in any court or
before any arbitrator or Governmental Authority which could reasonably
be expected to have a Material Adverse Effect.
(g) Corporate Documents. The Agent shall have received the
following (or their equivalent) for each of the Credit Parties:
(i) copies of the organization documents of such
Credit Party certified to be true and complete as of a recent
date by the appropriate Governmental Authority of the state or
other jurisdiction of its organization and certified by a
secretary, assistant secretary, general partner, or similar
Person of such Credit Party to be true and correct as of the
Closing Date;
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(ii) a copy of the bylaws, partnership agreement,
operating agreement, or other equivalent agreement or document
of such Credit Party certified by a secretary, assistant
secretary, general partner, or similar Person of such Credit
Party to be true and correct and in force and effect as of the
Closing Date;
(iii) copies of resolutions of the board of directors
of such Credit Party or of the general partner, members, or
similar Persons approving and adopting the Credit Documents to
which such Credit Party is a party and the transactions
contemplated therein and authorizing execution and delivery
thereof, certified by a secretary, assistant secretary,
general partner, or such Person of such Credit Party to be
true and correct and in force and effect as of the Closing
Date;
(iv) certificates of good standing and existence (or
its equivalent) with respect to each Credit Party certified as
of a recent date by the appropriate Governmental Authorities
of the state of organization and each other state in which the
failure to so qualify and be in good standing would be
reasonably likely to have a Material Adverse Effect on the
business or operations of such Credit Party in such state; and
(v) an officer's certificate of the Credit Parties,
dated as of the Closing Date, certifying to such factual
matters as may be reasonably requested by the Agent.
(h) Priority of Liens. The Agent shall have received
satisfactory evidence that (i) the Agent holds a perfected, first
priority Lien on all Collateral (subject only to Permitted Liens which
are specifically permitted to have priority over the Liens of the
Agent) and (ii) none of the Collateral is subject to any Liens other
than Permitted Liens.
(i) Officer's Certificates. The Agent shall have received a
certificate executed by an Executive Officer of Xxxxxxxx'x as of the
Closing Date, in form and substance satisfactory to the Agent, stating
that (i) each Borrower and each Guarantor is in compliance with all
existing financial obligations, (ii) all governmental, shareholder, and
third party consents and approvals, if any, necessary with respect to
the Credit Documents and the transactions contemplated thereby have
been obtained, (iii) there is no pending, or to such Executive
Officer's knowledge, threatened action, suit, investigation, or
proceeding in any court or before any arbitrator or governmental
instrumentality that purports to affect any Credit Party or any
transaction contemplated by the Credit Documents, which could
reasonably be expected to have a Material Adverse Effect, and (iv)
immediately after giving effect to the initial Extensions of Credit on
the Closing Date, (A) no Default or Event of Default exists, (B) all
representations and warranties contained herein and in the other Credit
Documents are true and correct in all material respects, and (C) the
Credit Parties are in compliance on a Pro Forma Basis with each of the
financial covenants set forth in Section 6.11 (assuming for purposes
hereof that such financial covenants were measured as of, and for the
twelve (12) Fiscal Periods ending on, the most recent Fiscal Period end
and attaching detailed calculations demonstrating such compliance).
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(j) Merchant Account Agreements. The Agent shall have received
true, correct, and complete copies of all Merchant Account Agreements
which any Credit Party is party to.
(k) Borrowing Base Certificate. The Agent shall have received
a Borrowing Base Certificate dated as of the most recent week-end
preceding the Closing Date, in form and substance satisfactory to the
Agent and certified by the chief financial officer of Xxxxxxxx'x to be
true and correct as of the date thereof.
(l) Field Audit. Representatives of the Agent shall have
completed a field audit of the accounts receivable, inventory, accounts
payable, and accounting controls and systems of the members of the
Consolidated Group with results and findings acceptable to the Agent
and the Lenders.
(m) Fees and Expenses. The Borrowers and the Guarantors shall
have paid to the Lenders and the Agent of all fees and expenses owed by
them in connection with this Agreement and the other Credit Documents,
including, without limitation, payment to the Agent and CIT of the fees
set forth in the Agents' Fee Letter.
(n) Availability. After giving effect to the making of all
Extensions of Credit (including any Loans made to finance the fees and
expenses set forth in the Agents' Fee Letter or otherwise as
reimbursement for fees, costs, and expenses then payable in connection
with this Agreement and the other Credit Documents), and with all of
the Borrowers' obligations current, on the Closing Date, the Borrowing
Base shall exceed the outstanding Obligations by an amount not less
than $10,000,000.
(o) Release from Obligations with Respect to Crescent
Jewelers. The Agent shall have received satisfactory evidence that upon
the initial funding of the Loans hereunder all of the liabilities,
indebtedness, and other obligations of Xxxxxxxx'x incurred in
connection with that certain Credit Agreement, dated as of September
15, 1999, among Crescent Jewelers, Crescent Jewelers Inc., Bank of
America, N.A., and the other lending institutions party thereto will be
released or terminated to the satisfaction of the Agent (except for any
obligations which, by the express terms of such agreement, survive
termination).
Section 4.2 Conditions to all Extensions of Credit. The obligation of
each Lender to make any Loan or of the Issuing Lender to issue any Letter of
Credit hereunder (including the initial Extension of Credit to be made
hereunder) is subject to the satisfaction of the following conditions precedent
on the date of making such Extension of Credit:
(a) Representations and Warranties. The representations and
warranties made by the Borrowers and the Guarantors herein and in the
other Credit Documents or which are contained in any certificate
furnished at any time under or in connection herewith or therewith
shall be true and correct in all material respects on and as of the
date of such Extension of Credit as if made on and as of such date
(except for those which expressly
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relate to an earlier date and except for changes expressly permitted
therein or as expressly contemplated herein).
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date or after
giving effect to the Extension of Credit to be made on such date unless
such Default or Event of Default shall have been waived in accordance
with this Agreement.
(c) Material Adverse Effect. No event has occurred and is
continuing, or would result from such Extension of Credit, which has
had or would have a Material Adverse Effect.
(d) Additional Conditions to Revolving Loans and Letters of
Credit. If making of a Revolving Loan, or issuance of a Letter of
Credit, is requested pursuant to Section 2.1 and Section 2.2, all
conditions set forth in Article 2 shall have been satisfied.
Each request for an Extension of Credit (including Continuations and
Conversions) and each acceptance by any Borrower of an Extension of Credit
(including Continuations and Conversions) shall be deemed to constitute a
representation and warranty by the Borrowers as of the date of such Extension of
Credit that the applicable conditions in clauses (a), (b), and (c) preceding (as
applicable) have been satisfied.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Extensions of Credit hereunder, each of the Borrowers and the Guarantors hereby
represents and warrants to the Agent and to each Lender that:
Section 5.1 Financial Condition. Each of the financial statements
described below (copies of which have heretofore been provided to the Agent for
distribution to the Lenders) have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby, are complete and
correct in all material respects and present fairly in all material respects the
financial condition (including disclosure of all material liabilities,
contingent or otherwise) and results from operations of the entities and for the
periods specified, subject in the case of interim company-prepared statements to
normal year-end adjustments and the absence of footnotes:
(a) audited consolidated balance sheets for Xxxxxxxx'x and its
Subsidiaries dated as of September 30, 1999, September 30, 2000, and
September 29, 2001, together with related audited consolidated
statements of income and cash flows for the Fiscal Years then ending,
certified by Ernst & Young LLP, certified public accountants;
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(b) company prepared consolidated balance sheets for
Xxxxxxxx'x and its Subsidiaries as of June 29, 2002, together with
related consolidated statements of income and cash flows for the Fiscal
Period then ending; and
(c) after the Closing Date, the annual and periodic financial
statements provided in accordance with Section 6.1(a) and Section
6.1(b).
Section 5.2 No Changes or Restricted Payments. Except as set forth on
Schedule 5.2, since the date of the most recent annual audited financial
statements referenced in Section 5.1(a),
(a) for the period from the date of such financial statements
to the Closing Date, except as previously disclosed in writing to the
Agent and the Lenders, (i) there have been no material sales,
transfers, or other dispositions of any material part of the business
or property of the members of the Consolidated Group, nor have there
been any material purchases or other acquisitions of any business or
property (including the Capital Stock of any other Person) by the
members of the Consolidated Group, which are not reflected in the
annual audited or company prepared periodic financial statements
referenced in Section 5.1(a) and Section 5.1(b), and (ii) no Restricted
Payments have been declared or paid by members of the Consolidated
Group to any Person which is not a Credit Party; and
(b) there has been no circumstance, development, or event
relating to or affecting the members of the Consolidated Group which
has had or could reasonably be expected to have a Material Adverse
Effect.
Section 5.3 Organization; Existence; Compliance with Law. Each of the
members of the Consolidated Group (a) is duly incorporated, organized or formed
and validly existing in good standing under the laws of the jurisdiction of its
incorporation, organization or formation, (b) has the corporate or other
necessary power and authority, and the legal right to own and operate its
Property, to lease the Property it operates as lessee, and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
entity and in good standing under the laws of each jurisdiction where its
ownership, lease, or operation of Property or the conduct of its business
requires such qualification, other than in such jurisdictions where the failure
to be so qualified and in good standing would not, in the aggregate, have a
Material Adverse Effect, and (d) is in compliance with all Requirements of Law
(including, without limitation, Consumer Protection Laws), except to the extent
that the failure to comply therewith would not, in the aggregate, be reasonably
expected to have a Material Adverse Effect.
Section 5.4 Power; Authorization; Enforceable Obligations. Each of the
Credit Parties has the corporate or other necessary power and authority, and the
legal right, to make, deliver, and perform the Credit Documents to which it is a
party and has taken all necessary corporate or other action to authorize the
execution, delivery, and performance by it of the Credit Documents to which it
is a party. No consent or authorization of, filing with, notice to, or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with acceptance of Extensions of Credit or the making of the
guaranties hereunder or with the execution, delivery, or performance of any
Credit Documents by the Credit Parties (other than
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those which have been obtained, such filings as are required by the Securities
and Exchange Commission and to fulfill other reporting requirements with
Governmental Authorities) or with the validity or enforceability of any Credit
Document against the Credit Parties (except such filings as are necessary in
connection with the perfection of the Liens created by such Credit Documents).
Each Credit Document to which it is a party constitutes a legal, valid, and
binding obligation of such Credit Party enforceable against such Credit Party in
accordance with its respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
Section 5.5 No Legal Bar. The execution, delivery, and performance of
the Credit Documents, the borrowings hereunder, and the use of the Extensions of
Credit will not violate any Requirement of Law or any Contractual Obligation of
any member of the Consolidated Group (except those as to which waivers or
consents have been obtained), and will not result in, or require, the creation
or imposition of any Lien on any Property or revenue of any member of the
Consolidated Group pursuant to any Requirement of Law or Contractual Obligation
other than the Liens arising under or contemplated in connection with the Credit
Documents. No member of the Consolidated Group is in default under or with
respect to any of its Contractual Obligations in any respect which would
reasonably be expected to have a Material Adverse Effect. The Credit Parties'
entering into the Credit Documents and incurrence of the Total Obligations is
not prohibited under the terms of any Subordinated Debt.
Section 5.6 No Material Litigation and Disputes.
(a) Except as set forth on Schedule 5.6, no claim, litigation,
investigation, or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the best knowledge of the
Borrowers and the Guarantors, threatened by or against, any members of
the Consolidated Group or against any of their respective Properties or
revenues which (i) relate to the Credit Documents or any of the
transactions contemplated hereby or thereby or (ii) would reasonably be
expected to have a Material Adverse Effect.
(b) No default exists and, to the best knowledge of the
Borrowers and the Guarantors, no default has been asserted, under any
Contractual Obligations to which any members of the Consolidated Group
are party which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect.
Section 5.7 No Defaults. No Default or Event of Default has occurred
and is continuing.
Section 5.8 Ownership and Operation of Property. Each of the members of
the Consolidated Group (a) has good record and marketable title to, or a valid
leasehold interest in, all its material Real Property, and good title to, or a
valid leasehold interest in, all its other material Property, and none of such
Property is subject to any Lien, except for Permitted Liens, and (b) holds all
licenses, permits, franchises, or other certifications, consents, approvals, and
authorizations, governmental or private, necessary to the ownership of its
Property and to the
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conduct of its business, except for any such licenses, permits, franchises, or
other certifications, consents, approvals, and authorizations which the failure
to hold could not reasonably be expected to have a Material Adverse Effect.
Section 5.9 Intellectual Property. Each of the members of the
Consolidated Group owns, or has the legal right to use, all United States
trademarks, tradenames, copyrights, patents, technology, know-how, and
processes, if any, necessary for each of them to conduct its business as
currently conducted (the "Intellectual Property") except for those the failure
to own or have such legal right to use would not be reasonably expected to have
a Material Adverse Effect. Schedule 5.9 sets forth a list of the Intellectual
Property owned and used by members of the Consolidated Group as of the Closing
Date. No claim has been asserted in writing to any Borrower or any Guarantor and
is pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, and the use of such Intellectual Property by the members of the
Consolidated Group does not infringe on the rights of any Person, except for
such claims and infringements that, in the aggregate, could not be reasonably
expected to have a Material Adverse Effect.
Section 5.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the members of the Consolidated Group would be
reasonably expected to have a Material Adverse Effect.
Section 5.11 Taxes. Each member of the Consolidated Group has filed or
caused to be filed all income tax returns (federal, state, local, and foreign)
and all other tax returns which are required to be filed and has paid, except
where any failure to file or pay could not reasonably be expected to have a
Material Adverse Effect, (a) all amounts shown therein to be due (including
interest and penalties) and (b) all other taxes, fees, assessments, and other
governmental charges (including mortgage recording taxes, documentary stamp
taxes, and intangibles taxes) owing, except for such taxes which are not yet
delinquent or as are being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have been
established unless the failure to make any such payment could give rise to an
immediate right to foreclose on a Lien securing such amounts. No tax claim or
assessment has been asserted against any member of the Consolidated Group which
if adversely determined could reasonably be expected to have a Material Adverse
Effect.
Section 5.12 ERISA. Except as would not reasonably be expected to have
a Material Adverse Effect:
(a) During the five (5) year period prior to the date on which
this representation is made or deemed made: (i) no ERISA Event has
occurred, and, to the best knowledge of the Borrowers and the
Guarantors, no event or condition has occurred or exists as a result of
which any ERISA Event could reasonably be expected to occur, with
respect to any Plan; (ii) no "accumulated funding deficiency," as such
term is defined in Section 302 of ERISA and Section 412 of the Internal
Revenue Code, whether or not waived, has occurred with respect to any
Plan; (iii) each Plan has been maintained, operated, and funded in
compliance with its own terms and in material compliance with the
provisions of ERISA, the Internal Revenue Code, and any other
applicable federal or
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state laws; and (iv) no lien in favor of the PBGC or a Plan has arisen
or is reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities"
(as defined in Section 4001(a)(16) of ERISA), whether or not vested,
under each Single Employer Plan, as of the last annual valuation date
prior to the date on which this representation is made or deemed made
(determined, in each case, in accordance with Financial Accounting
Standards Board Statement 87, utilizing the actuarial assumptions used
in such Plan's most recent actuarial valuation report), did not exceed
as of such valuation date the fair market value of the assets of such
Plan.
(c) No member of the Consolidated Group has incurred, or, to
the best knowledge of the Borrowers and the Guarantors, could be
reasonably expected to incur, any withdrawal liability under ERISA to
any Multiemployer Plan or Multiple Employer Plan. No member of the
Consolidated Group would become subject to withdrawal liability under
ERISA if any member of the Consolidated Group were to withdraw
completely from all Multiemployer Plans and Multiple Employer Plans as
of the valuation date most closely preceding the date on which this
representation is made or deemed made. No member of the Consolidated
Group has received any notification that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of ERISA), is
insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no
Multiemployer Plan is, to the best knowledge of the Borrowers and the
Guarantors, reasonably expected to be in reorganization, insolvent, or
terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Internal Revenue Code) or breach of
fiduciary responsibility has occurred with respect to a Plan which has
subjected or may subject any member of the Consolidated Group to
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or
Section 4975 of the Internal Revenue Code, or under any agreement or
other instrument pursuant to which any member of the Consolidated Group
has agreed or is required to indemnify any Person against any such
liability.
(e) No member of the Consolidated Group has liability with
respect to "expected post-retirement benefit obligations" within the
meaning of the Financial Accounting Standards Board Statement 106. Each
Plan which is a welfare plan (as defined in Section 3(1) of ERISA) to
which Sections 601-609 of ERISA and Section 4980B of the Internal
Revenue Code apply has been administered in compliance in all material
respects of such sections.
(f) Neither the execution and delivery of this Credit
Agreement nor the consummation of the financing transactions
contemplated thereunder will involve any transaction which is subject
to the prohibitions of Sections 404, 406, or 407 of ERISA by reason of
the identity of any member of the Consolidated Group or in connection
with which a tax could be imposed on any member of the Consolidated
Group pursuant to Section 4975 of the Internal Revenue Code.
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(g) No ERISA Affiliate that is not a member of the
Consolidated Group has incurred, or to the best knowledge of the
Borrowers and the Guarantors, could reasonably be expected to incur,
any liability under ERISA, the Internal Revenue Code or otherwise in
relation to any ERISA Affiliate Plan that would have a Material Adverse
Effect.
Section 5.13 Use of Proceeds; Governmental Regulations, Etc.
(a) The proceeds of the Loans are to be used solely for the
purposes specified in Section 5.15. No Credit Party is in the business
of buying or selling Margin Stock or extending credit for the purpose
of buying or carrying Margin Stock.
(b) None of the members of the Consolidated Group is subject
to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, or the Investment Company Act of 1940, each as
amended. In addition, none of the members of the Consolidated Group is
(i) an "investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, and is not
controlled by such a company, or (ii) a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as
amended.
Section 5.14 Subsidiaries. Schedule 5.14 sets forth all of the
Subsidiaries of Xxxxxxxx'x as of the Closing Date, including the jurisdiction of
organization, classes of Capital Stock (including options, warrants, rights of
subscription, conversion and exchangeability and other similar rights),
ownership, and ownership percentages thereof. The outstanding shares of Capital
Stock shown have been duly authorized and validly issued and, in the case of any
corporation, are fully paid and non-assessable and are owned free of Liens other
than Liens of the type described in clauses (a), (b), (c), (f), and (q) of the
definition of Permitted Liens. Except as identified on Schedule 5.14, the
outstanding shares of Capital Stock shown are not the subject of any buy-sell,
voting trust, or other shareholder agreement and are not subject to the
preemptive rights of any Person.
Section 5.15 Purpose of Extensions of Credit. The Loans will be used by
the Borrowers solely to (a) refinance the indebtedness, liabilities, and
obligations of Xxxxxxxx'x under the Original Credit Agreement, (b) fund a direct
Investment in Crescent Jewelers, a California corporation, by contribution of
equity and advances of Subordinated Debt, and (c) provide working capital and
for other general corporate purposes of the Credit Parties, including Permitted
Acquisitions and Permitted Stock Repurchases. Except for Permitted Stock
Repurchases, no portion of the Loan proceeds will be used directly or indirectly
(w) to buy or carry any Margin Stock, (x) to repay or otherwise refinance
indebtedness of any Person incurred to buy or carry any Margin Stock, (y) to
extend credit for the purpose of buying or carrying any Margin Stock, or (z) to
acquire any security in any transaction that is subject to Section 13 or 14 of
the Securities Exchange Act of 1934 and the regulations promulgated thereunder,
and notwithstanding any other provision to the contrary, no portion of the Loans
will be used for any purpose which violates any provision of Regulation T,
Regulation U, or Regulation X.
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Section 5.16 Environmental Matters. Except as would not reasonably be
expected to have a Material Adverse Effect:
(a) Each of the facilities and properties owned, leased, or
operated by the members of the Consolidated Group (the "Subject
Properties") and all operations at the Subject Properties are in
compliance with all applicable Environmental Laws, and there is no
violation of any Environmental Law with respect to the Subject
Properties or the businesses operated by the members of the
Consolidated Group (the "Businesses"), and there are no conditions
relating to the Businesses or Subject Properties that could give rise
to liability under any applicable Environmental Laws.
(b) None of the Subject Properties contains, or to the
knowledge of the Borrowers or the Guarantors has previously contained,
any Materials of Environmental Concern at, on or under the Subject
Properties in amounts or concentrations that constitute or constituted
a violation of, or could give rise to liability under, Environmental
Laws.
(c) None of the members of the Consolidated Group has received
any written notice of, or written inquiry from any Governmental
Authority regarding, any violation, alleged violation, non-compliance,
liability, or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the Subject
Properties or the Businesses, nor does any member of the Consolidated
Group have knowledge or reason to believe that any such notice will be
received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Subject Properties, or generated,
treated, stored, or disposed of at, on or under any of the Subject
Properties or any other location, in each case by or on behalf of any
members of the Consolidated Group in violation of, or in a manner that
would be reasonably likely to give rise to liability under, any
applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the best knowledge of the Borrowers or the
Guarantors, threatened, under any Environmental Law to which any member
of the Consolidated Group is or will be named as a party, nor are there
any consent decrees or other decrees, consent orders, administrative
orders, or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to
any member of the Consolidated Group, the Subject Properties, or the
Businesses.
(f) There has been no release or, threat of release of
Materials of Environmental Concern at or from the Subject Properties,
or arising from or related to the operations (including, without
limitation, disposal) of any member of the Consolidated Group in
connection with the Subject Properties or otherwise in connection with
the Businesses, in violation of or in amounts or in a manner that could
give rise to liability under Environmental Laws.
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Section 5.17 No Material Misstatements. None of the information,
reports, financial statements, exhibits, or schedules, taken as a whole,
furnished by or on behalf of any member of the Consolidated Group to the Agent
or any Lender in connection with the negotiation of the Credit Documents or
included therein or delivered pursuant thereto contained, contains, or will
contain any misstatement of a material fact or omitted, omits, or will omit to
state any material fact necessary to make the statements therein not materially
misleading, provided that to the extent any such information, report, financial
statement, exhibit, or schedule was based upon or constitutes a forecast or
projection, each of the Borrowers and the Guarantors represents only that it
acted in good faith and utilized reasonable assumptions and due care in the
preparation of such information, report, financial statement, exhibit, or
schedule.
Section 5.18 Labor Matters. Except as set forth in Schedule 5.18, as of
the Closing Date,
(a) there are no strikes or lockouts against any members of
the Consolidated Group pending or, to the best knowledge of the
Borrowers and the Guarantors, threatened;
(b) the hours worked by and payments made to employees of the
Consolidated Group have not been in violation of the Fair Labor
Standards Act or any other applicable federal, state, local, or foreign
law dealing with such matters in any case where a Material Adverse
Effect would reasonably be expected to occur as a result of the
violation thereof;
(c) all payments due from members of the Consolidated Group,
or for which any claim may be made against a member of the Consolidated
Group, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the
books of the respective members of the Consolidated Group; and
(d) none of the members of the Consolidated Group is party to
a collective bargaining agreement.
Section 5.19 Security Documents.
(a) Security Agreements. Each Security Agreement is effective
to create in favor of the Agent, for the benefit of the Agent and the
Lenders, a legal valid and enforceable security interest in the
"Collateral" identified therein and, when financing statements in
appropriate form are filed in the appropriate offices for the locations
specified as the jurisdiction of incorporation or organization (as
applicable) of each Credit Party in Schedule 2.4(d) to each such
Security Agreement, such Security Agreement shall create a fully
perfected Lien on, pledge of, and security interest in, all right,
title, and interest of the grantors thereunder in such "Collateral"
that may be perfected by filing, recording, or registering a financing
statement under the UCC, in each case prior and superior in right to
any other Lien on any Collateral other than Permitted Liens which are
specifically permitted to have priority over the Liens of the Agent.
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(b) Intellectual Property. Each Security Agreement together
with the applicable Notice of Grant of Security Interest in Trademarks
and the applicable Notice of Grant of Security Interest in Patents
filed with the United States Patent and Trademark Office, and the
applicable Notice of Grant of Security Interest in Copyrights filed
with the United States Copyright Office will create a fully perfected
Lien on, and security interest in, all right, title, and interest of
the grantors thereunder in all Patents and Patent Licenses, Trademarks
and Trademark Licenses, and Copyrights and Copyright Licenses (each as
defined in such Security Agreement) and in which a security interest
may be perfected by filing, recording, or registration of a Notice in
the United States Patent and Trademark Office and the United States
Copyright Office, in each case prior and superior in right to any other
Lien other than Permitted Liens which are specifically permitted
hereunder to have priority over the Liens of the Agent.
(c) Mortgages. The Mortgages (if any) are effective to create
in favor of the Agent, for the benefit of the Agent and the Lenders, a
legal, valid and enforceable Lien on all of the respective grantors'
right, title, and interest in and to the Mortgaged Property thereunder
and the proceeds thereof, and constitute fully perfected Liens on, and
security interests in, all right, title, and interest of the grantors
in such Mortgaged Property and the proceeds thereof, in each case prior
and superior in right to any other Lien other than Permitted Liens
which are specifically permitted hereunder to have priority over the
Liens of the Agent.
Section 5.20 Location of Real Property and Leased Premises. As of the
Closing Date:
(a) Schedule 5.20 sets forth a complete and correct list of
all Real Property located in the United States and owned or leased by
any member of the Consolidated Group with street address and state
where located;
(b) Schedule 5.20 sets forth a list of all locations where any
tangible personal property of any member of the Consolidated Group is
located, including street address and state where located; and
(c) Schedule 5.20 sets forth the chief executive office and
principal place of business of each member of the Consolidated Group.
Section 5.21 Solvency. Each of the Borrowers is, and the Credit Parties
(taken as a whole) are, Solvent prior to and after giving effect to each
Extension of Credit to be made on the Closing Date (including the inclusion of
each Existing Letter of Credit as a Letter of Credit hereunder).
Section 5.22 Bank Accounts; Merchant Accounts. As of the Closing Date,
Schedule 5.22 contains a complete and accurate list of all bank accounts
maintained by each Credit Party with any bank or other financial institution and
Merchant Accounts.
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ARTICLE 6
AFFIRMATIVE COVENANTS
The Borrowers and the Guarantors hereby covenant and agree that so long
as this Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding or any Letter of Credit is
outstanding, and until all of the Commitments hereunder shall have terminated:
Section 6.1 Information Covenants.
(a) Annual Financial Statements. The Borrowers and the
Guarantors will furnish, or cause to be furnished, to the Agent and
each of the Lenders, as soon as available, and in any event within
ninety (90) days after the close of each Fiscal Year of Xxxxxxxx'x, a
consolidated balance sheet and income statement of the members of the
Consolidated Group as of the end of such Fiscal Year, together with
related consolidated statements of operations and retained earnings and
of cash flows for such Fiscal Year, in each case setting forth in
comparative form consolidated figures for the preceding Fiscal Year,
all such financial information described above to be in reasonable form
and detail and audited by independent certified public accountants of
recognized national standing reasonably acceptable to the Agent and
whose opinion shall be to the effect that such financial statements
have been prepared in accordance with GAAP (except for changes with
which such accountants concur) and shall not be limited as to the scope
of the audit or qualified as to the status of the members of the
Consolidated Group as a going concern or any other material
qualifications or exceptions.
(b) Periodic Financial Statements. The Borrowers and the
Guarantors will furnish, or cause to be furnished, to the Agent and
each of the Lenders, as soon as available, and in any event within
thirty (30) days after the end of each Fiscal Period or forty-five (45)
days for any Fiscal Period which ends on the last day of a Fiscal Year,
a consolidated balance sheet, income statement, and statements of cash
flows of the members of the Consolidated Group for such Fiscal Period,
in each case setting forth in comparative form consolidated figures for
the corresponding Fiscal Period of the preceding Fiscal Year, all such
financial information described above to be in reasonable form and
detail and reasonably acceptable to the Agent, and accompanied by a
certificate of an Executive Officer of Xxxxxxxx'x to the effect that
such monthly financial statements fairly present in all material
respects the financial condition of the members of the Consolidated
Group and have been prepared in accordance with GAAP, subject to
changes resulting from audit and normal year-end audit adjustments and
the absence of footnotes.
(c) Officer's Certificate. The Borrowers and the Guarantors
will furnish, or cause to be furnished, to the Agent and each of the
Lenders, at the time of delivery of the financial statements provided
for in Section 6.1(a) and Section 6.1(b) preceding, a certificate of an
Executive Officer of Xxxxxxxx'x, substantially in the form of Exhibit
D, (i) demonstrating compliance with the financial covenants contained
in Section 6.11 by
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calculation thereof as of the end of each such Fiscal Period (as
applicable) and (ii) stating that no Default or Event of Default
exists, or if any Default or Event of Default does exist, specifying
the nature and extent thereof and what action the Credit Parties
propose to take with respect thereto.
(d) Borrowing Base Certificate. The Borrowers and the
Guarantors will furnish, or cause to be furnished, to the Agent and
each of the Lenders, no later than the first Business Day following the
end of the preceding calendar week, or on a more frequent basis as
requested by the Agent, a statement of the Borrowing Base and its
components as of the end of the immediately preceding week (or such
other more frequent period), in form and content satisfactory to the
Agent and certified by an Executive Officer of Xxxxxxxx'x or the
treasurer or corporate controller of Xxxxxxxx'x to be true and correct
as of the date thereof (a "Borrowing Base Certificate") together with a
schedule of the Borrowers' receivables created since the immediately
preceding such schedule and Borrowing Base Certificate.
(e) Annual Business Plan and Budgets. The Borrowers and the
Guarantors will furnish, or cause to be furnished, to the Agent and
each of the Lenders, within thirty (30) days prior to the end of each
Fiscal Year of Xxxxxxxx'x, beginning with the first Fiscal Year
commencing after the Closing Date, an annual business plan and budget
of the members of the Consolidated Group containing, among other
things, pro forma financial statements for the following Fiscal Year.
(f) Collateral Reports. The Borrowers and the Guarantors will
furnish, or cause to be furnished, to the Agent and each of the
Lenders, within fifteen (15) days after the end of each Fiscal Period,
in form and detail reasonably satisfactory to the Agent, (i) an aging
of the accounts receivable of the Borrowers, together with a
computation of Eligible Installment Contracts in detail satisfactory to
the Agent and a reconciliation to the previous Fiscal Period's aging of
the accounts receivable of the Borrowers and to their respective
general ledgers and financial statements, (ii) an aging of the accounts
payable of the Borrowers, (iii) reports by category of inventory of the
Borrowers, with additional detail showing additions to and deletions
from the Borrowers' inventory, together with a computation of Eligible
Inventory in detail satisfactory to the Agent and a reconciliation to
the general ledger and financial statements, (iv) a list of all new
locations where the Credit Parties have any Collateral and any other
locations where Collateral is no longer kept by the Credit Parties
(including a listing of retail store locations opened or closed during
such Fiscal Period), including the address and, if requested by the
Agent, contact information for any landlord, (v) a computation of the
Receivables Advance Rate and the Collateral Adjustment Percent, in form
satisfactory to the Agent, and (vi) with the delivery of each of the
foregoing, a certificate executed by the chief financial officer or
treasurer of Xxxxxxxx'x certifying as to the accuracy and completeness
of the foregoing. If any of the records of the Borrowers or reports of
the Collateral are prepared by an accounting service or other agent,
each of the Borrowers hereby authorizes such service or agent to
deliver such records, reports, and related documents to the Agent, for
distribution to the Lenders.
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(g) Consumer Credit Policies. The Borrowers and the Guarantors
will furnish, or cause to be furnished, to the Agent and each of the
Lenders, concurrently with delivery of the financial statements for the
last day of each Fiscal Quarter delivered pursuant to clause (a) or
clause (b) preceding, written notice to the Agent of material changes
or modifications in their respective consumer credit policies and
practices, together with a written explanation, in substance and detail
reasonably satisfactory to the Agent, of such changes or modifications
to such consumer credit policies or practices.
(h) Investment Banking Fees. The Borrowers and the Guarantors
will furnish, or cause to be furnished, to the Agent and each of the
Lenders, advance notice of all investment banking fees in excess of
$250,000 in the aggregate payable by members of the Consolidated Group
in connection with any single transaction, together with a
certification from the Borrowers that after giving effect thereto no
Default or Event of Default shall exist on a Pro Forma Basis.
(i) Auditor's Reports. The Borrowers and the Guarantors will
furnish, or cause to be furnished, to the Agent and each of the
Lenders, promptly upon receipt thereof, a copy of any other report or
"management letter" submitted by independent accountants to any member
of the Consolidated Group in connection with any annual, interim, or
special audit of the books of such Person.
(j) Reports. The Borrowers and the Guarantors will furnish, or
cause to be furnished, to the Agent and each of the Lenders, promptly
upon transmission or receipt thereof, (i) copies of any filings and
registrations with, and reports to or from, the Securities and Exchange
Commission, or any successor agency (excluding any exhibits thereto and
any registration statements filed on Form S-8), and copies of all
financial statements, proxy statements, notices, and reports as any
member of the Consolidated Group shall send to its stockholders or to a
holder of any Indebtedness owed by any member of the Consolidated Group
in its capacity as such a holder and (ii) upon the request of the
Agent, all reports and written information to and from the United
States Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States Occupational
Health and Safety Administration, or any state or local agency
responsible for health and safety matters, or any successor agencies or
authorities concerning environmental, health, or safety matters.
(k) Notices. Upon any Executive Officer of the Borrower or any
Guarantor obtaining actual knowledge thereof, the Borrowers and the
Guarantors will immediately furnish, or cause to be furnished, to the
Agent and each of the Lenders, written notice of (i) the occurrence of
an event or condition consisting of a Default or Event of Default,
specifying the nature and existence thereof and what action the Credit
Parties propose to take with respect thereto, (ii) the occurrence of
any of the following with respect to any member of the Consolidated
Group (A) the pendency or commencement of any litigation, arbitration,
or governmental proceeding against such Person which could reasonably
be expected to have a Material Adverse Effect or (B) the institution of
any proceedings against such Person with respect to, or the receipt of
notice by such Person of potential liability or responsibility for
violation, or alleged violation of any federal, state, or local
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law, rule, or regulation, including but not limited to, Environmental
Laws, the violation of which could reasonably be expected to have a
Material Adverse Effect, and (iii) the occurrence of any default or
other breach or failure to perform under any agreement with respect to
any Subordinated Debt.
(l) ERISA. Upon any Executive Officer of the Borrower or any
Guarantor obtaining knowledge thereof, the Borrowers and the Guarantors
will give written notice to the Agent and the Lenders promptly (and in
any event within five (5) Business Days) of: (i) any event or
condition, including, but not limited to, any Reportable Event, that
constitutes, or might reasonably lead to, an ERISA Event; (ii) with
respect to any Multiemployer Plan, the receipt of notice as prescribed
in ERISA or otherwise of any withdrawal liability assessed against the
Credit Parties or any ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both within the
meaning of Title IV of ERISA); (iii) the failure to make full payment
on or before the due date (including extensions) thereof of all amounts
which any member of the Consolidated Group or any ERISA Affiliate is
required to contribute to each Plan pursuant to its terms and as
required to meet the minimum funding standard set forth in ERISA and
the Internal Revenue Code with respect thereto; or (iv) any change in
the funding status of any Plan that could have a Material Adverse
Effect, together with a description of any such event or condition or a
copy of any such notice and a statement by an Executive Officer of
Xxxxxxxx'x briefly setting forth the details regarding such event,
condition, or notice, and the action, if any, which has been or is
being taken or is proposed to be taken by the Credit Parties with
respect thereto. Promptly upon request, the Borrowers and the
Guarantors shall furnish to the Agent and the Lenders such additional
information concerning any Plan as may be reasonably requested,
including, but not limited to, copies of each annual report/return
(Form 5500 series), as well as all schedules and attachments thereto
required to be filed with the Department of Labor and/or the Internal
Revenue Service pursuant to ERISA and the Internal Revenue Code,
respectively, for each "plan year" (within the meaning of Section 3(39)
of ERISA).
(m) Additional Patents and Trademarks. At the time of delivery
of the financial statements and reports pursuant to Section 6.1(a), the
Borrowers and the Guarantors will furnish, or cause to be furnished, to
the Agent and each of the Lenders, a report signed by an Executive
Officer of Xxxxxxxx'x setting forth (i) a list of registration numbers
for all patents, trademarks, service marks, tradenames, and copyrights
awarded to any member of the Consolidated Group since the last day of
the immediately preceding Fiscal Year and (ii) a list of all patent
applications, trademark applications, service xxxx applications, trade
name applications, and copyright applications submitted by any member
of the Consolidated Group since the last day of the immediately
preceding Fiscal Year and the status of each such application, all in
such form as shall be reasonably satisfactory to the Agent.
(n) Notices to Subordinated Creditors. The Borrowers and the
Guarantors will furnish, or cause to be furnished to the Agent and each
of the Lenders copies of all statements, reports, notices, documents,
and certificates, furnished to the holders of any
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Subordinated Debt and not otherwise furnished to the Agent and the
Lenders pursuant to this Agreement.
(o) Certificate of December Sales. The Borrowers and the
Guarantors will furnish, or cause to be furnished, to the Agent and the
Lenders, as soon as available, and in any event within five (5)
Business Days after the end of each Fiscal Period ending closest to
December 31 of each year, a certificate of an Executive Officer of
Xxxxxxxx'x demonstrating compliance with the financial covenant
contained in Section 6.11(d) by calculation thereof as of the end of
each such Fiscal Period.
(p) Bank Accounts. With each of the certificates delivered
pursuant to clause (c) preceding, the Borrowers and the Guarantors will
furnish, or cause to be furnished, to the Agent a listing of each bank
account opened or closed by any Credit Party during the preceding
Fiscal Period, and any Merchant Account Agreement entered into by any
Credit Party during the preceding Fiscal Period.
(q) Other Information. With reasonable promptness upon any
such request, the Borrowers and the Guarantors will furnish, or cause
to be furnished, to the Agent and each of the Lenders, such other
information regarding the business, properties, or financial condition
of any member of the Consolidated Group as the Agent or any Lender
through the Agent may reasonably request.
Section 6.2 Preservation of Existence and Franchises. Except as a
result of or in connection with a dissolution, merger, or disposition of a
Subsidiary permitted under Section 7.4 or Section 7.5, the Borrowers and the
Guarantors will, and will cause each of their respective Subsidiaries to, do all
things necessary to preserve and keep in full force and effect its existence and
all material rights, franchises, and authority.
Section 6.3 Books and Records. The Borrowers and the Guarantors will,
and will cause each of their respective Subsidiaries to, keep complete and
accurate books and records of its transactions in accordance with good
accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves) and keep such books and records in a
location with fire, casualty and theft protection satisfactory to the Agent.
Section 6.4 Compliance with Law. The Borrowers and the Guarantors will,
and will cause each of their respective Subsidiaries to, comply with all laws,
rules, regulations, and orders, and all applicable restrictions imposed by all
Governmental Authorities, applicable to it and its Property if noncompliance
with any such law, rule, regulation, order, or restriction could reasonably be
expected to have a Material Adverse Effect.
Section 6.5 Payment of Taxes and Other Indebtedness. The Borrowers and
the Guarantors will, and will cause each of their respective Subsidiaries to,
pay and discharge (a) all taxes, assessments, and governmental charges or levies
imposed upon it, or upon its income or profits, or upon any of its Properties,
before they shall become delinquent and (b) all lawful claims (including claims
for labor, materials, and supplies) which, if unpaid, might give rise to a Lien
upon any of its Properties; provided, however, that no member of the
Consolidated Group
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shall be required to pay any such tax, assessment, charge, levy, claim, or
Indebtedness which is being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have been
established, unless the failure to make any such payment (i) could give rise to
an immediate right to foreclose on a Lien securing such amounts or (ii) could
have a Material Adverse Effect.
Section 6.6 Insurance.
(a) The Borrowers and the Guarantors will, and will cause each
of their respective Subsidiaries to, at all times maintain in full
force and effect insurance (including worker's compensation insurance,
liability insurance, casualty insurance, flood insurance, and business
interruption insurance) in such amounts, covering such risks and
liabilities, and with such deductibles or self-insurance retentions as
are in accordance with normal industry practice (or as otherwise
required by the Collateral Documents). The Agent shall be named as loss
payee or mortgagee, as its interest may appear, and/or additional
insured with respect to any such insurance providing coverage in
respect of any Collateral, and each provider of any such insurance
shall agree, by endorsement upon the policy or policies issued by it or
by independent instruments furnished to the Agent, that it will give
the Agent thirty (30) days prior written notice before any such policy
or policies shall be altered or canceled, and that no act or default of
any member of the Consolidated Group or any other Person shall affect
the rights of the Agent or the Lenders under such policy or policies.
The present insurance coverage of the members of the Consolidated Group
is outlined as to carrier, policy number, expiration date, type, and
amount on Schedule 6.6.
(b) The proceeds from insurance received from the theft, loss,
physical destruction or damage, taking, or similar event shall be used
either to repair, replace, or reinvest in the same or similar assets or
to prepay the Obligations.
Section 6.7 Maintenance of Property. The Borrowers and the Guarantors
will, and will cause each of their respective Subsidiaries to, maintain and
preserve its properties and equipment material to the conduct of its business in
good repair, working order, and condition, normal wear and tear and casualty and
condemnation excepted, and will make, or cause to be made, in such properties
and equipment from time to time all repairs, renewals, replacements, extensions,
additions, betterments, and improvements thereto as may be needed or proper, to
the extent and in the manner customary for companies in similar businesses,
except, as to any of the foregoing activities, where the activities are not
otherwise prohibited hereunder.
Section 6.8 Performance of Obligations. The Borrowers and the
Guarantors will, and will cause each of their respective Subsidiaries to,
perform in all material respects all of its obligations under the terms of all
material agreements, indentures, mortgages, security agreements, and other debt
instruments to which it is a party or by which it is bound except to the extent
that the failure to do so will not result in a Material Adverse Effect.
Section 6.9 Use of Proceeds. The Borrowers will use the proceeds of
Extensions of Credit solely for the purposes set forth in Section 5.15 and not
for prepayment of interest or
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payment or prepayment of principal of any Subordinated Debt or for any other
payments of Subordinated Debt which would violate the terms of any subordination
agreement applicable thereto.
Section 6.10 Audits/Inspections. Upon reasonable notice and during
normal business hours, the Borrowers and the Guarantors will, and will cause
each of their respective Subsidiaries to, permit representatives appointed by
the Agent, including, without limitation, independent accountants, agents,
attorneys, and appraisers to visit and inspect its property, including its books
and records, its accounts receivable and inventory, its facilities and its other
business assets, and to make photocopies or photographs thereof and to write
down and record any information such representative obtains and shall permit the
Agent or its representatives to investigate and verify the accuracy of
information provided to the Lenders and to discuss all such matters with the
officers, employees, and representatives of such Person. The cost of such
inspections and audits shall be at the expense of the Borrowers as provided in
the Security Agreement. The Lenders, and their representatives may accompany the
Agent and its representatives on any such inspection or audit at their own
expense.
Section 6.11 Financial Covenants.
(a) Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio, determined for the Consolidated Group on a consolidated basis as
of the last day of each Fiscal Quarter after the Closing Date for the
preceding four (4) Fiscal Quarters ending as of such date shall not be
less than 1.15 to 1.00.
(b) Adjusted Tangible Net Worth. The Adjusted Tangible Net
Worth of the Consolidated Group, determined on a consolidated basis as
of the last day of each Fiscal Period ending after the Closing Date,
shall not be less than the Adjusted Tangible Net Worth Requirement.
(c) Leverage Ratio. The Leverage Ratio, determined for the
Consolidated Group on a consolidated basis as of the last day of each
Fiscal Period ending after the Closing Date shall not be greater than
2.00 to 1.00.
(d) December Sales. The Borrowers and the Guarantors shall
cause the actual retail sales of the Borrowers in the Fiscal Period
ending closest to December 31 of each year to not be less than (i)
$89,600,000 for such Fiscal Period ending December 28, 2002 and (ii)
for each Fiscal Period ending closest to December 31 of each year
thereafter, seventy percent (70.0%) of the projected retail sales for
such Fiscal Period as set forth in the projections delivered to the
Agent and the Lenders in the annual business plan and budget of the
Borrowers delivered to the Agent and the Lenders as required pursuant
to Section 6.1(e).
Section 6.12 New Subsidiaries; Addition of Subsidiaries as Borrowers
and Guarantors. Promptly upon creation or acquisition of any Subsidiary by a
Credit Party, other than any Subsidiary which is organized under Requirements of
Law of a jurisdiction other than the United States or a state of the United
States, the Credit Parties shall propose to the Agent that such new
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Subsidiary become, and with the Agent's and the Required Lenders' consent
pursuant to Section 10.20 cause such Subsidiary to become either a Borrower and
a Guarantor or a Guarantor (but not a Borrower) under the Credit Documents. Any
Subsidiary which must be added as either a Borrower or a Guarantor (but not a
Borrower) as provided in this Section 6.12, shall promptly execute and deliver a
joinder agreement, all items of the type required by Section 4.1 (as applicable)
as if such Subsidiary was a Credit Party on the Closing Date, and such other
Credit Documents as the Agent may reasonably require.
Section 6.13 Guaranties of the Obligations. Each Credit Party,
including any Person which becomes a Borrower or a Guarantor after the Closing
Date pursuant to the terms of this Agreement, shall guarantee payment and
performance of the Total Obligations (other than such Total Obligations owing by
itself) pursuant to a Guaranty Agreement in form and substance satisfactory to
the Agent, duly executed or joined in (as applicable) by each such Credit Party.
Each Borrower acknowledges and expressly agrees with the Agent and each Lender
that the guaranty by such Borrower is required solely as a condition to, and is
given solely as inducement for and in consideration of, credit or accommodations
extended or to be extended under the Credit Documents to any or all of the other
Borrowers and is not required or given as a condition of extensions of credit to
such Borrower.
Section 6.14 Additional Collateral; Further Assurances.
(a) Subject to Requirements of Law, each Credit Party shall
cause any Subsidiary of Xxxxxxxx'x which is required to become a Credit
Party pursuant to the terms of this Agreement to, upon the request of
the Agent, (i) grant Liens to the Agent, for the benefit of the Agent
and the Lenders, pursuant to such documents as the Agent may reasonably
deem necessary and deliver such property, documents, and instruments as
the Agent may request to perfect the Liens of the Agent in the
Collateral of such Subsidiary (ii) execute a Guaranty Agreement with
respect to the Total Obligations (excluding the Total Obligations of
such Credit Party) pursuant to Section 6.13, in form and substance
satisfactory to the Agent, and (iii) in connection with the foregoing
requirements, or either of them, deliver to the Agent all items of the
type required by Section 4.1(a) (as applicable). Upon execution and
delivery of such Credit Documents and other instruments, certificates,
and agreements, such Subsidiary shall automatically become a Borrower
and a Guarantor, or a Guarantor (but not a Borrower), as applicable,
hereunder and thereupon shall have all of the rights, benefits, duties,
and obligations in such capacity under the Credit Documents.
(b) Without limiting the foregoing, each Credit Party shall,
and shall cause each of Xxxxxxxx'x Subsidiaries which is required to
become a Credit Party pursuant to the terms of this Agreement to,
execute and deliver, or cause to be executed and delivered, to the
Agent such documents and agreements, and shall take or cause to be
taken such actions as the Agent may, from time to time, reasonably
request to carry out the terms and conditions of this Agreement and the
other Credit Documents.
(c) Upon the Agent's request, each Credit Party will deliver
to the Agent the following with respect to each parcel of Real Property
owned by any Credit Party, other
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than the Real Property described in Section 7.1(g) if prohibited by the
terms of the documentation evidencing the Indebtedness described
therein:
(i) a Mortgage in proper form for recording in the
jurisdiction in which such Real Property covered thereby is
located;
(ii) ALTA or other mortgagee's policies, in form and
substance satisfactory to the Agent, with respect to the Real
Property subject to the Mortgages;
(iii) an environmental site assessment, in compliance
with applicable Requirements of Law prepared by a credentialed
environmental consultant acceptable to the Agent;
(iv) a boundary survey prepared and certified to the
Agent by a credentialed surveyor acceptable to the Agent; and
(v) such other information, documentation, and
certifications, in form and substance satisfactory to the
Agent, as may be reasonably requested by the Agent.
Section 6.15 Landlord and Mortgagee Agreements. The Credit Parties will
provide to the Agent upon the Agent's request, a landlord's or mortgagee's
waiver and consent agreement or subordination and consent agreement, in form and
substance reasonably acceptable to the Agent, duly executed on behalf of each
landlord or mortgagee, as the case may be, of Real Property on which any
Collateral is located; provided that the Agent may, in its discretion, defer
delivery of any such waiver and consent agreement or subordination and consent
agreement and establish a Reserve with respect to any Collateral located on any
Real Property for which the Agent has not received such acceptable waiver and
consent agreement or subordination and consent agreement; provided further that
in the event the Credit Parties, after use of commercially reasonable efforts,
are unable to obtain any such landlord waivers requested for a retail location,
the Agent's and the Lenders' sole remedy in connection therewith shall be to
establish a Reserve with respect to such location.
Section 6.16 Bank as Depository. Each of the Credit Parties shall
maintain Bank of America as its principal depository bank, including for the
maintenance of operating, administrative, cash management, collection activity,
and other deposit accounts for the conduct of its business.
Section 6.17 Implementation of New Computer Systems. On or before the
first Anniversary Date, the Borrowers will, and the Guarantors will cause the
Borrowers to, implement new computer based management information and accounting
systems substantially conforming to the systems described by the Borrowers in
writing to the Agent and the Lenders and attached hereto as Schedule 6.17.
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ARTICLE 7
NEGATIVE COVENANTS
The Borrowers and the Guarantors hereby covenant and agree that so long
as this Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding or any Letter of Credit is
outstanding, and until all of the Commitments hereunder shall have terminated:
Section 7.1 Indebtedness. The Borrowers and the Guarantors will not
permit any member of the Consolidated Group to contract, create, incur, assume,
or permit to exist any Indebtedness, except:
(a) Indebtedness existing or arising under this Agreement or
the other Credit Documents;
(b) Indebtedness of the Borrowers and their Subsidiaries set
forth on Schedule 7.1, and renewals, refinancings, and extensions
thereof on terms and conditions which, taken as a whole, are no less
favorable to such Person than such existing Indebtedness;
(c) purchase money Indebtedness (including for purposes hereof
obligations in respect of Capital Leases or Synthetic Leases) hereafter
incurred by the Borrowers or any of their Subsidiaries to finance the
purchase of fixed assets and any refinancing thereof; provided that (i)
the total of all such Indebtedness for the Borrowers and their
Subsidiaries taken together shall not exceed an aggregate principal
amount of $7,500,000 at any one time outstanding; (ii) such
Indebtedness when incurred shall not exceed the purchase price of the
asset(s) financed; and (iii) no such Indebtedness shall be refinanced
for a principal amount in excess of the principal balance outstanding
thereon at the time of such refinancing;
(d) obligations of the Borrowers or their Subsidiaries owing
under interest rate, commodities, and foreign currency exchange
protection agreements entered into in the ordinary course of business
to manage existing or anticipated risks and not for speculative
purposes;
(e) unsecured intercompany Indebtedness owing by a member of
the Consolidated Group to another member of the Consolidated Group
(subject, however, to the limitations of Section 7.6 in the case of the
member of the Consolidated Group extending the loan, advance, or
credit);
(f) Support Obligations given by members of the Consolidated
Group with respect to any Indebtedness permitted under this Section
7.1;
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(g) Funded Debt of any Borrower incurred to finance the
acquisition or construction of a new corporate headquarters building in
an aggregate amount not in excess of $5,000,000;
(h) Indebtedness acquired or assumed in connection with a
Permitted Acquisition (including any holdback note or deferral of a
portion of the purchase price (including earn-out payments)); and
(i) other unsecured Indebtedness of the Borrowers and their
Subsidiaries in an aggregate outstanding principal amount of up to
$5,000,000 at any time.
Section 7.2 Liens. The Borrowers and the Guarantors will not permit any
member of the Consolidated Group to contract, create, incur, assume, or permit
to exist any Lien with respect to any of its Property, whether now owned or
hereafter acquired, except for Permitted Liens.
Section 7.3 Nature of Business. The Borrowers and the Guarantors will
not permit any member of the Consolidated Group to substantively alter the
character or conduct of the business conducted by such Person as of the Closing
Date and any business ancillary or complimentary thereto.
Section 7.4 Merger and Consolidation, Dissolution, and Acquisitions.
(a) No member of the Consolidated Group will enter into any
transaction of merger or consolidation, except that:
(i) any member of the Consolidated Group may be a
party to a transaction of merger or consolidation with another
member of the Consolidated Group; provided that (A) if
Xxxxxxxx'x is a party to such transaction, it shall be the
surviving entity, and (B) in any event, and without limiting
clause (A) preceding, the surviving entity (if not Xxxxxxxx'x)
shall be a Domestic Subsidiary of Xxxxxxxx'x and, if the
survivor is not already a Credit Party, it shall execute and
deliver such Credit Documents as may be necessary for
compliance with the provisions of Section 6.12 and Section
6.13; provided, that notwithstanding the foregoing, any
Foreign Subsidiary may merge with and into another Foreign
Subsidiary;
(ii) any member of the Consolidated Group which is
not Borrower may enter into a transaction of merger or
consolidation in connection with an Asset Disposition
permitted under Section 7.5; and
(iii) a Domestic Subsidiary of a Borrower may be a
party to a transaction of merger or consolidation with a
Person other than a member of the Consolidated Group, provided
that (A) the surviving Person shall be a wholly-owned Domestic
Subsidiary of a Borrower and the provisions of Section 6.12,
Section 6.13, and Section 6.14 shall have been complied with
and (B) such transaction shall otherwise constitute a
Permitted Acquisition.
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(b) No member of the Consolidated Group may dissolve,
liquidate, or wind up its affairs, other than any such member that is
not a Borrower and whose assets are transferred to a Credit Party in an
Asset Disposition allowed by Section 7.5.
(c) No member of the Consolidated Group shall make any
Acquisition (except for Permitted Investments, Permitted Acquisitions,
or as otherwise expressly permitted by the provisions of clause (a)
preceding), without the prior written consent of the Required Lenders.
Section 7.5 Asset Dispositions. The Borrowers and the Guarantors will
not permit any member of the Consolidated Group to make any Asset Disposition
(including, without limitation, any Sale and Leaseback Transaction), unless:
(a) the sale, lease, or other disposition is to a Borrower;
(b) the sale, lease or other disposition is by a Credit Party
other than a Borrower, to a Credit Party;
(c) such Asset Disposition is in connection with the closing
of retail store locations of a Borrower in the ordinary course of
business; provided that the Borrowers will not close more than fifty
(50) retail store locations in any twelve (12) consecutive Fiscal
Periods;
(d) such Asset Disposition is the result of theft, loss,
physical destruction, or damage, taking or similar event with respect
to the assets subject to such Asset Disposition and the proceeds from
insurance resulting from such Asset Disposition are used to repair,
replace, or reinvest in the same or similar assets;
(e) in all other cases, (i) no accounts or Installment
Contracts will be the subject of any such sale, (ii) any Eligible
Inventory sold in connection with any such sale shall be sold for cash
at least equal to an amount equal to such Eligible Inventory multiplied
by the applicable advance rate for Eligible Inventory as specified in
clause (b) of the definition of Borrowing Base, (iii) at least
seventy-five percent (75.0%) of the consideration paid therefor shall
consist of cash and Cash Equivalents, (iv) if the subject transaction
involves Capital Stock of a Subsidiary of a Borrower, the subject
transaction is of a controlling interest in such Subsidiary, (v) the
aggregate net book value of all assets sold, leased, or otherwise
disposed of shall not exceed $5,000,000 in any Fiscal Year of the
Xxxxxxxx'x, (vi) no Default or Event of Default shall exist immediately
after giving effect thereto, and (vii) the Borrowers shall have
demonstrated compliance with the financial covenants in Section 6.11 on
a Pro Forma Basis after giving effect to the disposition and shall have
delivered to the Agent a Pro Forma Compliance Certificate (including
reaffirmation of the representations and warranties hereunder as of
such date before and after giving effect to such transaction) in
connection therewith; or
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(f) the assets sold consist of Installment Contracts which
have been written-off in accordance with the applicable Borrower's
credit policies and which are sold in a transaction consistent with
such Borrower's customary business practices.
With respect to any assets subject to a disposition permitted by this Section
7.5, at the Borrowers' expense, the Agent will promptly deliver to the Borrowers
upon request such release documentation (including delivery of applicable stock
certificates) as may be reasonably requested to give effect to the release of
such assets from the security interests securing the Borrowers' obligations
hereunder.
Section 7.6 Investments. The Borrowers and the Guarantors will not
permit any member of the Consolidated Group to make or permit to exist any
Investment in or to any Person, except for Permitted Investments; provided that
no member of the Consolidated Group will make any Investment (including any
Investment which is of a type included in the definition of Permitted
Investments) in any Person which owns or controls Xxxxxxxx'x.
Section 7.7 Restricted Payments. Neither any Borrower, nor any
Guarantor, will make any Restricted Payment except for Permitted Distributions.
Section 7.8 Modifications and Payments in Respect of Other Funded Debt.
None of the members of the Consolidated Group will
(a) after the issuance thereof, amend or modify (or permit the
amendment or modification of) the terms of any Subordinated Debt in a
manner adverse to the interests of the Lenders (including specifically
any amendment of the terms of subordination, shortening any maturity or
average life to maturity or requiring any payment sooner than
previously scheduled or increasing the interest rate or fees applicable
thereto) or in a manner prohibited by the subordination provisions
thereof; or
(b) make any prepayment, redemption, defeasance, or
acquisition for value of (including, without limitation, by way of
depositing money or securities with the trustee with respect thereto
before due for the purpose of paying when due), or refund, refinance,
or exchange of any Funded Debt (other than the Indebtedness under this
Agreement and the other Credit Documents and intercompany Indebtedness
permitted hereunder) other than regularly scheduled payments of
principal and interest on such Funded Debt, except in connection with a
refinancing or refunding permitted hereunder.
Section 7.9 Transactions with Affiliates. The Borrowers and the
Guarantors will not permit any member of the Consolidated Group to enter into or
permit to exist any transaction or series of transactions with any officer,
director, shareholder, Subsidiary, or Affiliate of such Person other than (a)
advances of working capital to any Borrower, (b) transfers of other assets to
any Borrower or from any Credit Party which is not a Borrower to any other
Credit Party, (c) transactions permitted by Section 7.1, Section 7.4, Section
7.5, Section 7.6, Section 7.7 or Section 7.13, (d) normal compensation and
reimbursement of expenses of officers and directors, (e) the transactions
entered into prior to the Closing Date and set forth on Schedule 7.9, and (f)
except as otherwise specifically limited in this Agreement, other transactions
which are
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entered into on terms and conditions substantially as favorable to
such Person as would be obtainable by it in a comparable arms-length transaction
with a Person other than an officer, director, shareholder, Subsidiary, or
Affiliate.
Section 7.10 Fiscal Year; Organizational Documents. Without the prior
written consent of the Required Lenders (which consent shall not be unreasonably
withheld), the Borrowers and the Guarantors will not permit any member of the
Consolidated Group to amend, modify, or change (a) the last day of its Fiscal
Year or (b) its articles of incorporation (or corporate charter or other similar
organizational document) or bylaws (or other similar document) other than in a
manner which does not adversely affect the rights of the Agent or the Lenders.
Section 7.11 Ownership of Subsidiaries. Notwithstanding any other
provision of this Agreement to the contrary, the Borrowers and the Guarantors
will not permit any member of the Consolidated Group to (a) permit any Person
other than a Borrower or any Wholly Owned Subsidiary of a Borrower to own any
Capital Stock of any Subsidiary of a Borrower, except (i) to qualify directors
where required by applicable law or to satisfy other requirements of applicable
law with respect to the ownership of Capital Stock of Foreign Subsidiaries or
(ii) as a result of or in connection with a dissolution, merger, consolidation,
or disposition of a Subsidiary permitted under Section 7.4 or Section 7.5, (b)
permit any Subsidiary of a Borrower to issue any shares of preferred Capital
Stock, or (c) permit, create, incur, assume, or suffer to exist any Lien on any
Capital Stock of any Subsidiary of a Borrower, except for Permitted Liens.
Section 7.12 No Further Negative Pledges. The Borrowers and the
Guarantors will not permit any member of the Consolidated Group to enter into,
assume, or become subject to any agreement prohibiting or otherwise restricting
the creation or assumption of any Lien upon its properties or assets, whether
now owned or hereafter acquired, or requiring the grant of any security for any
obligation if security is given for any other obligation, except (a) pursuant to
or as otherwise expressly permitted by this Agreement and the other Credit
Documents and (b) pursuant to the terms of (i) any purchase money Indebtedness
permitted by Section 7.1(c) and (ii) any Indebtedness permitted by Section
7.1(g), in each case to the extent such limitations relate only to the property
which is the subject of such financing.
Section 7.13 Limitation on Management Fees. The Borrowers and the
Guarantors will not permit members of the Consolidated Group to pay management
or consulting fees (exclusive of investment banking fees payable in connection
with capital raising, debt placement, or other financial transactions permitted
under Section 6.1(h)) to any Affiliates (including, without limitation, Xxxxxx
Xxxxxx and its Affiliates) in an aggregate amount in excess of $1,000,000 during
any Fiscal Year of Xxxxxxxx'x.
Section 7.14 Limitation on Foreign Subsidiaries. After the Closing
Date, the Borrowers and the Guarantors will not permit any member of the
Consolidated Group to create, acquire, or permit to exist any Subsidiary which
is not a Domestic Subsidiary (other than Cougar Reinsurance Company, Ltd., a
Turks and Caicos company) without the prior written consent of the Required
Lenders.
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Section 7.15 Inventory Classification. During any calendar month, the
Borrowers and the Guarantors shall not transfer, convert, or otherwise
reclassify Eligible Inventory into inventory which is leased or consigned unless
(a) no Default or Event of Default exists, (b) the aggregate fair market value
thereof does not exceed $2,000,000, and (c) the Borrowers and the Guarantors
provide at least ten (10) Business Days prior written notice thereof to the
Agent, which notification contains satisfactory calculations that, after giving
effect to such transaction, the aggregate principal amount of the Obligations
will not exceed the Borrowing Base.
ARTICLE 8
EVENTS OF DEFAULT
Section 8.1 Events of Default. An Event of Default shall exist upon the
occurrence of any of the following specified events (each an "Event of
Default"):
(a) the Borrowers or any Guarantor shall default in the
payment when due of (i) any principal of any of the Loans, (ii) any
reimbursement obligations arising from drawings under Letters of
Credit, (iii) any interest on the Loans or on any reimbursement
obligations arising from drawings under Letters of Credit, (iv) any
Fees owing hereunder, or (v) any other amount owing under any of the
other Credit Documents or in connection herewith or therewith;
(b) any representation, warranty, or statement made or deemed
to be made by any Borrower or any Guarantor herein, in any of the other
Credit Documents, or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove untrue
in any material respect on the date as of which it was deemed to have
been made;
(c) any Borrower or any Guarantor shall
(i) default in the due performance or observance of
any term, covenant, or agreement contained in Sections 6.2,
6.9, 6.10, 6.11, 6.14, or 7.1 through 7.15,
(ii) default in the due performance of the
requirements of Section 6.1(d) in the Agent's discretion or if
such default shall continue for more than two Business Days,
(iii) default in the due performance or observance of
any term, covenant, or agreement contained in Sections 6.1
(other than Section 6.1(d)) or Section 6.16 and such default
shall continue unremedied for a period of at least five (5)
Business Days after the earlier of an Executive Officer of a
Credit Party becoming aware of such default or notice thereof
by the Agent,
(iv) default in the due performance or observance by
it of any term, covenant, or agreement (other than those
referred to in clauses (a), (b), (c)(i), (c)(ii), (c)(iii),
and (d) through (k) of this Section 8.1) contained in this
Credit
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Agreement or in any other Credit Document and such default
shall continue unremedied for a period of at least thirty (30)
days after the earlier of an Executive Officer of a Credit
Party becoming aware of such default or notice thereof by the
Agent; or
(d) except as otherwise expressly permitted herein, any Credit
Document shall fail to be in full force and effect in all material
respects or to give the Agent and/or the Lenders the Liens, rights,
powers, and privileges purported to be created thereby in all material
respects, or any Credit Party shall so state in writing;
(e) except as the result of or in connection with a
dissolution, merger, or disposition of a Subsidiary permitted under
Section 7.4 or Section 7.5, the guaranty given by any Guarantor
(including any Person which becomes a Guarantor after the Closing Date
in accordance with Section 6.12) or any provision thereof shall cease
to be in full force and effect in all material respects, or any
Guarantor (including any Person which becomes a Guarantor after the
Closing Date in accordance with Section 6.12) or any Person acting by
or on behalf of such Guarantor shall deny or disaffirm such Guarantor's
obligations under such guaranty;
(f) any Bankruptcy Event shall occur with respect to any
Credit Party, or pursuant to article "SIXTH" of its Certificate of
Incorporation, Xxxxxxxx'x shall propose or enter into any negotiations
with its creditors or stockholders (or any class of its creditors or
stockholders) concerning a compromise or arrangement of its
Indebtedness;
(g) with respect to any Indebtedness (other than Indebtedness
outstanding under this Agreement, but including any Subordinated Debt)
in excess of $2,000,000 in the aggregate for the members of the
Consolidated Group taken as a whole, (i) any member of the Consolidated
Group shall (A) default in any payment (beyond the applicable grace
period with respect thereto, if any) with respect to any such
Indebtedness, or (B) the occurrence and continuance of a default in the
observance or performance relating to such Indebtedness or contained in
any instrument or agreement evidencing, securing, or relating thereto,
or any other event or condition shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit, the holder or holders of such Indebtedness (or trustee or agent
on behalf of such holders) to cause (determined without regard to
whether any notice or lapse of time is required), any such Indebtedness
to become due prior to its stated maturity or (ii) any such
Indebtedness shall be declared due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior
to the stated maturity thereof;
(h) one or more judgments or decrees shall be entered against
one or more of the members of the Consolidated Group involving a
liability of $3,000,000 or more in the aggregate (to the extent not
paid or fully covered by insurance provided by a carrier who has
acknowledged coverage and has the ability to perform) or otherwise
having a Material Adverse Effect and any such judgments or decrees
shall not have been vacated, discharged, or stayed or bonded pending
appeal within thirty (30) days from the entry thereof;
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(i) any of the following events or conditions, if such event
or condition is reasonably likely to involve the imposition of taxes,
penalties, and other liabilities against members of the Consolidated
Group in an aggregate amount in excess of $1,000,000: (i) any
"accumulated funding deficiency," as such term is defined in Section
302 of ERISA and Section 412 of the Internal Revenue Code, whether or
not waived, shall exist with respect to any Plan, or any Lien shall
arise on the assets of any member of the Consolidated Group in favor of
the PBGC or a Plan; (ii) an ERISA Event shall occur with respect to a
Single Employer Plan, which is, in the reasonable opinion of the Agent,
likely to result in the termination of such Plan for purposes of Title
IV of ERISA; (iii) an ERISA Event shall occur with respect to a
Multiemployer Plan or Multiple Employer Plan, which is, in the
reasonable opinion of the Agent, likely to result in (A) the
termination of such Plan for purposes of Title IV of ERISA, or (B) any
member of the Consolidated Group incurring any liability in connection
with a withdrawal from, reorganization of (within the meaning of
Section 4241 of ERISA), or insolvency (within the meaning of Section
4245 of ERISA) of such Plan; (iv) any prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code) or breach of fiduciary responsibility shall occur which
may subject any member of the Consolidated Group or any ERISA Affiliate
to any liability under Sections 406, 409, 502(i), or 502(l) of ERISA or
Section 4975 of the Internal Revenue Code, or under any agreement or
other instrument pursuant to which any member of the Consolidated Group
or any ERISA Affiliate has agreed or is required to indemnify any
Person against any such liability; or (v) the occurrence of any event
described in clause (i) through clause (iv) preceding in relation to an
ERISA Affiliate Plan, if such event actually results in any member of
the Consolidated Group incurring liability for taxes, penalties, or
other liabilities in an aggregate amount in excess of $1,000,000;
(j) there shall occur a Change of Control; or
(k) Xxxxxxxx'x shall not comply with any of the terms and
conditions applicable to it in that certain Subordination Agreement,
dated as of the Closing Date, among, Xxxxxxxx'x, Crescent, Crescent
Jewelers Inc., and the Agent, as such agreement may be amended,
restated, or otherwise modified from time to time.
Section 8.2 Acceleration; Remedies. Upon the occurrence of an Event of
Default, and at any time thereafter unless and until such Event of Default has
been waived by the requisite Lenders (pursuant to the voting requirements
specified in Section 10.6) or cured to the satisfaction of the requisite Lenders
(pursuant to the voting procedures specified in Section 10.6), the Agent shall,
upon the request and direction of the Required Lenders, by written notice to the
Borrower take any of the following actions:
(a) declare the Commitments terminated whereupon the
Commitments shall be immediately terminated;
(b) declare the unpaid principal of and any accrued interest
in respect of all Loans, any reimbursement obligations arising from
drawings under Letters of Credit, and any and all other indebtedness or
obligations of any and every kind owing by the Credit
Page 86
Parties to the Agent and/or any of the Lenders hereunder to be due
whereupon the same shall be immediately due and payable without
presentment, demand, protest, or other notice of any kind, all of which
are hereby waived by the Credit Parties;
(c) direct the Borrowers and the Guarantors to pay (and the
Borrowers and the Guarantors agree that upon receipt of such notice, or
upon the occurrence of an Event of Default under Section 8.1(f), they
will immediately pay) to the Agent additional cash, to be held by the
Agent, for the benefit of the Agent and the Lenders, in a cash
collateral account as additional security for the LOC Obligations in
respect of subsequent drawings under all then outstanding Letters of
Credit in an amount equal to the maximum aggregate amount which may be
drawn under all Letters of Credits then outstanding; and
(d) enforce any and all rights and interests created and
existing under the Credit Documents including, without limitation, all
rights and remedies existing under the Collateral Documents, all rights
and remedies against a Guarantor and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
8.1(f) shall occur with respect to any Borrower, then the Commitments shall
automatically terminate and all Loans, all reimbursement obligations arising
from drawings under Letters of Credit, all accrued interest in respect thereof,
all accrued and unpaid Fees, and all other indebtedness or obligations owing to
the Agent and/or any of the Lenders hereunder automatically shall immediately
become due and payable without the giving of any notice or other action by the
Agent or the Lenders.
ARTICLE 9
AGENCY PROVISIONS
Section 9.1 Appointment and Authorization. Each Lender hereby
designates and appoints Bank of America (acting in its capacity as the Agent) as
its agent under this Agreement and the other Credit Documents and each Lender
hereby irrevocably authorizes the Agent to take such action on its behalf under
the provisions of this Agreement and each other Credit Document and to exercise
such powers and perform such duties as are expressly delegated to it by the
terms of this Agreement or any other Credit Document, together with such powers
as are reasonably incidental thereto. The Agent agrees to act as such on the
express conditions contained in this Article 9. The provisions of this Article 9
are solely for the benefit of the Agent and the Lenders and the Credit Parties
shall have no rights as a third party beneficiary of any of the provisions
contained herein other than as expressly provided in Section 9.10 and Section
9.11. Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Credit Document, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein, nor shall the
Agent have or be deemed to have any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or any other Credit Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any Requirement of Law.
Instead, such term is used merely as a matter of market custom, and is
Page 87
intended to create or reflect only an administrative relationship between
independent contracting parties. Except as expressly otherwise provided in this
Agreement, the Agent shall have and may use its sole discretion with respect to
exercising or refraining from exercising any discretionary rights or taking or
refraining from taking any actions which the Agent is expressly entitled to take
or assert under this Agreement and the other Credit Documents, including (a) the
determination of the applicability of ineligibility criteria with respect to the
calculation of the Borrowing Base, (b) the making of Discretionary
Over-Advances, and (c) the exercise of remedies pursuant to Section 8.2, and any
action so taken or not taken shall be deemed consented to by the Lenders.
Section 9.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Credit Document by or through agents,
employees, or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects as long as such selection was made without gross negligence or
willful misconduct.
Section 9.3 Liability of the Agent. None of the Agent-Related Persons
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Credit Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Lenders for any
recital, statement, representation, or warranty made by any Credit Party or any
Affiliate of any Credit Party, or any officer thereof, contained in this
Agreement or in any other Credit Document, or in any certificate, report,
statement, or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Credit Document,
or the validity, effectiveness, genuineness, enforceability, or sufficiency of
this Agreement or any other Credit Document, or for any failure of any Credit
Party or any other party to any Credit Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Credit Document, or to inspect the properties, books or records of any
Credit Party or any Credit Party's Affiliates.
Section 9.4 Reliance by the Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex, or
telephone message, statement, or other document or conversation believed by it
to be genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including,
without limitation, counsel to any Credit Party), independent accountants and
other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement or any other Credit Document
in accordance with a request or consent of the Required Lenders (or such other
percentage of Lenders if so required by Section 10.6) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
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Section 9.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, unless
the Agent shall have received written notice from a Credit Party or a Lender
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." The Agent will notify the
Lenders of its receipt of any such notice. The Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Required
Lenders in accordance with Article 8; provided, however, that unless and until
the Agent has received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable.
Section 9.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Credit Parties and their Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition, and
creditworthiness of the Credit Parties and their Affiliates, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to the
Borrowers. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals, and decisions in taking or not taking action under
this Agreement and the other Credit Documents, and to make such investigations
as it deems necessary to inform itself as to the business, prospects,
operations, property, financial and other condition, and creditworthiness of the
Credit Parties and their Affiliates. Except for notices, reports, and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition, or creditworthiness of the Credit
Parties and their Affiliates which may come into the possession of any of the
Agent-Related Persons.
Section 9.7 Indemnification. WHETHER OR NOT THE TRANSACTIONS
CONTEMPLATED HEREBY ARE CONSUMMATED, THE LENDERS SHALL UPON DEMAND INDEMNIFY THE
AGENT-RELATED PERSONS (TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF THE
CREDIT PARTIES AND WITHOUT LIMITING THE OBLIGATION OF THE CREDIT PARTIES TO DO
SO), IN ACCORDANCE WITH THEIR PRO RATA SHARES, FROM AND AGAINST ANY AND ALL
INDEMNIFIED LIABILITIES OTHER THAN LIABILITIES RELATING TO BANK PRODUCTS;
PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR THE PAYMENT TO THE
AGENT-RELATED PERSONS OF ANY PORTION OF SUCH INDEMNIFIED LIABILITIES (AS DEFINED
HEREIN) RESULTING SOLELY FROM SUCH PERSON'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. Without limitation of the foregoing, each Lender shall reimburse the
Agent upon demand for its pro rata share of any costs or out-of-pocket expenses
(including fees and expenses for legal counsel) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification,
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amendment, or enforcement (whether through negotiations, legal proceedings, or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Credit Document, or any document contemplated by or
referred to herein, to the extent that the Agent is not reimbursed for such
expenses by or on behalf of the Credit Parties. The undertaking in this Section
shall survive the payment of the Total Obligations and the resignation or
replacement of the Agent.
Section 9.8 The Agent in Individual Capacity. Bank of America and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with any
Credit Party and its Affiliates as though Bank of America were not the Agent
hereunder and without notice to or consent of the Lenders. Bank of America or
its Affiliates may receive information regarding any Credit Party or its
Affiliates and account debtors (including information that may be subject to
confidentiality obligations in favor of any such Credit Party or Affiliate), and
the Lenders acknowledge that the Agent and Bank of America shall be under no
obligation to provide such information to the Lenders. With respect to its
Loans, Bank of America as a Lender shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as though it were
not the Agent, and the terms "Lender" and "Lenders" include Bank of America in
its individual capacity.
Section 9.9 Successor Agent. The Agent may resign as Agent upon at
least thirty (30) days prior notice to the Lenders and the Credit Parties, such
resignation to be effective upon the acceptance of a successor agent to its
appointment as the Agent. In the event Bank of America sells all of its
Commitments and Loans as part of a sale, transfer, or other disposition by Bank
of America of substantially all of its loan portfolio, Bank of America shall
resign as the Agent and such purchaser or transferee shall become the successor
Agent hereunder. Subject to the foregoing, if the Agent resigns (the "resigning
Agent") under this Agreement, the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders (the "successor Agent"). If no
successor Agent is appointed prior to the effective date of the resignation of
the resigning Agent, the resigning Agent may appoint, after consulting with the
Lenders and the Borrowers, a successor Agent from among the Lenders. Upon the
acceptance of its appointment as the successor Agent, the successor Agent shall
succeed to all the rights, powers, and duties of the resigning Agent and the
term "Agent" shall mean the successor Agent and the resigning Agent's
appointment, powers, and duties as the Agent shall be terminated. The
appointment of any successor Agent shall, so long as no Default or Event of
Default shall exist, be subject to the prior consent of the Borrowers (such
consent not to be unreasonably withheld). After any resigning Agent's
resignation hereunder as the Agent, the provisions of this Article 9 shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was the Agent under this Agreement.
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Section 9.10 Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership, or
trust" within the meaning of the Internal Revenue Code and such Lender
claims exemption from, or a reduction of, United States withholding tax
under Sections 1441 or 1442 of the Internal Revenue Code, such Lender
agrees with and in favor of the Agent, to deliver to the Agent and the
Borrowers:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a U.S. tax treaty, two (2)
properly completed and executed IRS Forms W-8BEN and W-8ECI
before the payment of any interest in the first calendar year
and before the payment of any interest in each third
succeeding calendar year during which interest may be paid
under this Agreement;
(ii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade
or business of such Lender, two (2) properly completed and
executed copies of IRS Form W-8ECI before the payment of any
interest is due in the first taxable year of such Lender and
in each succeeding taxable year of such Lender during which
interest may be paid under this Agreement, and IRS Form W-9;
and
(iii) such other form or forms as may be required
under the Internal Revenue Code or other laws of the United
States as a condition to exemption from, or reduction of,
United States withholding tax.
Such Lender agrees to promptly notify the Agent and the Borrowers of
any change in circumstances which would modify or render invalid any
claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form
W-8BEN and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Total Obligations owing to such
Lender under this Agreement, such Lender agrees to notify the Agent and
the Borrowers of the percentage amount in which it is no longer the
beneficial owner of such Total Obligations owing to such Lender. To the
extent of such percentage amount, the Agent and the Borrowers will
treat such Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form W-8ECI with the Agent sells,
assigns, grants a participation in, or otherwise transfers all or part
of the Total Obligations owing to such Lender under this Agreement,
such Lender agrees to undertake sole responsibility for complying with
the withholding tax requirements imposed by Sections 1441 and 1442 of
the Internal Revenue Code.
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(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent or the Borrowers may withhold from any
interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms
or other documentation required by clause (a) preceding are not
delivered to the Agent and the Borrowers, then the Agent or the
Borrowers may withhold from any interest payment to such Lender not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent or
the Borrowers did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to
notify the Agent or the Borrowers of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Lender shall indemnify the
Agent and the Borrowers fully for all amounts paid, directly or
indirectly, by the Agent or the Borrowers as tax or otherwise,
including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section
9.10, together with all costs and expenses (including fees and expenses
for legal counsel). The obligation of the Lenders under this clause (e)
shall survive the payment of the Total Obligations and the resignation
or replacement of the Agent.
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Section 9.11 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Liens upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full of all Loans and reimbursement obligations in
respect of Letters of Credit, and the termination of all outstanding
Letters of Credit (whether or not any of such obligations are due) and
all other Total Obligations; (ii) constituting property being sold or
disposed of if the Credit Party disposing of such property certifies to
the Agent that the sale or disposition is made in compliance with the
terms of this Agreement (and the Agent may rely conclusively on any
such certificate, without further inquiry); (iii) constituting property
in which no Credit Party owned any interest at the time the Lien was
granted or at any time thereafter; or (iv) constituting property leased
to a Credit Party under a lease which has expired or been terminated in
a transaction permitted under this Agreement. Except as provided above,
the Agent will not release any of the Agent's Liens without the prior
written authorization of the Lenders; provided that the Agent may, in
its discretion, release the Agent's Liens on Collateral valued in the
aggregate not in excess of $2,000,000 during each calendar year without
the prior written authorization of the Lenders and the Agent may
release the Agent's Liens on Collateral valued in the aggregate not in
excess of $5,000,000 during each calendar year with the prior written
authorization of the Required Lenders. Upon request by the Agent or the
Credit Parties at any time, the Lenders will confirm in writing the
Agent's authority to release any Agent's Liens upon particular types or
items of Collateral pursuant to this Section 9.11.
(b) Upon receipt by the Agent of any authorization required
pursuant to Section 9.11(a) from the Lenders or the Required Lenders,
as applicable, of the Agent's authority to release any Liens upon
particular types or items of Collateral, and upon at least five (5)
Business Days prior written request by the Credit Parties, the Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the
Agent's Liens upon such Collateral; provided, however, that (i) the
Agent shall not be required to execute any such document on terms
which, in the Agent's opinion, would expose the Agent to liability or
create any obligation or entail any consequence other than the release
of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect, or impair the Total Obligations or
any Liens (other than those expressly being released) upon (or
obligations of the Credit Parties in respect of) all interests retained
by the Credit Parties, including the proceeds of any sale, all of which
shall continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by the
Credit Parties or is cared for, protected, or insured or has been
encumbered, or that the Agent's Liens have been properly or
sufficiently or lawfully created, perfected, protected, or enforced or
are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure, or
fidelity, or to continue exercising, any of the rights, authorities,
and powers granted or available to the Agent pursuant to any of the
Credit
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Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, the Agent
may act in any manner it may deem appropriate, in its sole discretion
given the Agent's own interest in the Collateral in its capacity as one
of the Lenders and that the Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing.
Section 9.12 Restrictions on Actions by the Lenders; Sharing of
Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of all Lenders, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of all Lenders, setoff
against the Total Obligations, any amounts owing by such Lender to any
Credit Party or any accounts of any Credit Party now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it
shall not, unless specifically requested to do so by the Agent, take or
cause to be taken any action to enforce its rights under this Agreement
or any other Credit Document or against any Credit Party, including the
commencement of any legal or equitable proceedings, to foreclose any
Lien on, or otherwise enforce any security interest in, any of the
Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral
or any payments with respect to the Total Obligations owing to such
Lender arising under, or relating to, this Agreement or the other
Credit Documents, except for any such proceeds or payments received by
such Lender from the Agent pursuant to the terms of this Agreement, or
(ii) payments from the Agent in excess of such Lender's ratable portion
of all such distributions by the Agent, such Lender shall promptly (1)
turn the same over to the Agent, in kind, and with such endorsements as
may be required to negotiate the same to the Agent, or in same day
funds, as applicable, for the account of all of the Lenders and for
application to the Total Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or
warranty, an undivided interest and participation in the Total
Obligations owed to the other Lenders so that such excess payment
received shall be applied ratably as among the Lenders in accordance
with their Revolving Commitment Percentage; provided, however, that if
all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable
portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such
purchasing party is required to pay interest in connection with the
recovery of the excess payment.
Section 9.13 Agency for Perfection; Appointment of Collateral Agent.
(a) Each Lender hereby appoints each other Lender as agent for
the purpose of perfecting Liens, for the benefit of the Agent and the
Lenders, in assets which, in accordance with Article 9 of the UCC or
any other Requirements of Law can be perfected only by possession.
Should any Lender (other than the Agent) obtain possession of any such
Collateral, such Lender shall notify the Agent thereof, and, promptly
upon the
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Agent's request therefor shall deliver such Collateral to the Agent or
otherwise deal with such Collateral in accordance with the Agent's
instructions.
(b) The Lenders hereby appoint, authorize, and direct Bank of
America, N.A., its successors and assigns in such capacity, to act as
collateral agent under the Collateral Documents (in such capacity, the
"Collateral Agent") with such powers and discretion as are specifically
delegated to the Collateral Agent by the terms thereof, together with
such other powers as are reasonably incidental thereto. The Lenders
further agree that the Collateral Agent shall be entitled to the same
rights, privileges, powers, immunities, and indemnification provided to
the Agent under this Article 9 to the same extent as provided to the
Agent.
Section 9.14 Payments by the Agent to the Lenders. All payments to be
made by the Agent to the Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an assignee, delivered with or in the applicable
Assignment and Acceptance), or pursuant to such other wire transfer instructions
as each party may designate for itself by written notice to the Agent.
Concurrently with each such payment, the Agent shall identify whether such
payment (or any portion thereof) represents principal, premium, or interest on
the Loans or otherwise. Unless the Agent receives notice from the Borrowers
prior to the date on which any payment is due to the Lenders that the Borrowers
will not make such payment in full as and when required, the Agent may assume
that the Borrowers have made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrowers have not made such payment in full to the Agent, each Lender shall
repay to the Agent on demand such amount distributed to such Lender, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
Section 9.15 Field Audit and Examination Reports; Disclaimer by the
Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit
or examination report (each a "Report" and collectively, the "Reports")
prepared by or on behalf of the Agent;
(b) expressly agrees and acknowledges that neither Bank of
America nor the Agent (i) makes any representation or warranty as to
the accuracy of any Report, or (ii) shall be liable for any information
contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent, Bank of America,
or any other party performing any audit or examination will inspect
only specific information regarding the Credit Parties and will rely
significantly upon the Credit Parties' books and records, as well as on
representations of the Credit Parties' personnel;
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(d) agrees to keep all Reports confidential and strictly for
its internal use, and not to distribute except to its Participants, or
use any Report in any other manner; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to
hold the Agent and any such other Lender preparing a Report harmless
from any action the indemnifying Lender may take or conclusion the
indemnifying Lender may reach or draw from any Report in connection
with any loans or other credit accommodations that the indemnifying
Lender has made or may make to the Credit Parties, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a
loan or loans of the Credit Parties; and (ii) to pay and protect, and
indemnify, defend, and hold the Agent and any such other Lender
preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses, and other amounts (including
fees and expenses of legal counsel) incurred by the Agent and any such
other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
Section 9.16 Relation Among the Lenders. The Lenders are not partners
or co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
Section 9.17 Settlement.
(a) Each Lender's funded portion of the Loans is intended by
the Lenders to be equal at all times to such Lender's Revolving
Commitment Percentage of the outstanding Loans. Notwithstanding such
agreement, the Agent, Bank of America, and the Lenders agree (which
agreement shall not be for the benefit of or enforceable by the Credit
Parties) that in order to facilitate the administration of this
Agreement and the other Credit Documents, settlement among them as to
the Revolving Loans, including the Non-Ratable Loans, shall take place
on a periodic basis in accordance with the following provisions:
(i) The Agent shall request settlement (a
"Settlement") with the Lenders on at least a weekly basis, or
on a more frequent basis at the Agent's election, (A) on
behalf of Bank of America, with respect to each outstanding
Non-Ratable Loan, (B) for itself, with respect to each
Discretionary Over-Advance, and (C) with respect to
collections received, in each case, by notifying the Lenders
of such requested Settlement by telecopy, telephone, e-mail,
or other similar form of transmission, of such requested
Settlement, no later than 12:00 noon (Pasadena, California
time) on the date of such requested Settlement (the
"Settlement Date"). Each Lender (other than Bank of America,
in the case of Non-Ratable Loans, and the Agent in the case of
Discretionary Over-Advances) shall transfer the amount of such
Lender's Revolving Commitment Percentage of the outstanding
principal amount of the Non-Ratable Loans and Discretionary
Over-Advances with respect to which Settlement is requested to
the Agent, to such account of the Agent as the Agent may
designate, not later than 2:00 p.m. (Pasadena, California
time), on the
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Settlement Date applicable thereto. Settlements may occur
during the continuation of a Default or an Event of Default
and whether or not the applicable conditions precedent set
forth in Article 4 have then been satisfied. Such amounts
transferred to the Agent shall be applied against the amounts
of the applicable Non-Ratable Loan or Discretionary
Over-Advance and, together with the portion of such
Non-Ratable Loan or Discretionary Over-Advance representing
Bank of America's Revolving Commitment Percentage thereof,
shall constitute Revolving Loans of such Lenders,
respectively. If any such amount is not transferred to the
Agent by any Lender on the Settlement Date applicable thereto,
the Agent shall be entitled to recover such amount on demand
from such Lender together with interest thereon at the Federal
Funds Rate for the first three (3) days from and after the
Settlement Date and thereafter at the Adjusted Base Rate (Y)
on behalf of Bank of America, with respect to each outstanding
Non-Ratable Loan, and (Z) for itself, with respect to each
Discretionary Over-Advance.
(ii) Notwithstanding the foregoing, not more than one
(1) Business Day after demand is made by the Agent (whether
before or after the occurrence of a Default or an Event of
Default and regardless of whether the Agent has requested a
Settlement with respect to a Non-Ratable Loan or Discretionary
Over-Advance), each other Lender (A) shall irrevocably and
unconditionally purchase and receive from Bank of America or
the Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such Non-Ratable Loan
or Discretionary Over-Advance equal to such Lender's Revolving
Commitment Percentage of such Non-Ratable Loan or
Discretionary Over-Advance and (B) if Settlement has not
previously occurred with respect to such Non-Ratable Loans or
Discretionary Over-Advance, upon demand by Bank of America or
the Agent, as applicable, shall pay to Bank of America or the
Agent, as applicable, as the purchase price of such
participation an amount equal to one-hundred percent (100%) of
such Lender's Revolving Commitment Percentage of such
Non-Ratable Loans or Discretionary Over-Advance. If such
amount is not in fact transferred to the Agent by any Lender,
the Agent shall be entitled to recover such amount on demand
from such Lender together with interest thereon at the Federal
Funds Rate for the first three (3) days from and after such
demand and thereafter at the Adjusted Base Rate.
(iii) From and after the date, if any, on which any
Lender purchases an undivided interest and participation in
any Non-Ratable Loan or Discretionary Over-Advance pursuant to
clause (ii) preceding, the Agent shall promptly distribute to
such Lender, such Lender's Revolving Commitment Percentage of
all payments of principal and interest and all proceeds of
Collateral received by the Agent in respect of such
Non-Ratable Loan or Discretionary Over-Advance.
(iv) Between Settlement Dates, to the extent no
Discretionary Over-Advances are outstanding, the Agent may pay
over to Bank of America any payments received by the Agent,
which in accordance with the terms of this Agreement would be
applied to the reduction of the Loans, for application to the
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Non-Ratable Loans. If, as of any Settlement Date, collections
received since the then immediately preceding Settlement Date
have been applied to Bank of America's Revolving Loans (other
than to Non-Ratable Loans or Discretionary Over-Advance in
which a Lender has not yet funded its purchase of a
participation pursuant to clause (ii) preceding), as provided
for in the previous sentence, Bank of America shall pay to the
Agent for the accounts of the Lenders, to be applied to the
outstanding Revolving Loans of such Lenders, an amount such
that each Lender shall, upon receipt of such amount, have, as
of such Settlement Date, its Revolving Commitment Percentage
of the Revolving Loans. During the period between Settlement
Dates, Bank of America (with respect to Non-Ratable Loans),
the Agent (with respect to Discretionary Over-Advances), and
each Lender (with respect to the Revolving Loans other than
Non-Ratable Loans and Discretionary Over-Advances), shall be
entitled to interest at the applicable rate or rates payable
under this Agreement on the actual average daily amount of
funds employed by Bank of America, the Agent, and the other
Lenders.
(b) The Lenders' Failure to Perform. All Loans (other than
Non-Ratable Loans and Discretionary Over-Advances) shall be made by the
Lenders simultaneously and in accordance with their Revolving
Commitment Percentages. It is understood that (i) no Lender shall be
responsible for any failure by any other Lender to perform its
obligation to make any Loans hereunder, nor shall the Revolving
Committed Amount of any Lender be increased or decreased as a result of
any failure by any other Lender to perform its obligation to make any
Loans hereunder, (ii) no failure by any Lender to perform its
obligation to make any Loans hereunder shall excuse any other Lender
from its obligation to make any Loans hereunder, and (iii) the
obligations of each Lender hereunder shall be several, not joint and
several.
(c) Defaulting Lenders. Unless the Agent receives notice from
a Lender on or prior to the Closing Date or, with respect to any
borrowing after the Closing Date, at least one (1) Business Day prior
to the date of such borrowing, that such Lender will not make available
as and when required hereunder to the Agent such Lender's Revolving
Commitment Percentage of such borrowing, the Agent may assume that each
Lender has made such amount available to the Agent in immediately
available funds on the Funding Date. Furthermore, the Agent may, in
reliance upon such assumption, make available to the Borrowers on such
date a corresponding amount. If any Lender has not transferred its full
Revolving Commitment Percentage of any borrowing to the Agent in
immediately available funds and if the Agent has transferred a
corresponding amount to the Borrowers on the Business Day following
such Funding Date the applicable Lender shall make such amount
available to the Agent, together with interest at the Federal Funds
Rate for that day. A notice by the Agent submitted to any Lender with
respect to amounts owing shall be conclusive, absent manifest error. If
each Lender's full Revolving Commitment Percentage of any requested
borrowing is transferred to the Agent as required, the amount
transferred to the Agent shall constitute such Lender's Loan for all
purposes of this Agreement. If any such amount is not transferred to
the Agent on the Business Day following the Funding Date, the Agent
will notify the Borrowers of such failure to fund and, upon demand by
the Agent, the Borrowers shall pay such amount to the Agent for
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the Agent's account, together with interest thereon for each day
elapsed since the date of such borrowing, at a rate per annum equal to
the Adjusted Eurodollar Rate or the Adjusted Base Rate, as applicable
at the time to the Loans comprising that particular borrowing. The
failure of any Lender to make any Loan on any Funding Date (any such
Lender, prior to the cure of such failure, being hereinafter referred
to as a "Defaulting Lender") shall not relieve any other Lender of its
obligation hereunder to make a Loan on such Funding Date. No Lender
shall be responsible for any other Lender's failure to advance such
other Lenders' Revolving Commitment Percentage of any borrowing.
(d) Retention of Defaulting Lender's Payments. The Agent shall
not be obligated to transfer to a Defaulting Lender any payments made
by the Borrowers to the Agent for the Defaulting Lender's benefit, nor
shall a Defaulting Lender be entitled to the sharing of any payments
hereunder. Amounts payable to a Defaulting Lender shall instead be paid
to or retained by the Agent. In its discretion, the Agent may loan the
Borrowers the amount of all such payments received or retained by it
for the account of such Defaulting Lender. Any amounts so loaned to the
Borrowers shall bear interest at the rate applicable to Base Rate Loans
and for all other purposes of this Agreement shall be treated as if
they were Loans, provided, however, that for purposes of voting or
consenting to matters with respect to the Credit Documents and
determining the Revolving Commitment Percentages, such Defaulting
Lender shall be deemed not to be a "Lender." Until a Defaulting Lender
cures its failure to fund its Revolving Commitment Percentage of any
borrowing (i) such Defaulting Lender shall not be entitled to any
portion of the Unused Line Fee and (ii) the Unused Line Fee shall
accrue in favor of the Lenders which have funded their respective
Revolving Commitment Percentage of such requested borrowing and shall
be allocated among such performing Lenders ratably based upon their
relative Revolving Committed Amount. This Section shall remain
effective with respect to such Lender until such time as the Defaulting
Lender shall no longer be in default of any of its obligations under
this Agreement. The terms of this Section shall not be construed to
increase or otherwise affect the Revolving Commitment of any Lender, or
relieve or excuse the performance by the Borrowers of their duties and
obligations hereunder.
Section 9.18 Syndication Agent. CIT, in its capacity as the syndication
agent, shall have no rights, powers, duties, liabilities, fiduciary
relationships, or obligations under this Agreement or any of the other Credit
Documents.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Notices. Except as otherwise expressly provided herein,
all notices and other communications shall have been duly given and shall be
effective (a) when delivered, (b) when transmitted via telecopy (or other
facsimile device) to the number specified below, (c) the Business Day following
the day on which the same has been delivered prepaid to a reputable national
overnight air courier service, or (d) the third Business Day following the day
on which the same is sent by certified or registered mail, postage prepaid, in
each case to the
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respective parties at the address, in the case of the Borrowers, the Guarantors,
and the Agent, set forth below, and, in the case of the Lenders, set forth on
Schedule 10.1, or at such other address as such party may specify by written
notice to the other parties hereto:
if to the Borrowers or the Guarantors:
Xxxxxxxx'x Inc.
0 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxxx
Telecopy: (000) 000-0000
if to the Agent:
Bank of America, N.A.
00 Xxxxx Xxxx Xxxxxx , Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Portfolio Manager
Telecopy: (000) 000-0000
Section 10.2 Right of Setoff. In addition to any rights and remedies of
the Lenders provided by law, if an Event of Default exists or the Loans have
been accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Credit Parties, any such notice being waived by the
Credit Parties to the fullest extent permitted by law, to setoff and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by, and other indebtedness at any time owing by, such Lender or
any Affiliate of such Lender to or for the credit or the account of the Credit
Parties against the Total Obligations to such Lender, now or hereafter existing,
irrespective of whether or not the Agent or such Lender shall have made demand
under this Agreement or any other Credit Document and although such Total
Obligations owing by the Credit Parties may be contingent or unmatured. Each
Lender agrees promptly to notify the Credit Parties and the Agent after any such
setoff and application made by such Lender; provided, however, the failure to
give such notice shall not affect the validity of such setoff and application.
NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SETOFF,
BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY CREDIT
PARTY HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS
CONSENT OF THE LENDERS.
Section 10.3 Benefit of Agreement; Assignments.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns
of the parties hereto; provided that neither any Borrower nor any
Guarantor may assign or transfer any of its interests and obligations
without prior written consent of each of the Lenders; provided further
that the rights of each Lender to transfer, assign, or grant
participations in its rights and/or obligations hereunder shall be
limited as provided by this Section 10.3.
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(b) Any Lender may, with the written consent of the Agent
(which consent shall not be unreasonably withheld) and if no Default or
Event of Default exists with the written consent of Xxxxxxxx'x (which
consent shall not be unreasonably withheld), assign and delegate to one
or more Eligible Assignees (provided that no consent of the Agent or
Xxxxxxxx'x shall be required in connection with any assignment and
delegation by a Lender to an Affiliate of such Lender or to another
Lender) (each an "Assignee") all, or any ratable part of all, of the
Loans, the Commitments, and the other rights and obligations of such
Lender hereunder, in a minimum amount of $10,000,000 and integral
amounts of $1,000,000 in excess thereof or all of such assigning
Lender's Loans and Commitments (provided that, unless an assignor
Lender has assigned and delegated all of its Loans and Commitments, no
such assignment and/or delegation shall be permitted unless, after
giving effect thereto, such assignor Lender retains a Commitment in a
minimum amount of $10,000,000); provided, however, that the Credit
Parties and the Agent may continue to deal solely and directly with
such Lender in connection with the interest so assigned to an Assignee
until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the
Assignee, shall have been given to the Borrowers and the Agent by such
Lender and the Assignee; (ii) such Lender and its Assignee shall have
delivered to the Borrowers and the Agent an Assignment and Acceptance
in the form of Exhibit E (an "Assignment and Acceptance") together with
any Notes subject to such assignment, and (iii) the assignor Lender or
Assignee has paid to the Agent a processing fee in the amount of $5,000
(provided that the Agent may, in its discretion, waive such fee in
connection with the initial syndication of the Commitments). The
Borrowers agree to promptly execute and deliver new or replacement
Notes as reasonably requested by the Agent to evidence assignments of
the Loans and Commitments in accordance herewith.
(c) From and after the date that the Agent notifies the
assignor Lender that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations, including, but not limited to, the obligation
to participate in Letters of Credit have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Credit Documents, and (ii) the
assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Credit Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and
be released from its obligations under this Agreement (and in the case
of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (i)
other than as provided in such Assignment and Acceptance, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties, or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness,
sufficiency, or value of this Agreement or any other Credit Document
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furnished pursuant hereto or the attachment, perfection, or priority of
any Lien granted by the Credit Parties to the Agent or any Lender in
the Collateral; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Credit Parties or the performance or observance by the
Credit Parties of any of their respective obligations under this
Agreement or any other Credit Document furnished pursuant hereto; (iii)
such Assignee confirms that it has received a copy of this Agreement,
together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such Assignee will, independently
and without reliance upon the Agent, such assigning Lender, or any
other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement; (v) such Assignee
appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other
Credit Documents as are delegated to the Agent by the terms hereof,
together with such powers, including the discretionary rights and
incidental power, as are reasonably incidental thereto; and (vi) such
Assignee agrees that it will perform in accordance with their terms all
of the obligations which by the terms of this Agreement are required to
be performed by it as a Lender.
(e) Immediately upon satisfaction of the requirements of
Section 10.3(b), this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of
the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(f) Any Lender may at any time sell to one or more
participants participating interests in any Loans, the Commitments of
that Lender, and the other interests of that Lender (the "originating
Lender") hereunder and under the other Credit Documents; provided,
however, that (i) the originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the originating Lender shall
remain solely responsible for the performance of such obligations,
(iii) the Credit Parties and the Agent shall continue to deal solely
and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and
the other Credit Documents, and (iv) no Lender shall transfer or grant
any participating interest under which the participant has rights to
approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Credit Document except the matters set
forth in Section 10.6(a)(i), Section 10.6(a)(ii), and Section
10.6(a)(iii), and (v) all amounts payable by the Borrowers hereunder
shall be determined as if such Lender had not sold such participation,
except that, if amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each participant
shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the
same extent and subject to the same limitation as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.
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(g) The Agent shall maintain at its address referred to in
Section 10.1 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of
the Loans owing to, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Credit Parties, the Agent, and
the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Credit Parties or any
Lender at any reasonable time and from time to time upon reasonable
prior notice. Any assignment of any loan, commitment, interest, or
obligation hereunder or under the other Credit Documents shall be
effective only upon an entry with respect thereto being made in the
Register.
(h) Upon its receipt of an Assignment and Acceptance executed
by the parties thereto, together with any Note subject to such
assignment and payment of the processing fee, the Agent shall (i)
accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register, and (iii) give prompt notice thereof
to the parties thereto.
(i) Any Lender may furnish any information concerning the
members of the Consolidated Group in the possession of such Lender from
time to time to assignees and participants (including prospective
assignees and participants), subject, however, to the provisions of
Section 10.15.
(j) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or
any portion of its rights under and interest in this Agreement in favor
of any Federal Reserve Bank in accordance with Regulation A of the
Federal Reserve Board or U.S. Treasury Regulation 31 CFR Section
203.14, and such Federal Reserve Bank may enforce such pledge or
security interest in any manner permitted under Requirements of Law.
Section 10.4 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Agent or any Lender in exercising any right, power, or privilege
hereunder or under any other Credit Document and no course of dealing between
the Agent or any Lender and any of the Credit Parties shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power, or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power, or privilege
hereunder or thereunder. The rights and remedies provided herein are cumulative
and not exclusive of any rights or remedies which the Agent or any Lender would
otherwise have. No notice to or demand on any Credit Party in any case shall
entitle the Credit Parties to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the Agent or the
Lenders to any other or further action in any circumstances without notice or
demand.
Section 10.5 Expenses; Indemnification.
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(a) The Borrowers agree to pay to the Agent, for its benefit,
on demand, all reasonable costs and expenses that the Agent pays or
incurs in connection with the negotiation, preparation, syndication,
consummation, administration (including reasonable costs of travel,
lodging, and meals incurred in connection with administration of this
Agreement), enforcement, and termination of this Agreement or any of
the other Credit Documents, including: (i) all reasonable fees,
expenses, and disbursements of any law firm or other counsel engaged by
the Agent; (ii) reasonable costs and expenses (including all fees,
expenses, and disbursements of any law firm or other counsel engaged by
the Agent) in connection with administration of this Agreement and for
any amendment, supplement, waiver, consent, or subsequent closing in
connection with the Credit Documents and the transactions contemplated
thereby; (iii) reasonable costs and expenses of lien and title
searches, title insurance, and environmental audits; (iv) taxes, fees,
and other charges for recording the Mortgages, filing financing
statements and continuations, and other actions to perfect, protect,
and continue the Agent's Liens (including reasonable costs and expenses
paid or incurred by the Agent in connection with the consummation of
this Agreement); (v) sums paid or incurred to pay any amount or take
any action required of any Credit Party under the Credit Documents that
such Credit Party fails to pay or take; (vi) costs of appraisals,
inspections, and verifications of the Collateral, including travel,
lodging, and meals for field examinations and inspections of the
Collateral and the Credit Parties' operations by the Agent, plus the
Agent's then customary charge for field examinations and audits and the
preparation of reports thereof (such charge is currently $800 per day
(or portion thereof) for each Person retained or employed by the Agent
with respect to each field examination or audit); and (vii) costs and
expenses of forwarding loan proceeds, collecting checks and other items
of payment, and establishing and maintaining payment accounts and
lockboxes, and costs and expenses of preserving and protecting the
Collateral. In addition, upon demand, the Borrowers agree to pay to the
Agent and the Lenders (as applicable) all costs and expenses incurred
by the Agent and the Lenders (including all reasonable fees, expenses,
and disbursements of any law firm or other counsel engaged by the Agent
and all reasonable fees, expenses, and disbursements incurred by the
Lenders for one law firm retained by the Lenders), in each case, paid
or incurred to obtain payment of the Total Obligations, enforce the
Agent's Liens, sell or otherwise realize upon the Collateral, and
otherwise enforce the provisions of the Credit Documents, or to defend
any claims made or threatened against the Agent or any Lender arising
out of the transactions contemplated hereby (including preparations for
and consultations concerning any such matters). Additionally, the
Borrowers agree to reimburse Bank of America for all costs, fees, and
expenses for which any Credit Party is obligated under the Original
Credit Agreement, and Bank of America is authorized to charge such
amounts to the loan account of the Borrowers. The foregoing shall not
be construed to limit any other provisions of the Credit Documents
regarding costs and expenses to be paid by the Borrowers. All of the
foregoing costs and expenses shall be charged to the loan account of
the Borrowers as Revolving Loans.
(b) EACH CREDIT PARTY AGREES TO DEFEND, INDEMNIFY, AND HOLD
THE AGENT-RELATED PERSONS, AND EACH LENDER AND EACH OF
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THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, COUNSEL,
REPRESENTATIVES, AGENTS, AND ATTORNEYS-IN-FACT (EACH, AN "INDEMNIFIED
PERSON") HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, CHARGES, EXPENSES, AND DISBURSEMENTS (INCLUDING ATTORNEY FEES
AND EXPENSES) OF ANY KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME
(INCLUDING AT ANY TIME FOLLOWING REPAYMENT OF THE LOANS AND THE
TERMINATION, RESIGNATION, OR REPLACEMENT OF THE AGENT OR REPLACEMENT OF
ANY LENDER) BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ANY SUCH
PERSON IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, ANY
OTHER CREDIT DOCUMENT, OR ANY OTHER AGREEMENT, DOCUMENT, OR INSTRUMENT
CONTEMPLATED BY OR REFERRED TO HEREIN OR THEREIN, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, OR ANY ACTION TAKEN OR OMITTED BY ANY
SUCH PERSON UNDER OR IN CONNECTION WITH ANY OF THE FOREGOING, INCLUDING
WITH RESPECT TO ANY INVESTIGATION, LITIGATION, OR PROCEEDING (INCLUDING
ANY INSOLVENCY PROCEEDING OR APPELLATE PROCEEDING) RELATED TO OR
ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE LOANS OR
THE USE OF THE PROCEEDS THEREOF, WHETHER OR NOT ANY INDEMNIFIED PERSON
IS A PARTY THERETO (ALL THE FOREGOING, COLLECTIVELY, THE "INDEMNIFIED
LIABILITIES"); PROVIDED THAT THE CREDIT PARTIES SHALL HAVE NO
OBLIGATION HEREUNDER TO ANY INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES TO THE EXTENT DETERMINED IN A FINAL,
NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PERSON. THE AGREEMENTS IN THIS SECTION 10.5(b) SHALL
SURVIVE PAYMENT OF ALL OTHER TOTAL OBLIGATIONS.
(c) EACH CREDIT PARTY AGREES TO INDEMNIFY, DEFEND, AND HOLD
HARMLESS THE AGENT AND THE LENDERS FROM ANY LOSS OR LIABILITY DIRECTLY
OR INDIRECTLY ARISING OUT OF THE USE, GENERATION, MANUFACTURE,
PRODUCTION, STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL,
OR PRESENCE OF A HAZARDOUS SUBSTANCE RELATING TO ANY CREDIT PARTY'S
OPERATIONS, BUSINESS, OR PROPERTY. THIS INDEMNITY WILL APPLY WHETHER
THE HAZARDOUS SUBSTANCE IS ON, UNDER, OR ABOUT ANY CREDIT PARTY'S
PROPERTY OR OPERATIONS OR PROPERTY LEASED TO ANY CREDIT PARTY. THE
INDEMNITY INCLUDES BUT IS NOT LIMITED TO REASONABLE ATTORNEY FEES AND
EXPENSES. THE INDEMNITY EXTENDS TO THE AGENT AND THE LENDERS, THEIR
AFFILIATES, SUBSIDIARIES, AND ALL OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, SUCCESSORS, ATTORNEYS, AND ASSIGNS. AS USED IN THIS
CLAUSE (c), "HAZARDOUS
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SUBSTANCES" MEANS ANY SUBSTANCE, MATERIAL, OR WASTE THAT IS OR BECOMES
DESIGNATED OR REGULATED AS "TOXIC," "HAZARDOUS," "POLLUTANT," OR
"CONTAMINANT" OR A SIMILAR DESIGNATION OR REGULATION UNDER ANY FEDERAL,
STATE, OR LOCAL LAW (WHETHER UNDER COMMON LAW, STATUTE, REGULATION, OR
OTHERWISE) OR JUDICIAL OR ADMINISTRATIVE INTERPRETATION OF SUCH,
INCLUDING PETROLEUM OR NATURAL GAS. THIS INDEMNITY WILL SURVIVE
REPAYMENT OF ALL OTHER OBLIGATIONS.
Section 10.6 Amendments, Waivers, and Consents. Neither this Agreement
nor any other Credit Document nor any of the terms hereof or thereof may be
amended, changed, waived, discharged, or terminated unless such amendment,
change, waiver, discharge, or termination is in writing entered into by, or
approved in writing by, the Required Lenders and the Borrowers, provided,
however, that:
(a) except as specifically provided in clause (iv) following,
without the consent of each Lender, neither this Agreement nor any
other Credit Document may be amended to
(i) extend the final maturity of any Loan or of any
reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit,
(ii) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability
of any post-default increase in interest rates) thereon or
Fees hereunder,
(iii) reduce or waive the principal amount of any
Loan or of any reimbursement obligation, or any portion
thereof, arising from drawings under Letters of Credit,
(iv) increase the aggregate amount of the Commitments
(including the Revolving Loan Commitments and the LOC
Committed Amount) or, with the consent of only the Lender
affected thereby, increase the Commitment of a Lender over the
amount thereof in effect (it being understood and agreed that
a waiver of any Default or Event of Default or mandatory
reduction in the Commitments shall not constitute a change in
the terms of any Commitment of any Lender),
(v) except as the result of or in connection with an
Asset Disposition permitted by Section 7.5 or as otherwise
expressly permitted under Section 9.11 or the Collateral
Documents, release or subordinate any Collateral,
(vi) except as the result of or in connection with a
dissolution, merger, or disposition of a member of the
Consolidated Group permitted under Section 7.4, release any
Credit Party from its obligations under the Credit Documents,
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(vii) amend, modify, or waive any provision of this
Section 10.6 or Section 3.6 through Section 3.9, Section
3.10(b), Section 8.1(a), Section 10.2, Section 10.3, Section
10.5, or Section 10.9,
(viii) reduce any percentage specified in or
otherwise change any percentage of the Commitments which is
required for the Lenders to take any action under this
Agreement, or otherwise modify, the definition of Required
Lenders,
(ix) amend the definition of (A) Eligible Installment
Contracts, Eligible Inventory, or Reserves if the effect of
any or all of such amendments would increase the determination
of the Borrowing Base by more than five percent (5.0%) or (B)
Borrowing Base or Receivables Advance Rate, or
(x) consent to the assignment or transfer by any
Borrower or any other Credit Party of any of its rights and
obligations under (or in respect of) the Credit Documents
except as permitted thereby;
(b) without the consent of the Agent, no provision of Article
9 may be amended; and
(c) without the consent of the Issuing Lender, no provision of
Section 2.2(a)(ii) or Section 2.6 may be amended.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as provided in clause (a) preceding, (y) each Lender is
entitled to vote as such Lender sees fit on any bankruptcy reorganization plan
that affects the Loans, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (z) the Required Lenders may consent to allow a
Credit Party to use cash collateral in the context of a bankruptcy or insolvency
proceeding.
Section 10.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart for each of the parties hereto. Delivery by
facsimile by any of the parties hereto of an executed counterpart of this
Agreement shall be as effective as an original executed counterpart hereof and
shall be deemed a representation that an original executed counterpart hereof
will be delivered.
Section 10.8 Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
Section 10.9 Survival. All indemnities set forth herein, including,
without limitation, in Section 2.6(e), Section 3.6, Section 9.7, and Section
10.5, shall survive the execution and delivery of this Agreement, the making of
the Loans, the issuance of the Letters of Credit, the
Page 107
repayment of the Loans, LOC Obligations and other obligations under the Credit
Documents, and the termination of the Commitments hereunder, and all
representations and warranties made by the Borrowers and the Guarantors herein
shall survive delivery of the Notes and the making of the Loans hereunder.
Section 10.10 Governing Law; Choice of Forum; Service of Process.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS, PROVIDED
THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE
EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN
ARTICLE 9 OF THE UCC) OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT
AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF
THE STATES OF CALIFORNIA OR OF THE UNITED STATES LOCATED IN LOS ANGELES
COUNTY, CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH OF THE CREDIT PARTIES, THE AGENT, AND THE LENDERS CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE CREDIT PARTIES, THE AGENT,
AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT,
ANY OTHER CREDIT DOCUMENT, OR ANY OTHER AGREEMENT, DOCUMENT, OR
INSTRUMENT RELATED HERETO OR THERETO. NOTWITHSTANDING THE FOREGOING (i)
THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY CREDIT PARTY OR ITS PROPERTY IN THE COURTS OF
ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR
THE TOTAL OBLIGATIONS AND (ii) EACH OF THE PARTIES HERETO ACKNOWLEDGES
THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING
SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE
JURISDICTIONS.
(c) EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO
SUCH CREDIT PARTY AT ITS ADDRESS SET FORTH IN SECTION 10.1 AND SERVICE
SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME
SHALL HAVE BEEN SO
Page 000
XXXXXXXXX XX XXX XXXXXX XXXXXX MAILS POSTAGE PREPAID. NOTHING CONTAINED
HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO SERVE
LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
(d) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO
THE CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES,
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT,
SHALL AT THE REQUEST OF ANY PARTY HERETO BE DETERMINED BY BINDING
ARBITRATION. The arbitration shall be conducted in accordance with the
United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement, and under the Commercial
Rules of the American Arbitration Association ("AAA"). The
arbitrator(s) shall give effect to statutes of limitation in
determining any claim. Any controversy concerning whether an issue is
arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or
pursuant to a provisional or ancillary remedy shall not constitute a
waiver of the right of either party, including the plaintiff, to submit
the controversy or claim to arbitration if any other party contests
such action for judicial relief.
(e) Notwithstanding the provisions of clause (d) preceding, no
controversy or claim shall be submitted to arbitration without the
consent of all parties if, at the time of the proposed submission, such
controversy or claim arises from or related to an obligation to the
Lenders which is secured by real estate property collateral (exclusive
of real estate space lease assignments). If all the parties do not
consent to submission of such a controversy or claim to arbitration,
the controversy or claim shall be determined as provided in Section
10.10(f).
(f) At the request of any party a controversy or claim which
is not submitted to arbitration as provided and limited in Section
10.10(d) and Section 10.10(e) shall be determined by judicial
reference. If such an election is made, the parties shall designate to
the court a referee or referees selected under the auspices of the AAA
in the same manner as arbitrators are selected in AAA sponsored
proceedings. The presiding referee of the panel, or the referee if
there is a single referee, shall be an active attorney or retired
judge. Judgment upon the award rendered by such referee or referees
shall be entered in the court in which such proceeding was commenced.
(g) No provision of clause (d) through clause (g) preceding
shall limit the right of the Agent or the Lenders to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or
personal property collateral or security, or obtaining provisional or
ancillary remedies from a court of competent jurisdiction before,
after, or during the pendency of any arbitration or other proceeding.
The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference. At the Agent's option, foreclosure
under a deed of trust or mortgage may be accomplished either
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by exercise of power of sale under the deed of trust or mortgage or by
judicial foreclosure.
Section 10.11 Waiver of Jury Trial. EACH OF THE CREDIT PARTIES, THE
LENDERS, AND THE AGENT IRREVOCABLY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO
THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED
PERSON, PARTICIPANT, OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. EACH OF THE CREDIT PARTIES, THE LENDERS, AND THE AGENT
AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES FURTHER
AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT,
THE OTHER CREDIT DOCUMENTS, OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS.
Section 10.12 Severability. If any provision of any of the Credit
Documents is determined to be illegal, invalid, or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in full force
and effect and shall be construed without giving effect to the illegal, invalid,
or unenforceable provisions.
Section 10.13 Entirety. This Agreement together with the other Credit
Documents represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
Section 10.14 Binding Effect; Termination.
(a) This Agreement shall become effective at such time on or
after the Closing Date when it shall have been executed by the
Borrowers, the Guarantors, and the Agent, and the Agent shall have
received copies hereof which, when taken together, bear the signatures
of each Lender, and thereafter this Agreement shall be binding upon and
inure to the benefit of the Borrowers, the Guarantors, the Agent, each
Lender, and their respective successors and assigns.
(b) The term of this Agreement shall be until no Loans, LOC
Obligations, or any other amounts payable hereunder or under any of the
other Credit Documents shall remain outstanding, no Letters of Credit
shall be outstanding, all of the Loans and
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obligations owing hereunder and under the other Credit Documents have
been irrevocably satisfied in full and all of the Commitments hereunder
shall have expired or been terminated.
Section 10.15 Confidentiality. The Agent and each Lender (each, a
"Lending Party") agrees to keep confidential any information furnished or made
available to it by the Credit Parties pursuant to this Agreement that is marked
confidential; provided that nothing herein shall prevent any Lending Party from
disclosing such information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director, employee, agent, or advisor of any
Lending Party or Affiliate of any Lending Party, (b) to any other Person if
reasonably incidental to the administration of the credit facility provided
herein, (c) as required by any law, rule, or regulation, (d) upon the order of
any court or administrative agency, (e) upon the request or demand of any
regulatory agency or authority, (f) that is or becomes available to the public
or that is or becomes available to any Lending Party other than as a result of a
disclosure by any Lending Party prohibited by this Agreement, (g) in connection
with any litigation to which such Lending Party or any of its Affiliates may be
a party, (h) to the extent necessary in connection with the exercise of any
remedy under this Agreement or any other Credit Document, (i) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about a
Lender's investment portfolio in connection with ratings issued with respect to
such Lender, (j) to any direct or indirect contractual counterparty in swap
agreements or such contractual counterparty's professional advisor (so long as
such contractual counterparty or professional advisor to such contractual
counterparty (i) has been approved in writing by the Borrowers and (ii) agrees
in a writing enforceable by the Borrowers to be bound by the provisions of this
Section 10.15) and (k) subject to provisions substantially similar to those
contained in this Section 10.15, to any actual or proposed participant or
assignee.
Section 10.16 Other Security and Guaranties. The Agent may, without
notice or demand and without affecting the Credit Parties' obligations
hereunder, from time to time: (a) take from any Person and hold collateral
(other than the Collateral) for the payment of all or any part of the Total
Obligations and exchange, enforce, or release such collateral or any part
thereof; and (b) accept and hold any endorsement or guaranty of payment of all
or any part of the Total Obligations and release or substitute any such endorser
or guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Total Obligations, or any
other Person in any way obligated to pay all or any part of the Total
Obligations.
Section 10.17 Agency of Crescent for Each Other Credit Party. Each of
the other Credit Parties irrevocably appoints Crescent as its agent for all
purposes relevant to this Agreement, including the giving and receipt of notices
and execution and delivery of all documents, instruments, and certificates
contemplated herein and all modifications hereto. Any acknowledgment, consent,
direction, certification, or other action which might otherwise be valid or
effective only if given or taken by all or any of the Credit Parties or acting
singly, shall be valid and effective if given or taken only by Crescent, whether
or not any of the other Credit Parties joins therein, and the Agent and the
Lenders shall have no duty or obligation to make further inquiry with respect to
the authority of Crescent under this Section 10.16, provided that
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nothing in this Section 10.16 shall limit the effectiveness of, or the right of
the Agent and the Lenders to rely upon, any notice (including without limitation
a Notice of Borrowing or a Notice of Continuation/Conversion), document,
instrument, certificate, acknowledgment, consent, direction, certification, or
other action delivered by any Credit Party pursuant to this Agreement.
Section 10.18 Joint and Several Liability. All Loans, upon funding,
shall be deemed to be jointly funded to and received by the Borrowers. Each
Borrower jointly and severally agrees to pay, and shall be jointly and severally
liable under this Agreement for, all of the Total Obligations, regardless of the
manner or amount in which proceeds of Loans are used, allocated, shared, or
disbursed by or among the Borrowers themselves, or the manner in which the Agent
and/or any Lender accounts for such Loans or other extensions of credit on its
books and records. Each Borrower shall be liable for all amounts due to the
Agent and/or any Lender under this Agreement, regardless of which Borrower
actually receives Loans or other extensions of credit hereunder or the amount of
such Loans and extensions of credit received or the manner in which the Agent
and/or such Lender accounts for such Loans or other extensions of credit on its
books and records. Each Borrower's indebtedness, liabilities, and obligations
with respect to Loans and other extensions of credit made to it, and such
Borrower's indebtedness, liabilities, and obligations arising as a result of the
joint and several liability of such Borrower hereunder, with respect to Loans
made to the other Borrowers hereunder, shall be separate and distinct
obligations, but all such indebtedness, liabilities, and obligations shall be
primary obligations of such Borrower. The Borrowers acknowledge and expressly
agree with the Agent and each Lender that the joint and several liability of
each Borrower is required solely as a condition to, and is given solely as
inducement for and in consideration of, credit or accommodations extended or to
be extended under the Credit Documents to any or all of the other Borrowers and
is not required or given as a condition of extensions of credit to such
Borrower. Each Borrower's indebtedness, liabilities, and obligations under this
Agreement and as an obligor under a Guaranty Agreement shall be separate and
distinct obligations. Each Borrower's indebtedness, liabilities, and obligations
under this Agreement shall, to the fullest extent permitted by law, be
unconditional irrespective of (i) the validity or enforceability, avoidance, or
subordination of the indebtedness, liabilities, and obligations of any other
Borrower or of any promissory note or other document evidencing all or any part
of the indebtedness, liabilities, and obligations of any other Borrower, (ii)
the absence of any attempt to collect the indebtedness, liabilities, and
obligations from any other Borrower, any Guarantor, or any other security
therefor, or the absence of any other action to enforce the same, (iii) the
waiver, consent, extension, forbearance, or granting of any indulgence by the
Agent and/or any Lender with respect to any provision of any instrument
evidencing the indebtedness, liabilities, and obligations of any other Borrower
or Guarantor, or any part thereof, or any other agreement now or hereafter
executed by any other Borrower or Guarantor and delivered to the Agent and/or
any Lender, (iv) the failure by the Agent and/or any Lender to take any steps to
perfect and maintain its security interest in, or to preserve its rights to, any
security or collateral for the indebtedness, liabilities, and obligations of any
other Borrower or Guarantor, (v) the Agent's and/or any Lender's election, in
any proceeding instituted under the Bankruptcy Code, of the application of
Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a
security interest by any other Borrower, as debtor-in-possession under Section
364 of the Bankruptcy Code, (vii) the disallowance of all or any portion of the
Agent's and/or any Lender's claim(s) for the repayment of the indebtedness,
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liabilities, and obligations of any other Borrower under Section 502 of the
Bankruptcy Code, or (viii) any other circumstances which might constitute a
legal or equitable discharge or defense of a guarantor or of any other Borrower.
With respect to any Borrower's indebtedness, liabilities, and obligations
arising as a result of the joint and several liability of the Borrowers
hereunder with respect to Loans or other extensions of credit made to any of the
other Borrowers hereunder, such Borrower waives, until the Total Obligations
shall have been paid in full and this Agreement shall have been terminated, any
right to enforce any right of subrogation or any remedy which the Agent and/or
any Lender now has or may hereafter have against any other Borrower, any
endorser or any Guarantor of all or any part of the Total Obligations, and any
benefit of, and any right to participate in, any security or collateral given to
the Agent and/or any Lender to secure payment of the Total Obligations or any
other liability of any Borrower to the Agent and/or any Lender. Upon any Event
of Default, the Agent may proceed directly and at once, without notice, against
any Borrower to collect and recover the full amount, or any portion of the Total
Obligations, without first proceeding against any other Borrower or any other
Person, or against any security or collateral for the Total Obligations. Each
Borrower consents and agrees that the Agent shall be under no obligation to
marshal any assets in favor of any Borrower or against or in payment of any or
all of the Total Obligations.
Section 10.19 Contribution and Indemnification Among the Borrowers.
Each Borrower is obligated to repay the Total Obligations as joint and several
obligors under this Agreement. To the extent that any Borrower shall, under this
Agreement as a joint and several obligor, repay any of the Total Obligations
constituting Loans made to another Borrower hereunder or other Total Obligations
incurred directly and primarily by any other Borrower (an "Accommodation
Payment"), then the Borrower making such Accommodation Payment shall be entitled
to contribution and indemnification from, and be reimbursed by, each of the
other Borrowers in an amount, for each of such other Borrowers, equal to a
fraction of such Accommodation Payment, the numerator of which fraction is such
other Borrower's Allocable Amount and the denominator of which is the sum of the
Allocable Amounts of all of the Borrowers. As of any date of determination, the
"Allocable Amount" of each Borrower shall be equal to the maximum amount of
liability for Accommodation Payments which could be asserted against such
Borrower hereunder without (a) rendering such Borrower "insolvent" within the
meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform
Fraudulent Transfer Act ("UFTA") or Section 2 of the Uniform Fraudulent
Conveyance Act ("UFCA"), (b) leaving such Borrower with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA. All
rights and claims of contribution, indemnification, and reimbursement under this
Section shall be subordinate in right of payment to the prior payment in full of
the Total Obligations. The provisions of this Section shall, to the extent
expressly inconsistent with any provision in any Credit Document, supersede such
inconsistent provision.
Section 10.20 Additional Borrowers and Guarantors. Addition of any
Person as a Borrower or a Guarantor is subject to approval of the Agent and the
Required Lenders, and may be conditioned upon such requirements as they may
reasonably determine in their discretion, including, without limitation, (a) the
furnishing of such financial and other information as the
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Agent or any such Lender may request; (b) approval by all appropriate approval
authorities of the Agent and each such Lender; (c) execution and delivery by the
Credit Parties, such Person, the Agent, and the Required Lenders of such
agreements and other documentation (including, without limitation, an amendment
to this Agreement or any other Credit Document), and the furnishing by such
Person or any of the Credit Parties of such certificates, opinions, and other
documentation, as the Agent and any such Lender may reasonably request. Neither
the Agent nor any Lender shall have any obligation to approve any such Person
for addition as a party to this Agreement.
Section 10.21 Express Waivers By the Credit Parties in Respect of Cross
Guaranties and Cross Collateralization. Each Credit Party agrees as follows:
(a) Each Credit Party hereby waives: (i) notice of acceptance
of this Agreement; (ii) notice of the making of any Loans, the issuance
of any Letter of Credit, or any other financial accommodations made or
extended under the Credit Documents or the creation or existence of any
indebtedness, liabilities, or obligations under the Credit Documents;
(iii) notice of the amount of the indebtedness, liabilities, and
obligations under the Credit Documents, subject, however, to such
Credit Party's right to make inquiry of the Agent to ascertain the
amount of the indebtedness, liabilities, and obligations under the
Credit Documents at any reasonable time; (iv) notice of any adverse
change in the financial condition of any other Credit Party or of any
other fact that might increase such Credit Party's risk with respect to
such other Credit Party under the Credit Documents; (v) notice of
presentment for payment, demand, protest, and notice thereof as to any
promissory notes or other instruments among the Credit Documents; and
(vii) all other notices (except if such notice is specifically required
to be given to such Credit Party hereunder or under any of the other
Credit Documents to which such Credit Party is a party) and demands to
which such Credit Party might otherwise be entitled;
(b) Each Credit Party hereby waives the right by statute or
otherwise to require the Agent or any Lender to institute suit against
any other Credit Party or to exhaust any rights and remedies which the
Agent or any Lender has or may have against any other Credit Party.
Each Credit Party further waives any defense arising by reason of any
disability or other defense of any other Credit Party (other than the
defense that the Total Obligations shall have been fully and finally
performed and indefeasibly paid) or by reason of the cessation from any
cause whatsoever of the liability of any such Credit Party in respect
thereof.
(c) Each Credit Party hereby waives and agrees not to assert
against the Agent, any Lender, or the Issuing Lender: (i) any defense
(legal or equitable), setoff, counterclaim, or claim which such Credit
Party may now or at any time hereafter have against any other Credit
Party or any other party liable under the Credit Documents; (ii) any
defense, setoff, counterclaim, or claim of any kind or nature available
to any other Credit Party against the Agent, any Lender, or the Issuing
Lender, arising directly or indirectly from the present or future lack
of perfection, sufficiency, validity, or enforceability of the Total
Obligations or any security therefor; (iii) any right or defense
arising by reason of any claim or defense based upon an election of
remedies by the
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Agent, any Lender, or the Issuing Lender under any applicable law; (iv)
the benefit of any statute of limitations affecting any other Credit
Party's liability hereunder;
(d) Each Credit Party consents and agrees that, without notice
to or by such Credit Party and without affecting or impairing the
obligations of such Credit Party hereunder, the Agent may (subject to
any requirement for consent of any of the Lenders to the extent
required by this Agreement), by action or inaction: (i) compromise,
settle, extend the duration or the time for the payment of, or
discharge the performance of, or may refuse to or otherwise not enforce
the Credit Documents; (ii) release all or any one or more parties to
any one or more of the Credit Documents or grant other indulgences to
any other Credit Party in respect thereof; (iii) amend or modify in any
manner and at any time (or from time to time) any of the Credit
Documents; or (iv) release or substitute any Person liable for payment
of the Total Obligations, or enforce, exchange, release, or waive any
security for the Total Obligations or any guaranty therefor;
Each Credit Party represents and warrants to the Agent and the Lenders that such
Credit Party is currently informed of the financial condition of all other
Credit Parties and all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Total Obligations. Each Credit
Party further represents and warrants that such Credit Party has read and
understands the terms and conditions of the Credit Documents. Each Credit Party
agrees that neither the Agent, any Lender, nor the Issuing Lender has any
responsibility to inform any Credit Party of the financial condition of any
other Credit Party or of any other circumstances which bear upon the risk of
nonpayment or nonperformance of the Total Obligations.
Section 10.22 Conflict. To the extent that there is a conflict or
inconsistency between any provision hereof, on the one hand, and any provision
of any Credit Document, on the other hand, this Agreement shall control.
Section 10.23 Amendment and Restatement.
(a) This Agreement and the other Credit Documents amends and
restates in its entirety the Original Credit Agreement. All rights,
benefits, indebtedness, interest, liabilities, and obligations of the
parties to the agreements, documents, and instruments executed and
delivered in connection with the Original Credit Agreement (the
"Original Credit Documents") are hereby renewed, amended, restated, and
superseded in their entirety according to the terms and provisions set
forth herein and in the other Credit Documents. All indebtedness,
liabilities, and obligations of the Credit Parties under the Original
Credit Agreement are renewed and continued and hereafter shall be
payable in accordance with this Agreement.
(b) All obligations of any Credit Party under any guaranty
agreement executed pursuant to the Original Credit Documents are
renewed and continued and hereafter shall be payable in accordance with
the Guaranty Agreements executed by such Credit Parties, and each such
Credit Party acknowledges and agrees that the "Guaranteed Obligations"
as defined by the Guaranty Agreements include, without limitation, the
"Obligations" under
Page 115
the Original Credit Agreement existing on the Closing Date as renewed
by this Agreement.
(c) All security interests, liens, and assignments previously
granted by any Credit Party pursuant to the Original Credit Documents
are hereby renewed and continued, and all such security interests,
liens, and assignments shall remain in full force and effect as
security for the Total Obligations.
(d) This Agreement shall not result in or constitute a waiver
of or a release, discharge, or forgiveness of any amount payable
pursuant to the Original Credit Documents, which such amounts are
payable pursuant to the terms of this Agreement. Each Credit Party
represents and warrants that as of the date hereof there are no claims
or offsets against, or defenses or counterclaims to, its obligations
under this Agreement or any of the Original Credit Documents. To induce
the Agent and the Lenders to enter into this Agreement, each Credit
Party waives any and all such claims, offsets, defenses, or
counterclaims, whether known or unknown, arising prior to the date
hereof and relating to the Original Credit Documents or this Agreement
and the other Credit Documents.
[Remainder of page intentionally left blank]
Page 116
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
CREDIT PARTIES:
XXXXXXXX'X INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
Senior Vice President, Chief
Financial Officer
XXXXXXXX'X FLORIDA PARTNERSHIP
By: Xxxxxxxx'x Management Corp., its
Managing Partner
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
President
FI STORES LIMITED PARTNERSHIP
By:Xxxxxxxx'x Inc., its general partner
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
Senior Vice President,
Chief Financial Officer
XXXXXXXX'X HOLDING CORP.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
Secretary and Treasurer
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XXXXXXXX'X MANAGEMENT CORP.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
President
FCJV HOLDING CORP.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
President
FCJV, L.P.
By: FCJV Holding Corp.,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
President
AGENT:
BANK OF AMERICA, N.A.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx
Senior Vice President
LENDERS:
BANK OF AMERICA, N.A.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx
Senior Vice President
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THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
-----------------------------------
Title: Vice President
----------------------------------
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Schedule 1.1(A)
EXISTING LETTERS OF CREDIT
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Schedule 1.1(B)
INVESTMENTS
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Schedule 1.1(C)
LIENS
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Schedule 1.1(D)
LENDER AND COMMITMENTS
Revolving Revolving LOC
Commitment Committed Committed
Lender Percentage Amount Amount
------ ---------- ------ ------
Bank of America, N.A. 50.00% $ 75,000,000 $ 5,000,000
The CIT Group/ Business Credit, Inc. 50.00% $ 75,000,000 $ 5,000,000
Total 100.00% $150,000,000 $10,000,000
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Schedule 5.2
CHANGES AND RESTRICTED PAYMENTS
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Schedule 5.6
LITIGATION
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Schedule 5.9
INTELLECTUAL PROPERTY
A. Trademarks
B. Tradenames
C. Copyrights
D. Patents
E. Other Intellectual Property (technology, know-how and processes
necessary for the conduct of business
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Schedule 5.14
SUBSIDIARIES
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Schedule 5.18
LABOR MATTERS
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Schedule 5.20
REAL PROPERTY LOCATIONS; LOCATIONS
OF COLLATERAL; CHIEF EXECUTIVE
OFFICE/PRINCIPAL PLACES OF BUSINESS
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Schedule 5.22
BANK ACCOUNTS; MERCHANT ACCOUNTS
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Schedule 6.6
INSURANCE
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Schedule 6.17
COMPUTER SYSTEMS UPGRADE
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Schedule 7.1
INDEBTEDNESS
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Schedule 10.1
LENDERS' ADDRESSES
Credit Contact Operations Contact
Bank of America, N.A. Bank of America, N.A.
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000 00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Attn: Portfolio Manager Attn: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
THE CIT GROUP/BUSINESS CREDIT, INC. THE CIT GROUP/BUSINESS CREDIT, INC.
000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx 000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxx Attn: Xxxxxxxx Xxx
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
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