LOAN AND SECURITY AGREEMENT
FLEET RETAIL FINANCE INC.
AGENT FOR
THE LENDERS REFERENCED HEREIN
XXXXXX FINANCIAL, INC.
CO-AGENT AND DOCUMENTATION AGENT
PHAR-MOR, INC.
THE LEAD BORROWER
PHAR-MOR, INC.
PHAR-MOR, INC. LLC
PHAR-MOR OF DELAWARE, INC.
PHAR-MOR OF FLORIDA, INC.
PHAR-MOR OF OHIO, INC.
PHAR-MOR OF VIRGINIA, INC.
PHAR-MOR OF WISCONSIN, INC.
PHARMHOUSE CORP.
THE BORROWERS
Fleet Securities Inc.
THE SYNDICATION AGENT
November 16, 2000
TABLE OF CONTENTS
Article 1: - DEFINITIONS:.....................................................1
Article 2: - THE REVOLVING CREDIT:...........................................28
2-1 -ESTABLISHMENT OF REVOLVING CREDIT.............................28
2-2 -INITIAL RESERVES. CHANGES TO RESERVES..........................28
2-3 -ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS)...............29
2-4 -RISKS OF VALUE OF COLLATERAL...................................29
2-5 -COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT
LETTERS OF CREDIT........................................30
2-6 -REVOLVING CREDIT LOAN REQUESTS.................................30
2-7 -MAKING OF REVOLVING CREDIT LOANS...............................32
2-8 -SWINGLINE LOANS................................................32
2-9 -THE LOAN ACCOUNT...............................................33
2-10 -THE REVOLVING CREDIT NOTES....................................34
2-11 -PAYMENT OF THE LOAN ACCOUNT...................................34
2-12 -INTEREST ON REVOLVING CREDIT LOANS............................35
2-13 -REVOLVING CREDIT COMMITMENT FEE...............................36
2-14 -AGENT'S FEE...................................................36
2-15 -UNUSED LINE FEE...............................................36
2-16 -EARLY TERMINATION FEE.........................................36
2-17 -CONCERNING FEES...............................................36
2-18 -AGENT'S AND REVOLVING CREDIT LENDERS' DISCRETION..............37
2-19 -PROCEDURES FOR ISSUANCE OF L/C'S..............................38
2-20 -FEES FOR L/C'S................................................39
2-21 -CONCERNING L/C'S..............................................40
2-22 -CHANGED CIRCUMSTANCES.........................................41
2-23 -DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT.............42
2-24 -LENDERS' COMMITMENTS..........................................42
Article 3: - CONDITIONS PRECEDENT:...........................................44
3-1 -CORPORATE DUE DILIGENCE........................................44
3-2 -OPINION........................................................44
3-3 -ADDITIONAL DOCUMENTS...........................................44
3-4 -REPRESENTATIONS AND WARRANTIES.................................44
3-5 -PERFECTION OF ENCUMBRANCES.....................................45
3-6 -SATISFACTION OF EXISTING INDEBTEDNESS..........................45
3-7 -CONSENTS AND APPROVALS.........................................45
3-8 -NO DEFAULTS UNDER APPLICABLE LAW OR MATERIAL AGREEMENTS........45
3-9 -NO LITIGATION..................................................45
3-10 -ALL FEES AND EXPENSES PAID....................................45
3-11 -NO MATERIAL ADVERSE CHANGE....................................45
3-12 -MINIMUM DAY ONE AVAILABILITY..................................45
3-13 -BORROWER NOT IN DEFAULT.......................................45
3-14 -BOND INDENTURES...............................................45
3-15 -PROJECTIONS...................................................46
3-16 -OTHER INFORMATION.............................................46
3-17 -NO NEGATIVE EFFECT ON SYNDICATION............................46
3-18 -GOVERNMENT REGULATIONS........................................46
3-19 -BENEFIT OF CONDITIONS PRECEDENT...............................46
Article 4: - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:..............46
4-1 -PAYMENT AND PERFORMANCE OF LIABILITIES.........................47
4-2 -DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS..................47
4-3 -TRADE NAMES....................................................48
4-4 -INFRASTRUCTURE.................................................48
4-5 -LOCATIONS......................................................49
4-6 -TITLE TO ASSETS................................................50
4-7 -INDEBTEDNESS...................................................50
4-8 -INSURANCE......................................................50
4-9 -LICENSES.......................................................51
4-10 -LEASES........................................................51
4-11 -REQUIREMENTS OF LAW...........................................52
4-12 -LABOR RELATIONS...............................................52
4-13 -MAINTAIN PROPERTIES...........................................53
4-14 -TAXES.........................................................53
4-15 -NO MARGIN STOCK...............................................54
4-16 -ERISA.........................................................54
4-17 -HAZARDOUS MATERIALS...........................................55
4-18 -LITIGATION....................................................55
4-19 -DIVIDENDS. INVESTMENTS. CORPORATE ACTION......................55
4-20 -NEW BORROWERS.................................................56
4-21 -LOANS.........................................................57
4-22 -PROTECTION OF ASSETS..........................................57
4-23 -LINE OF BUSINESS..............................................58
4-24 -AFFILIATE TRANSACTIONS........................................58
4-25 -FURTHER ASSURANCES............................................58
4-26 -ADEQUACY OF DISCLOSURE........................................59
4-27 -NO RESTRICTIONS ON LIABILITIES................................59
4-28 -OTHER COVENANTS...............................................60
Article 5: FINANCIAL REPORTING AND PERFORMANCE COVENANTS:....................60
5-1 -MAINTAIN RECORDS...............................................60
5-2 -ACCESS TO RECORDS..............................................60
5-3 -IMMEDIATE NOTICE TO AGENT......................................61
5-4 -Borrowing Base Certificate.....................................62
5-5 -MONTHLY REPORTS................................................62
5-6 -QUARTERLY REPORTS..............................................62
5-7 -ANNUAL REPORTS.................................................63
5-8 -OFFICERS' CERTIFICATES.........................................63
5-9 -INVENTORIES, APPRAISALS, AND AUDITS............................64
5-10 -ADDITIONAL FINANCIAL INFORMATION..............................65
5-11 -FINANCIAL PERFORMANCE COVENANTS...............................66
Article 6: - USE OF COLLATERAL:..............................................66
6-1 -USE OF INVENTORY COLLATERAL....................................66
6-2 -INVENTORY QUALITY..............................................66
6-3 -ADJUSTMENTS AND ALLOWANCES.....................................67
6-4 -VALIDITY OF ACCOUNTS...........................................67
6-5 -NOTIFICATION TO ACCOUNT DEBTORS................................67
Article 7: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:........................67
7-1 -DEPOSITORY ACCOUNTS............................................67
7-2 -CREDIT CARD RECEIPTS...........................................68
7-3 -THE CONCENTRATION, BLOCKED, AND OPERATING ACCOUNTS.............68
7-4 -PROCEEDS AND COLLECTIONS.......................................69
7-5 -PAYMENT OF LIABILITIES.........................................70
7-6 -THE OPERATING ACCOUNT..........................................71
Article 8: - GRANT OF SECURITY INTEREST:.....................................71
8-1 -GRANT OF SECURITY INTEREST.....................................71
8-2 -EXTENT AND DURATION OF SECURITY INTEREST.......................72
Article 9: - AGENT AS BORROWER'S ATTORNEY-IN-FACT:...........................72
9-1 -APPOINTMENT AS ATTORNEY-IN-FACT................................72
9-2 -NO OBLIGATION TO ACT...........................................73
Article 10: - EVENTS OF DEFAULT:.............................................73
10-1 -FAILURE TO PAY THE REVOLVING CREDIT...........................73
10-2 -FAILURE TO MAKE OTHER PAYMENTS................................73
10-3 -FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD)....74
10-4 -Financial Reporting Requirements..............................74
10-5 -FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD).......74
10-6 -MISREPRESENTATION.............................................74
10-7 -ACCELERATION OF OTHER DEBT. BREACH OF LEASE...................74
10-8 -DEFAULT UNDER OTHER AGREEMENTS................................75
10-9 -UNINSURED CASUALTY LOSS.......................................75
10-10 -ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS..................75
10-11 -BUSINESS FAILURE.............................................75
10-12 -BANKRUPTCY...................................................76
10-13 -DEFAULT BY GUARANTOR.........................................76
10-14 -INDICTMENT - FORFEITURE......................................76
10-15 -TERMINATION OF GUARANTY......................................76
10-16 -CHALLENGE TO LOAN DOCUMENTS..................................76
10-17 -CHANGE IN CONTROL............................................76
Article 11: - RIGHTS AND REMEDIES UPON DEFAULT:..............................77
11-1 -Acceleration..................................................77
11-2 -RIGHTS OF ENFORCEMENT.........................................77
11-3 -SALE OF COLLATERAL............................................77
11-4 -OCCUPATION OF BUSINESS LOCATION...............................78
11-5 -GRANT OF NONEXCLUSIVE LICENSE.................................79
11-6 -ASSEMBLY OF COLLATERAL........................................79
11-7 -RIGHTS AND REMEDIES...........................................79
Article 12: - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:...................79
12-1 -REVOLVING CREDIT FUNDING PROCEDURES...........................79
12-2 -SWINGLINE LOANS...............................................80
12-3 -AGENT'S COVERING OF FUNDINGS:.................................80
12-4 -ORDINARY COURSE DISTRIBUTIONS.................................82
Article 13: - ACCELERATION AND LIQUIDATION:..................................83
13-1 -ACCELERATION NOTICES..........................................83
13-2 -ACCELERATION..................................................84
13-3 -INITIATION OF LIQUIDATION.....................................84
13-4 -ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION...........84
13-5 -AGENT'S CONDUCT OF LIQUIDATION................................84
13-6 -DISTRIBUTION OF LIQUIDATION PROCEEDS:.........................85
13-7 -RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION................85
Article 14: - THE AGENT:.....................................................86
14-1 -APPOINTMENT OF THE AGENT......................................86
14-2 -RESPONSIBILITIES OF AGENT.....................................86
14-3 -CONCERNING DISTRIBUTIONS BY THE AGENT.........................87
14-4 -DISPUTE RESOLUTION:...........................................88
14-5 -DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS.....................88
14-6 -CONFIDENTIAL INFORMATION......................................89
14-7 -RELIANCE BY AGENT.............................................89
14-8 -NON-RELIANCE ON AGENT AND OTHER REVOLVING CREDIT LENDERS......89
14-9 -INDEMNIFICATION...............................................90
14-10 -RESIGNATION OF AGENT.........................................91
Article 15: - ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:............91
15-1 -ADMINISTRATION OF CREDIT FACILITIES...........................91
15-2 - ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS......92
15-3 -ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY LENDERS....92
15-4 - ACTION REQUIRING CERTAIN CONSENT...........................93
15-5 -ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT............93
15-6 -ACTIONS REQUIRING SWINGLINE LENDER CONSENT....................94
15-7 -ACTIONS REQUIRING AGENT'S CONSENT.............................94
15-8 -MISCELLANEOUS ACTIONS.........................................94
15-9 -ACTIONS REQUIRING BORROWER'S CONSENT..........................95
15-10 -NONCONSENTING REVOLVING CREDIT LENDER........................95
Article 16: - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:
16-1 -ASSIGNMENTS AND ASSUMPTIONS:..................................96
16-2 -ASSIGNMENT PROCEDURES.........................................97
16-3 -EFFECT OF ASSIGNMENT..........................................98
Article 17: - NOTICES:.......................................................98
17-1 -NOTICE ADDRESSES..............................................98
17-2 -NOTICE GIVEN..................................................99
Article 18: - TERM:.........................................................100
18-1 -TERMINATION OF REVOLVING CREDIT..............................100
18-2 -ACTIONS ON TERMINATION.......................................100
Article 19: - GENERAL:......................................................100
19-1 -PROTECTION OF COLLATERAL.....................................100
19-2 -PUBLICITY....................................................101
19-3 -SUCCESSORS AND ASSIGNS.......................................101
19-4 -SEVERABILITY.................................................101
19-5 -AMENDMENTS. COURSE OF DEALING...............................101
19-6 -POWER OF ATTORNEY............................................102
19-7 -APPLICATION OF PROCEEDS......................................102
19-8 -INCREASED COSTS..............................................102
19-9 -COSTS AND EXPENSES OF THE AGENT..............................103
19-10 -COPIES AND FACSIMILES.......................................104
19-11 -MASSACHUSETTS LAW...........................................104
19-12 -CONSENT TO JURISDICTION.....................................104
19-13 -INDEMNIFICATION.............................................105
19-14 -RULES OF CONSTRUCTION.......................................105
19-15 -INTENT......................................................107
19-16 -PARTICIPATIONS:.............................................107
19-17 -RIGHT OF SET-OFF............................................107
19-18 -PLEDGES TO FEDERAL RESERVE BANKS:...........................107
19-19 -MAXIMUM INTEREST RATE.......................................108
19-20 -EXECUTION IN COUNTERPARTS...................................108
19-21 -WAIVERS.....................................................108
EXHIBITS
2:2-8(c) : : SwingLine Note
2:2-10 : Revolving Credit Note
2:2-24 : Revolving Credit Lenders' Commitments
4:4-2 : Corporate Information
4:4-3 : Trade Names
4:4-5 : Locations, Leases, and Landlords
4:4-6 : Encumbrances
4:4-6(c)(ii) : Equipment Usage Agreement
4:4-7 : Indebtedness
4:4-8 : Insurance Policies
4:4-10 : Capital Leases
4:4-12 : Labor Relations
4:4-14 : Taxes
4:4-16(a) : ERISA
4:4-17(a) : Hazardous Materials
4:4-18 : Litigation
5:5-4 : Borrowing Base Certificate
5:5-5 : Monthly Reports
7:7-1(a) : DDA's.
7:7-1(b)(ii) : Blocked Account Agreement
7:7-2 : Credit Card Arrangements
16:16-2 : Assignment and Acceptance
LOAN AND SECURITY AGREEMENT
November 16, 2000
THIS AGREEMENT is made between
Fleet Retail Finance Inc. (in such capacity, herein the
"Agent"), a Delaware corporation with offices at 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, as agent for the ratable benefit of the
"Revolving Credit Lenders", who are, at present, those financial
institutions identified on the signature pages of this Agreement and
who in the future are those Persons (if any) who become "Revolving
Credit Lenders" in accordance with the provisions of Section 2:2-24,
below;
and
The Revolving Credit Lenders;
and
Phar-Mor, Inc. in such capacity, ( the "Lead Borrower"), a
Pennsylvania corporation with its principal executive offices at 00
Xxxxxxx Xxxxx Xxxx, Xxxxxxxxxx, Xxxx 00000, as agent for the following
(individually, a "Borrower" and collectively, the "Borrowers"):
Phar-Mor, Inc., a Pennsylvania corporation, Phar-Mor of
Florida, Inc., a Pennsylvania corporation, Phar-Mor of Ohio,
Inc., an Ohio corporation, Phar-Mor of Virginia, Inc., a
Virginia corporation, Phar-Mor of Wisconsin, Inc., a Wisconsin
corporation, Phar-Mor of Delaware, Inc., a Delaware
corporation, Phar-Mor, Inc. LLC, a Pennsylvania limited
liability company and Pharmhouse Corp., a New York corporation
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
Article 1: - DEFINITIONS:
As used herein, the following terms have the following meanings or are
1
defined in the section of this Agreement so indicated:
"1995 Indenture": The September 11, 1995 Indenture between the Lead
Borrower and IBJ Xxxxxxxxx Bank & Trust Company, Trustee, as
assigned to The Bank of New York, as successor to IBJ
Xxxxxxxxx Bank & Trust Company, pursuant to which the Lead
Borrower issued its 11.72% Senior Notes Due 2002.
"Acceleration": The making of demand or declaration that any
indebtedness, not otherwise due and payable, is due and
payable. Derivations of the word "Acceleration" (such as
"Accelerate") are used with like meaning in this Agreement.
"Acceleration Notice": Written notice as follows:
(a) From the Agent to the Revolving Credit Lenders,
as provided in 13:13-1(a).
(b) From the SuperMajority Lenders to the Agent, as
provided in Section 13:13-1(b).
"Account Debtor": Has the meaning given that term in the UCC.
"Accounts" and "Accounts Receivable" include, without limitation,
"accounts" as defined in the UCC, and also all: accounts,
accounts receivable, receivables, and rights to payment
(whether or not earned by performance) for: property that has
been or is to be sold, leased, licensed, assigned, or
otherwise disposed of; services rendered or to be rendered; a
policy of insurance issued or to be issued; a secondary
obligation incurred or to be incurred; arising out of the use
of a credit or charge card or information contained on or used
with that card; and also all Inventory which gave rise
thereto, and all rights associated with such Inventory,
including the right of stoppage in transit; all reclaimed,
returned, rejected or repossessed Inventory (if any) the sale
of which gave rise to any Account.
"ACH": Automated clearing house.
"Affiliate": The following:
(a) With respect to any two Persons, a relationship
in which (i) one holds, directly or indirectly, not less than
twenty five percent (25%) of the capital stock, beneficial
2
interests, partnership interests, or other equity interests of
the other; or (ii) one has, directly or indirectly, the right,
under ordinary circumstances, to vote for the election of a
majority of the directors (or other body or Person who has
those powers customarily vested in a board of directors of a
corporation); or (iii) not less than twenty five percent (25%)
of their respective ownership is directly or indirectly held
by the same third Person.
(b) Any Person which: is a parent, brother-sister,
subsidiary, of a Borrower; could have such enterprise's tax
returns or financial statements consolidated with that
Borrower's; could be a member of the same controlled group of
corporations (within the meaning of Section 1563(a)(1), (2)
and (3) of the Internal Revenue Code of 1986, as amended from
time to time) of which any Borrower is a member; or controls
or is controlled by any Borrower.
"Agent": Is referred to in the Preamble.
" Agent's Cover": Defined in Section 12:12-3(c)(i).
" Agent's Fee": Is defined in Section 2:2-14.
" Agent's Rights and Remedies": Is defined in Section 11:11-7.
"Applicable Law": As to any Person:(i) All statutes, rules,
regulations, orders, or other requirements having the force of
law and (ii) all court orders and injunctions, arbitrator's
decisions, and/or similar rulings, in each instance ((i) and
(ii)) of or by any federal, state, municipal, and other
governmental authority, or court, tribunal, panel, or other
body which has jurisdiction over such Person, or any property
of such Person, or of any other Person for whose conduct such
Person would be responsible.
"Applicable Margin": The Base Margin Loans, Eurodollar Loans and L/C
Fees determined as of the date of this Agreement based upon
the following criteria:
----------- ------------------- ------------------ ----------------- ------------------ ----------------
Tier Availability Base Margin Eurodollar Documentary L/C Standby L/C
Applicable Margin Applicable Fees Fees
Margin
----------- ------------------- ------------------ ----------------- ------------------ ----------------
----------- ------------------- ------------------ ----------------- ------------------ ----------------
1 In excess of 0% 2.00% 1.50% 2.00%
$50,000,000
----------- ------------------- ------------------ ----------------- ------------------ ----------------
3
--------- ------------------- ------------------ ----------------- ------------------ ----------------
2 In excess of 0% 2.25% 1.75% 2.25%
$20,000,000 but
less than or
equal to
$50,000,000
----------- ------------------- ------------------ ----------------- ------------------ ----------------
3 Less than or 0% 2.50% 2.00% 2.50%
equal to
$20,000,000
----------- ------------------- ------------------ ----------------- ------------------ ----------------
The initial Applicable Margin and L/C Fees shall be at level
1, above. The Applicable Margin and L/C Fees shall be adjusted
quarterly as of the first day of each calendar quarter based
upon the average Availability for the immediately preceding
quarter, as shown on the Borrowing Base Certificates for such
quarter. Upon the occurrence of an Event of Default, interest
shall accrue at the rate set forth in Section 2:2-11(f), and
L/C Fees shall accrue at 200 basis points in excess of the L/C
Fees set forth at Xxxxx 0, above.
"Assigning Revolving Credit Lender": Defined in Section 16:16-1(a).
"Assignment and Acceptance": Defined in Section 16:16-2.
"Availability": The lesser of (a) or (b), where:
(a) is the result of
(i) The Revolving Credit Ceiling
Minus
(ii) The aggregate unpaid balance of the
Loan Account
Minus
(iii) The aggregate undrawn Stated Amount
of all then outstanding L/C's.
(b) is the result of
(i) The Borrowing Base
Minus
(ii) The aggregate unpaid balance of the
Loan Account
Minus
(iv) The aggregate undrawn Stated Amount
of all then outstanding L/C's.
4
Minus
(v) The aggregate of the Availability
Reserves.
"Availability Reserves": Such reserves as the Agent from time to time
determines in the Agent's discretion as being appropriate to
reflect the impediments to the Agent's ability to realize upon
the Collateral.
"Bankruptcy Code": Title 11, U.S.C., as amended from time to time.
"Base": The higher of (i) the annual rate of interest announced from
time to time by Fleet National Bank at its head office in
Boston, Massachusetts, as its "Prime Rate" or (ii) one-half of
one percent (.50%) above the Federal Funds Effective Rate.
Federal Funds Effective Rate shall mean for any day, the rate
per annum equal to the weighted average of the rates on
overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not published for any
day that is a Business Day, the average of the quotations for
such day on such transactions received by Fleet National Bank
from three funds brokers of recognized standing selected by
Fleet National Bank. Any change in "Base" shall be effective,
for purposes of the calculation of interest due hereunder,
when such change is made effective generally by the bank on
whose rate or index "Base" is being set.
"Base Margin Loan":Each Revolving Credit Loan while bearing interest at
the Base Margin Rate.
"Base Margin Rate":The aggregate of Base plus the Applicable Margin per
annum.
"Blocked Account" Any DDA into which the contents of any other DDA is
transferred.
"Blocked Account Agreement": An Agreement substantially in the form of
EXHIBIT 7:7-1(b)(ii).
"Borrower" and "Borrowers": Is defined in the Preamble.
5
"Borrowing Base": The aggregate of the following:
The face amount of Eligible Receivables (net of
Receivables Reserves) multiplied by the Receivables Advance
Rate.
Plus
The lesser of (a) the Cost of Eligible Inventory (net
of Inventory Reserves) multiplied by the Inventory Advance
Rate or (b) ninety percent (90%) of the appraised liquidation
value of Eligible Inventory (expressed as a percentage of the
Cost of appraised Eligible Inventory) (provided that the
appraised liquidation value of the Borrowers' prescription
list shall in no event exceed nine percent (9%) of the
appraised liquidation value of Eligible Inventory, as
determined in accordance with Section 5:5-9).
"Borrowing Base Certificate": Is defined in Section 5:5-4.
"BusinessDay": Any day other than (a) a Saturday or Sunday; (b) any
day on which banks in Boston, Massachusetts or in Youngstown,
Ohio, generally are not open to the general public for the
purpose of conducting commercial banking business; or (c) a
day on which the principal office of the Agent or Fleet
National Bank is not open to the general public to conduct
business.
"Capital Expenditures": The expenditure of funds or the incurrence of
liabilities which may be capitalized in accordance with GAAP.
"Capital Lease": Any lease which may be capitalized in accordance with
GAAP.
"Cash Control Event": Availability at any time is less than Twenty
Million Dollars ($20,000,000.00).
"Change in Control": The occurrence of any of the following:
(a) The acquisition, by any group of persons (within
the meaning of the Securities Exchange Act of 1934, as
amended) or by any Person, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange
Commission) of 20% or more of the issued and outstanding
capital stock of the Lead Borrower having the right, under
ordinary circumstances, to vote for the election of directors
of the Lead Borrower (excluding any acquisition of stock by
Avatex Corporation).
6
(b) More than half of the persons who were directors
of the Lead Borrower on the first day of any period consisting
of twelve (12) consecutive calendar months (the first of which
twelve (12) month periods commencing with the first day of the
month during which this Agreement was executed), cease, for
any reason other than death, disability, or replacement by
other Persons nominated by Avatex Corporation, a Delaware
corporation to be directors of the Lead Borrower.
(c) Any failure of the Lead Borrower to own,
beneficially and of record, 100% of the capital stock of all
other Borrowers, either directly or through ownership of 100%
of the capital stock of any entity which owns the stock of any
other Borrower.
"Chattel Paper": Has the meaning given that term in the UCC.
"Collateral": Is defined in Section 8:8-1.
"Collateral Interest": Any interest in property to secure an
obligation, including, without limitation, a security
interest, mortgage, and deed of trust.
"Concentration Account": Is defined in Section 7:7-3.
"Consent": Actual consent given by the Revolving Credit Lender from
whom such consent is sought; or the passage of seven (7)
Business Days from receipt of written notice to a Revolving
Credit Lender from the Agent of a proposed course of action to
be followed by the Agent without such Revolving Credit
Lender's giving the Agent written notice of that Revolving
Credit Lender's objection to such course of action, provided
that the Agent may rely on such passage of time as consent by
a Revolving Credit Lender only if such written notice states
that consent will be deemed effective if no objection is
received within such time period.
"Consigned Inventory": Inventory held by a Borrower on consignment
(including, without limitation, GE lightbulbs).
"Consolidated Net Worth": At any date as of which the amount thereof
shall be determined, Consolidated Total Assets minus
Consolidated Total Liabilities, provided, however, for the
purpose of the calculation of Consolidated Net Worth
hereunder, extraordinary income (e.g. discounted bond
repurchases) and noncash losses, charges, write-downs or
7
reserves to any non-current assets or liabilities existing as
of the date of this Agreement, other than on account of
inventory write-downs, shall be excluded and such adjustment
shall be carried over from year to year in making such
calculation.
"Consolidated Total Assets": At any date as of which the amount thereof
shall be determined, all assets that should, in accordance
with GAAP, be classified as assets on the consolidated balance
sheet of the Lead Borrower.
"Consolidated Total Liabilities": At any date as of which the amount
thereof shall be determined, all obligations that should, in
accordance with GAAP, be classified as liabilities on the
consolidated balance sheet of the Lead Borrower, including in
any event all Indebtedness.
"Cost": The lower of (a) or (b), where:
(a) is the calculated cost of purchases, based upon
the Borrowers' accounting practices, known to the Agent, which
practices are in effect on the date on which this Agreement
was executed as such calculated cost is determined from:
invoices received by the Borrowers; the Borrowers' purchase
journal; or the Borrowers' stock ledger.
(b) is the cost equivalent of the lowest ticketed or
promoted price at which the subject Inventory is offered to
the public, after all xxxx-xxxxx (whether or not such price is
then reflected on the Borrowers' accounting system),
reflecting the Borrowers' Current Practices.
"Cost" does not include inventory capitalization
costs or other non-purchase price charges (such as freight)
used in the Borrowers' calculation of cost of goods sold.
"Costs of Collection": All reasonable attorneys' fees and reasonable
out-of-pocket expenses incurred by the Agent's attorneys, and
all reasonable out-of-pocket costs incurred by the Agent in
the administration of the Liabilities and/or the Loan
Documents, including, without limitation, reasonable costs and
expenses associated with travel on behalf of the Agent, where
such costs and expenses are directly or indirectly related to
or in respect of the Agent's: administration and management of
the Liabilities; negotiation, documentation, and amendment of
any Loan Document; or efforts to preserve, protect, collect,
or enforce the Collateral, the Liabilities, and/or the Agent's
Rights and Remedies and/or any of the rights and remedies of
the Agent against or in respect of any guarantor or other
person liable in respect of the Liabilities (whether or not
8
suit is instituted in connection with such efforts). "Costs of
Collection" shall also include the reasonable fees and
expenses of Lenders' Special Counsel. The Costs of Collection
are Liabilities, and at the Agent's option may bear interest,
after demand, at the then effective Base Margin Rate.
"Current Practices": Practices in effect on October 1, 2000.
"CustomerCredit Liability": Gift certificates, merchandise credits,
layaway obligations, customer deposits, frequent shopping
programs, and similar liabilities of any Borrower to its
retail customers and prospective customers.
"DDA": Any checking or other demand daily depository account
maintained by any Borrower.
"Default": Any occurrence, circumstance, or state of facts with respect
to any Borrower which (a) is an Event of Default; or (b) would
become an Event of Default if any requisite notice were given
and/or any requisite period of time were to run and such
occurrence, circumstance, or state of facts were not
absolutely cured within any applicable grace period.
"Delinquent Revolving Credit Lender": Defined in Section 12:12-3(c).
"Deposit Account": Has the meaning given that term in the UCC.
"Documents": Has the meaning given that term in the UCC.
"Documents of Title": Has the meaning given that term in the UCC.
"Eligible Assignee": A bank, insurance company, or company engaged in
the business of making commercial loans having a combined
capital and surplus in excess of three hundred million dollars
($300,000,000.00) or any Affiliate of any Revolving Credit
Lender, or any Person to whom a Revolving Credit Lender
assigns its rights and obligations under this Agreement as
part of a programmed assignment and transfer of such Revolving
Credit Lender's rights in and to a material portion of such
Revolving Credit Lender's portfolio of asset based credit
facilities.
9
"Eligible Inventory": Eligible L/C Inventory and such of the Borrowers'
Inventory consisting of merchandise inventory (inclusive of
pharmaceutical Inventory and prescription list), at such
locations, and of such types, character, qualities and
quantities, as the Agent in its discretion from time to time
determines to be acceptable for borrowing, as to which
Inventory, the Agent has a perfected security interest which
is prior and superior to all security interests, claims, and
Encumbrances (other than Permitted Encumbrances). Eligible
Inventory will exclude, without limitation, Inventory that is
not saleable, including non-merchandise categories (labels,
bags, packaging, etc.), Inventory in foreign locations (except
for Eligible L/C Inventory), fresh produce inventory, samples,
damaged goods, return to vendor merchandise, and consignment
Inventory.
"Eligible L/C Inventory": Inventory to be acquired by a Borrower, the
purchase of which is supported by a documentary L/C then
having an initial expiry of forty five (45) or less days,
provided that
(a) Such Inventory is of such types,
character, qualities and quantities (net of Inventory
Reserves) as the Agent in its reasonable discretion
from time to time reasonably determines to be
eligible for borrowing; and
(b) The documentary L/C supporting such
purchase names the Agent or any Issuer as consignee
of the subject Inventory and the Agent has control
over the documents which evidence ownership of the
subject Inventory (such as by the providing to the
Agent of a Customs Brokers Agreement in form
reasonably satisfactory to the Agent).
"EligibleReceivables": Such of the Borrowers' Accounts as arise in the
ordinary course of the Borrowers' business for goods sold
and/or services rendered by the Borrowers, which Accounts have
been determined by the Agent in its discretion to be
satisfactory and have been earned by performance and are owed
to the Borrowers by such of the Borrowers' trade customers as
the Agent determines to be satisfactory, in the Agent's
discretion in each instance, as to which Accounts, the Agent
has a perfected security interest which is prior and superior
to all security interests, claims, and Encumbrances (other
than Permitted Encumbrances).
"Employee Benefit Plan": As defined in ERISA.
"Encumbrance": Each of the following:
10
(a) A Collateral Interest or agreement to create or
grant a Collateral Interest; the interest of a lessor under a
Capital Lease; conditional sale or other title retention
agreement; sale of accounts receivable or chattel paper; or
other arrangement pursuant to which any Person is entitled to
any preference or priority with respect to the property or
assets of another Person or the income or profits of such
other Person; each of the foregoing whether consensual or
non-consensual and whether arising by way of agreement,
operation of law, legal process or otherwise.
(b) The filing of any financing statement under
the UCC or comparable law of any jurisdiction.
"End Date": The date upon which both (a) all Liabilities have been
paid in full and (b) all obligations of any Revolving Credit
Lender to make loans and advances and to provide other
financial accommodations to the Borrowers hereunder shall have
been irrevocably terminated.
"Environmental Laws": All of the following:
(a) Applicable Law which regulates or relates to, or
imposes any standard of conduct or liability on account of or
in respect to environmental protection matters, including,
without limitation, Hazardous Materials, as are now or
hereafter in effect.
(b) The common law relating to damage to Persons or
property from Hazardous Materials.
"Equipment": Includes, without limitation, "equipment" as defined in
the UCC, and also all furniture, store fixtures, motor
vehicles, rolling stock, machinery, office equipment, plant
equipment, tools, dies, molds, and other goods, property, and
assets which are used and/or were purchased for use in the
operation or furtherance of a Borrower's business, and any and
all accessions or additions thereto, and substitutions
therefor.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate": Any Person which is under common control with a
Borrower within the meaning of Section 4001 of ERISA or is
part of a group which includes any Borrower and which would be
treated as a single employer under Section 414 of the Internal
Revenue Code of 1986, as amended.
11
"Eurodollar Business Day": Any day which is both a Business Day and a
day on which the principal market in Eurodollars in which
Fleet National Bank participates is open for dealings in
United States Dollar deposits.
"Eurodollar Loan": Any Revolving Credit Loan which bears interest at a
Eurodollar Rate.
"Eurodollar Offer Rate": That rate of interest (rounded upwards, if
necessary, to the next 1/100 of 1%) determined by the Agent to
be a prevailing rate per annum at which deposits on U.S.
Dollars are offered to Fleet National Bank, by first-class
banks in the Eurodollar market in which Fleet National Bank
participates at or about 10:00AM (Boston Time) two (2)
Eurodollar Business Days before the first day of the Interest
Period for the subject Eurodollar Loan, for a deposit
approximately in the amount of the subject loan for a period
of time approximately equal to such Interest Period.
"Eurodollar Rate": That per annum rate which is the aggregate of the
Eurodollar Offer Rate plus the Applicable Margin for
Eurodollar Loans except that, in the event that the Agent
determines that any Revolving Credit Lender may be subject to
the Reserve Percentage, the "Eurodollar Rate" shall mean, with
respect to any Eurodollar Loans then outstanding (from the
date on which that Reserve Percentage first became applicable
to such loans), and with respect to all Eurodollar Loans
thereafter made, an interest rate per annum equal the sum of
(a) plus (b), where:
(a) is the decimal equivalent of the following
fraction:
Eurodollar Offer Rate
---------------------
1 minus Reserve Percentage
(b) is the Applicable Margin for Eurodollar Loans.
"Events of Default": Is defined in Article 10:. An "Event of Default"
shall be deemed to have occurred and to be continuing unless
and until that Event of Default has been duly waived by the
requisite Revolving Credit Lenders or by the Agent as
applicable.
"Exempt DDA": A depository account maintained by any Borrower, the
only contents of which may be transfers from the Operating
Account and actually used solely (i) for xxxxx cash purposes;
or (ii) for payroll.
"Fee Letter": That letter dated October 6, 2000 and styled "Fee
Letter" between the Lead Borrower and the Agent, as such
letter may from time to time be amended.
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"Fiscal":When followed by "month" or "quarter", the relevant fiscal
period based on the Borrowers' fiscal year and accounting
conventions. When followed by reference to a specific year,
the fiscal year which ends in a month of the year to which
reference is being made (e.g. if the Borrowers' fiscal year
ends in January 2001 reference to that year would be to the
Borrowers' "Fiscal 2001").
"Fixtures": Has the meaning given that term in the UCC.
"FRFI": Fleet Retail Finance Inc.
"GAAP": Generally accepted accounting principles promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors (or successors) in effect and applicable to that
accounting period in respect of which reference to GAAP is
being made, provided, however, in the event of a Material
Accounting Change, then unless otherwise specifically agreed
to by the Agent, (a) the Borrowers' compliance with the
financial performance covenants imposed pursuant to Section
5:5-11 shall be determined as if such Material Accounting
Change had not taken place and (b) the Lead Borrower shall
include, with its monthly, quarterly, and annual financial
statements a schedule, certified by the Lead Borrower's chief
financial officer, on which the effect of such Material
Accounting Change on that statement shall be described.
"General Intangibles": Includes, without limitation, "general
intangibles" as defined in the UCC; and also all: rights to
payment for credit extended; deposits; amounts due to any
Borrower; credit memoranda in favor of any Borrower; warranty
claims; tax refunds and abatements; insurance refunds and
premium rebates; all means and vehicles of investment or
hedging, including, without limitation, options, warrants, and
futures contracts; records; customer lists; telephone numbers;
goodwill; causes of action; judgments; payments under any
settlement or other agreement; literary rights; rights to
performance; royalties; license and/or franchise fees; rights
of admission; licenses; franchises; license agreements,
including all rights of any Borrower to enforce same; permits,
certificates of convenience and necessity, and similar rights
granted by any governmental authority; patents, patent
applications, patents pending, and other intellectual
property; internet addresses and domain names; developmental
ideas and concepts; proprietary processes; blueprints,
drawings, designs, diagrams, plans, reports, and charts;
catalogs; manuals; technical data; computer software programs
(including the source and object codes therefor), computer
13
records, computer software, rights of access to computer
record service bureaus, service bureau computer contracts, and
computer data; tapes, disks, semi-conductors chips and
printouts; trade secrets rights, copyrights, mask work rights
and interests, and derivative works and interests; user,
technical reference, and other manuals and materials; trade
names, trademarks, service marks, and all goodwill relating
thereto; applications for registration of the foregoing; and
all other general intangible property of any Borrower in the
nature of intellectual property; proposals; cost estimates,
and reproductions on paper, or otherwise, of any and all
concepts or ideas, and any matter related to, or connected
with, the design, development, manufacture, sale, marketing,
leasing, or use of any or all property produced, sold, or
leased, by the or credit extended or services performed, by
any Borrower, whether intended for an individual customer or
the general business of any Borrower, or used or useful in
connection with research by any Borrower.
"Goods": Has the meaning given that term in the UCC, and also includes
all things movable when a security interest therein attaches
and also all computer programs embedded in goods and any
supporting information provided in connection with a
transaction relating to the program if (i) the program is
associated with the goods in such manner that it customarily
is considered part of the goods or (ii) by becoming the owner
of the goods, a Person acquires a right to use the program in
connection with the goods.
"Hazardous Materials": Any (a) substance which is defined or regulated
as a hazardous material in or under any Environmental Law and
(b) oil in any physical state.
"Indebtedness": All indebtedness and obligations of or assumed by any
Person on account of or in respect to any of the following:
(a) In respect of money borrowed (including any
indebtedness which is non-recourse to the credit of such
Person but which is secured by an Encumbrance on any asset of
such Person) whether or not evidenced by a promissory note,
bond, debenture or other written obligation to pay money.
(b) In connection with any letter of credit or
acceptance transaction (including, without limitation, the
face amount of all letters of credit and acceptances issued
for the account of such Person or reimbursement on account of
which such Person would be obligated).
(c) In connection with the sale or discount of
accounts receivable or chattel paper of such Person.
14
(d) As lessee under Capital Leases.
(e) In connection with any sale and leaseback
transaction.
"Indebtedness" also includes
(x) Any guaranty, endorsement,
suretyship or other undertaking pursuant to
which that Person may be liable on account
of any obligation of any third party.
(y) The Indebtedness of a
partnership or joint venture for which such
Person is liable as a general partner or
joint venturer.
"Indemnified Person": Is defined in Section 19:19-13.
"Instruments": Has the meaning given that term in the UCC.
"Interest Payment Date": With reference to:
Each Eurodollar Loan: The last day of the Interest
Period relating thereto (and on the last day of month three
for any such loan which has a six month Interest Period); the
Termination Date; and the End Date.
Each Base Margin Loan: The first day of each month;
the Termination Date; and the End Date.
"Interest Period": The following:
(a) With respect to each Eurodollar Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of, or conversion to, the subject
Eurodollar Loan and ending one, two, three, or six months
thereafter, as the Lead Borrower may elect by notice (pursuant
to Section 2:2-6) to the Agent.
(b) With respect to each Base Margin Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of or conversion to such Base
Margin Loan and ending on that date (i) as of which the
subject Base Margin Loan is converted to a Eurodollar Loan, as
the Lead Borrower may elect by notice (pursuant to Section
2:2-6) to the Agent, or (ii) on which the subject Base Margin
Loan is paid by the Borrowers.
(c) The setting of Interest Periods is in all
instances subject to the following:
(i) Any Interest Period for a Base Margin
Loan which would otherwise end on a day which is not
a Business Day shall be extended to the next
15
succeeding Business Day.
(ii) Any Interest Period for a Eurodollar
Loan which would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding
Business Day, unless that succeeding Business Day is
in the next calendar month, in which event such
Interest Period shall end on the last Business Day of
the month during which the Interest Period ends.
(iii) Subject to Subsection (iv), below, any
Interest Period applicable to a Eurodollar Loan,
which Interest Period begins on a day for which there
is no numerically corresponding day in the calendar
month during which such Interest Period ends, shall
end on the last Business Day of the month during
which that Interest Period ends.
(iv) Any Interest Period which would
otherwise end after the Termination Date shall end on
the Termination Date.
(v) The number of Interest Periods in effect
at any one time is subject to Section 2:2-12(d)
hereof.
"Inventory": Includes, without limitation, "inventory" as defined in
the UCC and also all: (a) Goods which are leased by a Person
as lessor; are held by a Person for sale or lease or to be
furnished under a contract of service; are furnished by a
Person under a contract of service; or consist of raw
materials, work in process, or materials used or consumed in a
business; (b) Goods of said description in transit; (c) Goods
of said description which are returned, repossessed and
rejected; (d) packaging, advertising, and shipping materials
related to any of the foregoing; (e) all names, marks, and
General Intangibles affixed or to be affixed or associated
thereto; and (f) Documents and Documents of Title which
represent any of the foregoing, provided, however, that
Inventory shall not include Consigned Inventory.
"Inventory Advance Rate": Sixty-five percent (65%), for so long as the
1995 Indenture remains outstanding, and sixty-eight percent
(68%) following the termination of the 1995 Indenture,
provided that no Indebtedness incurred in connection with any
refinancing of the 1995 Indenture restricts the Borrower's
Inventory Advance Rate below sixty-eight percent (68%).
"Inventory Reserves": Such Reserves as may be established from
time to time by the Agent in the Agent's discretion with
respect to the determination of the saleability, at retail, of
16
the Eligible Inventory or which reflect such other factors as
affect the market value of the Eligible Inventory. Without
limiting the generality of the foregoing, Inventory Reserves
may include (but are not limited to) reserves based on the
following:
(i) Obsolescence (based upon Inventory on hand
beyond a given number of days).
(ii) Seasonality.
(iii) Shrinkage.
(iv) Imbalance.
(v) Change in Inventory character.
(vi) Change in Inventory composition
(vii) Change in Inventory mix.
(viii) Markdowns (both permanent and point of sale)
(ix) Retail markons and markups inconsistent with
prior period practice and performance;
industry standards; current business plans;
or advertising calendar and planned
advertising events.
"Investment Property": Has the meaning given that term in the UCC.
"Issuer": The issuer of any L/C.
"L/C": Any letter of credit, the issuance of which is procured by the
Agent for the account of any Borrower and any acceptance made
on account of such letter of credit.
"L/C Landing Costs": To the extent not included in the Stated
Amount of an L/C, customs, duty, freight, and other
out-of-pocket costs and expenses which will be expended to
"land" the Inventory, the purchase of which is supported by
such L/C.
"Lease": Any lease or other agreement, no matter how styled or
structured, pursuant to which the Borrower is entitled to the
use or occupancy of any space.
"Leasehold Interest": Any interest of a Borrower as lessee under any
Lease.
"Lenders'Special Counsel": A single counsel, selected by the Majority
Lenders following the occurrence of an Event of Default, to
represent the interests of the Revolving Credit Lenders in
connection with the enforcement, attempted enforcement, or
preservation of any rights and remedies under this, or any
17
other Loan Document, as well as in connection with any
"workout", forbearance, or restructuring of the credit
facility contemplated hereby.
"Letter-of-Credit Right": Has the meaning given that term in UCC 9'99
and also refers to any right to payment or performance under
an L/C, whether or not the beneficiary has demanded or is at
the time entitled to demand payment or performance.
"Liabilities": Includes, without limitation, the following:
(a) All and each of the following, whether now existing or
hereafter arising under this Agreement or under any of the other Loan
Documents:
(i) Any and all direct and indirect liabilities,
debts, and obligations of each Borrower to the Agent or any
Revolving Credit Lender, each of every kind, nature, and
description.
(ii) Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft, or amount now or
hereafter owing by any Borrower to the Agent or any Revolving
Credit Lender (including all future advances whether or not
made pursuant to a commitment by the Agent or any Revolving
Credit Lender), whether or not any of such are liquidated,
unliquidated, primary, secondary, secured, unsecured, direct,
indirect, absolute, contingent, or of any other type, nature,
or description, or by reason of any cause of action which the
Agent or any Revolving Credit Lender may hold against any
Borrower.
(iii) All notes and other obligations of each
Borrower now or hereafter assigned to or held by the Agent or
any Revolving Credit Lender, each of every kind, nature, and
description.
(iv) All interest, fees, and charges and other
amounts which may be charged by the Agent or any Revolving
Credit Lender to any Borrower and/or which may be due from any
Borrower to the Agent or any Revolving Credit Lender from time
to time.
(v) All Costs of Collection.
(vi) Any and all covenants of each Borrower to or
with the Agent or any Revolving Credit Lender and any and all
obligations of each Borrower to act or to refrain from acting
in accordance with any agreement between that Borrower and the
Agent or any Revolving Credit Lender or instrument furnished
by that Borrower to the Agent or any Revolving Credit Lender.
18
(vii) Each of the foregoing as if each reference to
the " the Agent or any Revolving Credit Lender" were to each
Affiliate of the Agent.
(b) Any and all direct or indirect liabilities,
debts, and obligations of each Borrower to the Agent or any
Affiliate of the Agent, each of every kind, nature, and
description owing on account of any service or accommodation
provided to, or for the account of any Borrower pursuant to
this or any other Loan Document, including cash management
services and the issuances of L/C's.
"Liquidation": The exercise, by the Agent, of those rights accorded to
the Agent under the Loan Documents as a creditor of the
Borrowers following and on account of the occurrence of an
Event of Default looking towards the realization on the
Collateral. Derivations of the word "Liquidation" (such as
"Liquidate") are used with like meaning in this Agreement.
"Loan Account": Is defined in Section 2:2-9.
"Loan Commitment": With respect to each Revolving Credit Lender,
that respective Revolving Credit Lender's Revolving Credit
Dollar Commitment.
"Loan Documents": This Agreement, each instrument and document
executed and/or delivered as contemplated by Article 3:,
below, and each other instrument or document from time to time
executed and/or delivered in connection with the arrangements
contemplated hereby or in connection with any transaction with
the Agent or any Affiliate of the Agent, including, without
limitation, any transaction which arises out of any cash
management, depository, investment, letter of credit, interest
rate protection, or equipment leasing services provided by the
Agent or any Affiliate of the Agent, as each may be amended
from time to time.
"MajorityLenders": Revolving Credit Lenders (other than Delinquent
Revolving Credit Lenders) holding 51% or more of the Loan
Commitments (other than any Loan Commitments held by
Delinquent Revolving Credit Lenders), or if the Loan
Commitments have been terminated, Revolving Credit Lenders
whose percentage of the outstanding Revolving Credit Loans and
face amount of all outstanding L/Cs (after settlement and
repayment of all SwingLine Loans by the Revolving Credit
Lenders) aggregate not less than 51% of all such Liabilities.
19
"MaterialAccounting Change": Any change in GAAP applicable to
accounting periods subsequent to the Borrowers' fiscal year
most recently completed prior to the execution of this
Agreement, which change has a material effect on the
Borrowers' Consolidated financial condition or operating
results, as reflected on financial statements and reports
prepared by or for the Borrowers, when compared with such
condition or results as if such change had not taken place or
where preparation of the Borrowers' statements and reports in
compliance with such change results in the breach of a
financial performance covenant imposed pursuant to Section
5:5-11 where such a breach would not have occurred if such
change had not taken place or visa versa.
"MaterialAdverse Change": Any event, fact, circumstance, change in, or
effect on, the business of, any Borrower which, individually
or in the aggregate or on a cumulative basis with any other
circumstances, changes in, or effects on, the Borrowers or the
Collateral, taken as a whole which:
(a) Is, or would reasonably be expected to be,
materially adverse to the business, operations, assets or
liabilities (including, without limitation, contingent
liabilities), results of operations or the financial condition
of that Borrower.
(b) Would reasonably be expected to materially
adversely affect the ability of that Borrower to operate or
conduct its business in all material respects in the manner
necessary to perform its obligations under the Loan Documents
.
(c) Would reasonably be expected to have a material
adverse effect or result in a material adverse change in the
value, enforceability, collectability or the nature of the
Collateral.
"MaterialAdverse Effect": A result, consequence, or outcome with
respect to the Borrowers which constitutes a Material Adverse
Change.
"Maturity Date": November 30, 2003.
"New Borrower": Is defined in Section 4:4-20.
"Nominee": A business entity (such as a corporation or limited
partnership) formed by the Agent to own or manage any Post
Foreclosure Asset.
"Operating Account": Is defined in Section 7:7-3.
20
"OverLoan": A loan, advance, or providing of credit support (such as
the issuance of any L/C) to the extent that, immediately after
its having been made, Availability is less than zero.
"Participant": Is defined in Section 19:19-16, hereof.
"Payment Intangible": Has the meaning given that term in UCC 9'99 and
also refers to any general intangible under which the Account
Debtor's primary obligation is a monetary obligation.
"Permissible OverLoans": Revolving Credit Loans which are OverLoans,
but as to which each of the following conditions is satisfied:
(a) the Revolving Credit Ceiling is not exceeded; and (b) when
aggregated with all other Permissible OverLoans, such
Revolving Credit Loans do not aggregate more than ten percent
(10%) of the aggregate of the Borrowing Base; and (c) such
Revolving Credit Loans are made or undertaken in the Agent's
discretion to protect and preserve the interests of the
Revolving Credit Lenders.
"Permitted Encumbrances": The following:
(a) Encumbrances in favor of the Agent.
(b) Encumbrances listed on EXHIBIT 4:4-6, annexed
hereto.
(c) Encumbrances on Equipment or real property,
subject to compliance with the terms of Section 4:4-6(c),
below.
(d) Non-consensual statutory liens (other than liens
securing the payment of taxes) arising in the ordinary course
of a Borrowers' business to the extent: such liens secure
obligations which are not overdue or such liens secure
obligations relating to claims or liabilities which are fully
insured (subject to commercially reasonable deductibles) and
being defended at the sole cost and expense and at the sole
risk of the insurer or are being contested in good faith by
appropriate proceedings diligently pursued and available to a
Borrower, in each instance prior to the commencement of
foreclosure or other similar proceedings and with respect to
which adequate reserves have been set aside on the Borrowers'
books.
(e) Carriers', warehousemen's, mechanics, repairmen's
or similar liens incurred in the ordinary course of business.
(f) Zoning restrictions, easements, licenses,
covenants and other restrictions affecting the use of real
property.
21
(g) Deposits under workmen's compensation,
unemployment insurance and social security laws, or to secure
the performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, or to secure
statutory obligations or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds arising in the
ordinary course of business.
(h) Landlord's liens by operation of law.
(i) Interests of lessors under Capital Leases.
(j) Liens consisting of security deposits made by a
Borrower. The inclusion of any of the foregoing as a
"Permitted Encumbrance" does not affect its relative priority
vis a vis any Collateral Interest created by a Borrower in
favor of the Agent.
"Permitted Investments": Investments by the Lead Borrower, or financed
by the Lead Borrower pursuant to Section 4:4-21(f), below, in
readily marketable securities (but in no event in any
securities of Avatex Corporation) where each of the following
conditions is met:
(a) The Agent shall have a first and only perfected
security interest in the security.
(b) The cost, to the Lead Borrower (whether by direct
investment or loans made to Cabot Noble, Inc.), for such
marketable security, when aggregated with the cost of all
other securities purchased by the Lead Borrower (whether by
direct investment or loans made to Cabot Noble, Inc.), since
October 1, 2000, does not exceed $5,000,000.00.
(c) At the making of the relevant purchase, the
Borrowers are not then in Default nor would be in Default
immediately following such purchase.
(d) Availability, immediately after the relevant
purchase, is equal to not less than $30,000,000.00.
(e) The Lead Borrower provides to the Agent, within
seven (7) days of the making of the relevant purchase, a
forecast of Availability through the next ninety (90) day
period, which forecast reflects Availability at all times
equal to not less than $30,000,000.00.
"Permitted Repurchases": Repurchases of (i) the Borrower's 11.72%
Unsecured Senior Debentures, and (ii) the Borrower's common
stock up to $2,500,000.00 in the aggregate per annum, provided
that in the case of either (i) or (ii), above, (A) the
Borrowers are not then in Default nor would be in Default
immediately following the subject repurchase and (B)
Availability, immediately after the relevant repurchase, is
equal to not less than $30,000,000.00.
22
"Person":Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other
enterprise or entity.
"Post Foreclosure Asset": All or any part of the Collateral,
ownership of which is acquired by the Agent or a Nominee on
account of the "bidding in" at a disposition as part of a
Liquidation or by reason of a "deed in lieu" type of
transaction.
"Proceeds": Includes, without limitation, "Proceeds" as defined in the
UCC and each type of property described in Section 8:8-1
hereof.
"Receipts": All cash, cash equivalents, money, checks, credit card
slips, receipts and other Proceeds from any sale of the
Collateral.
"Receivables Advance Rate": Eighty five percent (85%).
"Receivables Collateral": That portion of the Collateral which consists
of Accounts, Accounts Receivable, General Intangibles, Chattel
Paper, Instruments, Documents of Title, Documents, Investment
Property, Payment Intangibles, Letter-of-Credit Rights,
bankers' acceptances, and all other rights to payment.
"Receivables Reserves": Such Reserves as may be established from time
to time by the Agent in the Agent's discretion with respect to
the determination of the collectability in the ordinary course
and of the creditworthiness of the relevant Account Debtor.
Without limiting the generality of the foregoing, Receivables
Reserves may include (but are not limited to) reserves based
on the following:
(a) The aggregate of all accounts receivables which
are more than sixty (60) days past original invoice date.
(b) The aggregate of all accounts receivable owed by
any Account Debtor twenty five percent (25%) or more of whose
accounts are described in Subsection (a), above.
(c) That portion of Eligible Receivables owed by any
Account Debtor which exceed thirty percent (30%) of all
Eligible Receivables.
23
(d) The aggregate of all accounts receivable which
arise out of the sale by any Borrower of goods consigned or
delivered to that Borrower or to the Account Debtor on sale or
return terms (whether or not compliance has been made with the
applicable provisions of Article 2 of the Uniform Commercial
Code).
(e) The aggregate of all accounts receivable which
arise out of any sale made on a basis other than upon terms
usual to the business of any Borrower.
(f) The aggregate of all accounts receivable which
arise out of any sale made on a "xxxx and hold," dating, or
delayed shipping basis.
(g) The aggregate of all accounts receivable which
are owed by any Account Debtor whose principal place of
business is not within the continental United States or the
District of Columbia.
(h) The aggregate of all accounts receivable which
are owed by any Affiliate.
(i) So much of any account as to which the subject
Account Debtor holds or is entitled to any claim,
counterclaim, set off, or chargeback as determined by the
Agent in its discretion.
(j) The aggregate of all accounts receivable which
are evidenced by a promissory note or other documentation
evidencing modified payment terms.
(k) The aggregate of all accounts receivable which
arise out of any agreement with, or purchase order from (a)
the United States, or any instrumentality thereof, or (b) with
any other state or local governmental entity as to whose
contracts, the assignment thereof is subject to any limitation
or prohibition, including, without limitation, all so-called
Medicare and Medicaid receivables.
(l) The aggregate of all accounts receivable which
are owed by any person employed by, or a salesperson of, any
Borrower.
"Register": Is defined in Section 16:16-2(c).
"Requirements of Law": As to any Person:
(a) Applicable Law.
(b) That Person's organizational documents.
(c) That Person's by-laws and/or other instruments
which deal with corporate or similar governance, as
applicable.
24
"Reserve Percentage": The decimal equivalent of that rate applicable to
a Revolving Credit Lender under regulations issued from time
to time by the Board of Governors of the Federal Reserve
System for determining the maximum reserve requirement of that
Revolving Credit Lender with respect to "Eurocurrency
liabilities" as defined in such regulations. The Reserve
Percentage applicable to a particular Eurodollar Loan shall be
based upon that in effect during the subject Interest Period,
with changes in the Reserve Percentage which take effect
during such Interest Period to take effect (and to
consequently change any interest rate determined with
reference to the Reserve Percentage) if and when such change
is applicable to such loans.
"Reserves": The following: Receivables Reserves; Availability Reserves;
and Inventory Reserves.
"Revolving Credit": Is defined in Section 2:2-1.
"Revolving Credit Ceiling": $150,000,000.00.
"Revolving Credit Commitment Fee": Is defined in Section 2:2-13.
"Revolving Credit Dollar Commitment": As set forth on EXHIBIT 2:2-24,
annexed hereto (as such amounts may change in accordance with
the provisions of this Agreement).
"Revolving Credit Early Termination Fee": Is defined in Section 2:2-16.
"Revolving Credit Lenders": Each Revolving Credit Lender party to this
Agreement as of the date hereof and any other Person who
becomes a "Revolving Credit Lender" in accordance with the
provisions of to this Agreement.
"Revolving Credit Loans": Loans made under the Revolving Credit, except
that where the term "Revolving Credit Loan" is used with
reference to available interest rates applicable to the loans
under the Revolving Credit, it refers to so much of the unpaid
principal balance of the Loan Account as bears the same rate
of interest for the same Interest Period. (See Section
2:2-11(c)).
"Revolving Credit Note": Is defined in Section 2:2-10.
25
"Revolving Credit Obligations": The aggregate of the Borrowers'
liabilities, obligations, and indebtedness of any character on
account of or in respect to the Revolving Credit.
"Revolving Credit Commitment Percentage": As set forth on EXHIBIT
2:2-24, annexed hereto (as such amounts may change in
accordance with the provisions of this Agreement).
"SEC": The Securities and Exchange Commission.
"Stated Amount": The maximum amount for which an L/C may be honored.
"Store": A place at which a Borrower customarily offers its Inventory
for retail sale to the public.
"Subsidiary": Any corporation, association, joint stock company,
business trust or other similar organization of which 50% or
more of the ordinary voting power for the election of a
majority of the members of the board of directors or other
governing body of such entity is held or controlled by a
Borrower or a Subsidiary of a Borrower; or any other such
organization the management of which is directly or indirectly
controlled by a Borrower or a Subsidiary of a Borrower through
the exercise of voting power or otherwise; or any joint
venture, whether incorporated or not, in which a Borrower or
any of its Subsidiaries has a 50% ownership interest.
"SuperMajority Lenders": Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 66-2/3% or more
the Loan Commitments (other than Loan Commitments held by a
Delinquent Revolving Credit Lender), or if the Loan
Commitments have been terminated, Revolving Credit Lenders
whose percentage of the outstanding Revolving Credit Loans and
face amount of all outstanding L/Cs (after settlement and
repayment of all SwingLine Loans by the Revolving Credit
Lenders) aggregate not less than 66-2/3% of all such
Liabilities.
"Supporting Obligation": Has the meaning given that term in UCC 9'99
and also refers to a Letter-of-Credit Right or secondary
obligation which supports the payment or performance of an
Account, Chattel Paper, a Document, a General Intangible, an
Instrument, or Investment Property.
26
"SwingLine": The facility pursuant to which the SwingLine Lender may
advance Revolving Credit Loans aggregating up to the SwingLine
Loan Ceiling.
"SwingLine Lender": FRFI.
"SwingLine Loan Ceiling": $20,000,000.00 (subject to increase as
provided in Section 15:15-4).
"SwingLine Loans": Defined in Section 2:2-8.
"SwingLine Note": Defined in Section 3-7(c).
"Syndication Agent": Fleet Securities Inc.
"Termination Date": The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section 10:10-12, below;
or (c) the Agent's notice to the Lead Borrower setting the
Termination Date on account of the occurrence of any Event of
Default other than as described in Section 10:10-12, below; or
(d) that date, thirty (30) days irrevocable written notice of
which is provided by the Lead Borrower to the Agent.
"Transfer": Wire transfer pursuant to the wire transfer system
maintained by the Board of Governors of the Federal Reserve
Board, or as otherwise may be agreed to from time to time by
the Agent making such Transfer and the subject Revolving
Credit Lender. Wire instructions may be changed in the same
manner that Notice Addresses may be changed (Section 17:17-1),
except that no change of the wire instructions for Transfers
to any Revolving Credit Lender shall be effective without the
consent of the Agent.
"UCC": The Uniform Commercial Code as in effect from time to time in
Massachusetts.
"UCC9'99": The Uniform Commercial Code, Article 9, 1999 Official Text,
except that following the effectiveness, in Massachusetts, of
the revision of Article 9 of the Uniform Commercial Code
contemplated by UCC9'99 (with such nonuniform variations as
may be adopted as part of the enactment of that revision),
each reference to "UCC9'99" shall be to the UCC.
27
"Unanimous Consent": Consent of Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 100% of the Loan
Commitments (other than Loan Commitments held by a Delinquent
Revolving Credit Lender).
"Unused Line Fee": Is defined in Section 2:2-15.
Article 2: - THE REVOLVING CREDIT:
2-1 -. Establishment of Revolving Credit
(a) The Revolving Credit Lenders hereby establish a revolving line of
credit (the "Revolving Credit") in the Borrowers' favor pursuant to which each
Revolving Credit Lender, subject to, and in accordance with, this Agreement,
acting through the Agent, shall make loans and advances and otherwise provide
financial accommodations to and for the account of the Borrowers as provided
herein.
(b) Loans, advances, and financial accommodations under the Revolving
Credit shall be made with reference to the Borrowing Base and shall be subject
to Availability. The Borrowing Base and Availability shall be determined by the
Agent by reference to Borrowing Base Certificates furnished as provided in
Section 5:5-4, below. The Cost of Eligible Inventory will be determined in a
manner consistent with the Borrower's Current Practices and shall be based on
the Borrowers' general ledger inventory.
(c) The commitment of each Revolving Credit Lender to provide such
loans, advances, and financial accommodations is subject to Section 2:2-24.
(d) The proceeds of borrowings under the Revolving Credit shall be used
solely for the Borrowers' working capital (including, repayment of existing
Indebtedness to institutional lenders), Capital Expenditures, and Permitted
Repurchases, to the extent permitted by this Agreement. No proceeds of a
borrowing under the Revolving Credit may be used, nor shall any be requested,
with a view towards the accumulation of any general fund or funded reserve of
the Borrowers other than in the ordinary course of the Borrowers' business and
consistent with the provisions of this Agreement.
(e) Notwithstanding anything to the contrary set forth herein or in any
other Loan Document, in no event, while the 1995 Indenture remains outstanding,
shall the Borrowers permit the aggregate amount of principal and interest
outstanding hereunder at any time to exceed the sum of (i) 90% of the accounts
receivable of the Borrowers, plus (ii) 65% of the inventory of the Borrowers
(where the terms "accounts receivable" and "inventory" have the meanings given
to them in accordance with GAAP), and the Borrowers shall refrain from borrowing
or immediately repay any advance to the extent necessary to accomplish the
foregoing.
2-2 -INITIAL RESERVES. CHANGES TO RESERVES.
28
(a) At the execution of this Agreement, the only Reserves are as
reflected on the initial Borrowing Base Certificate.
(b) Reserves that may be revised, by the Agent in good faith in its
reasonable business judgment:
(i) To reflect events, conditions, contingencies or risks
that, as determined by the Agent in good faith in its reasonable
business judgment, do or may affect any of:
(A) The Collateral or any other property which
secures the Liabilities.
(B) The assets, business or prospects of any
Borrower.
(C) The Collateral Interests and other rights of the
Agent in, or to realize upon, the Collateral (including the
enforceability, perfection and priority thereof).
(ii) To reflect the Agent's good faith belief in its
reasonable business judgment that any collateral report or financial
information furnished by or on behalf of the Borrower to the Agent is
or may have been incomplete, inaccurate or misleading in any material
respect.
(iii) To reflect any state of facts which constitutes an Event
of Default.
(c) A change to a then existing Reserve may be made only with not less
than seven (7) Business Days prior notice to the Lead Borrower, during which
period the Agent shall afford the Borrower an opportunity to demonstrate that
such Reserve is not necessary (unless the Agent determines that the Collateral
would be materially and adversely affected by such delay or an Event of Default
exists, in which case such Reserve may be immediately imposed), except that a
change to a then existing Reserve, which change reflects changed circumstances
of which the Lead Borrower has knowledge (such as a change in the aggregate of
taxes then outstanding), may be made without such notice.
2-3 -ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).
(a) No Revolving Credit Lender has any obligation to make any loan or
advance, or otherwise to provide any credit to or for the benefit of the
Borrowers where the result of such loan, advance, or credit is an OverLoan.
(b) The Revolving Credit Lenders' obligations, among themselves, are
subject to Section 12:12-3(a) (which relates to each Revolving Credit Lender's
making amounts available to the Agent) and to Section 15:15-3(a) (which relates
to Permissible OverLoans).
(c) The Revolving Credit Lenders' providing of an OverLoan on any one
occasion does not affect the obligations of each Borrower hereunder (including
each Borrower's obligation to immediately repay any amount which otherwise
constitutes an OverLoan) nor obligate the Revolving Credit Lenders to do so on
any other occasion.
29
2-4 -RISKS OF VALUE OF COLLATERAL. The Agent's reference to a given asset in
connection with the making of loans, credits, and advances and the providing of
financial accommodations under the Revolving Credit and/or the monitoring of
compliance with the provisions hereof shall not be deemed a determination by the
Agent or any Revolving Credit Lender relative to the actual value of the asset
in question. All risks concerning the value of the Collateral are and remain
upon the Borrowers. All Collateral secures the prompt, punctual, and faithful
performance of the Liabilities whether or not relied upon by the Agent in
connection with the making of loans, credits, and advances and the providing of
financial accommodations under the Revolving Credit.
2-5 -COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS OF CREDIT.
Subject to the provisions of this Agreement, the Revolving Credit Lenders shall
make Revolving Credit Loans and the Agent shall cause L/C's to be issued for the
account of the Lead Borrower, in each instance if duly and timely requested by
the Lead Borrower as provided herein provided that:
(a) The amount of the loan or advance or L/C so requested does not
exceed Availability.
(b) No Borrower is in Default.
2-6 -REVOLVING CREDIT LOAN REQUESTS.
(a) Requests for Revolving Credit Loans or for the continuance or
conversion of an interest rate applicable to a Revolving Credit Loan may be
requested by the Lead Borrower in such manner as may from time to time be
acceptable to the Agent.
(b) Subject to the provisions of this Agreement, the Lead Borrower may
request a Revolving Credit Loan and elect an interest rate and Interest Period
to be applicable to that Revolving Credit Loan by giving notice to the Agent by
no later than the following:
(i) If such Revolving Credit Loan is to be or is to be
converted to a Base Margin Loan: By 12:00 PM on the Business Day on
which the subject Revolving Credit Loan is to be made or is to be so
converted. Base Margin Loans requested by the Lead Borrower, other than
those resulting from the conversion of a Eurodollar Loan, shall not be
less than $10,000.00.
(ii) If such Revolving Credit Loan is to be, or is to be
continued as, or converted to, a Eurodollar Loan: By 1:00PM three (3)
Eurodollar Business Days before the commencement of any new Interest
Period or the end of the then applicable Interest Period. Eurodollar
Loans and conversions to Eurodollar Loans shall each be not less than
$500,000.00 and in increments of $100,000.00 in excess of such minimum.
30
(iii) Any Eurodollar Loan which matures while any Borrower is
in Default shall be converted, at the option of the Agent, to a Base
Margin Loan notwithstanding any notice from the Lead Borrower that such
Loan is to be continued as a Eurodollar Loan.
(c) Any request for a Revolving Credit Loan or for the continuance or
conversion of an interest rate applicable to a Revolving Credit Loan which is
made after the applicable deadline therefor, as set forth above, shall be deemed
to have been made at the opening of business on the then next Business Day or
Eurodollar Business Day, as applicable.
(d) The Lead Borrower may request that the Agent cause the issuance by
the Issuer of L/C's for the account of the Borrowers as provided in Section
2:2-19.
(e) The Agent may rely on any request for a loan or advance, or other
financial accommodation under the Revolving Credit which the Agent, in good
faith, believes to have been made by a Person duly authorized to act on behalf
of the Lead Borrower and may decline to make any such requested loan or advance,
or issuance, or to provide any such financial accommodation pending the Agent's
being furnished with such documentation concerning that Person's authority to
act as may be reasonably satisfactory to the Agent.
(f) A request by the Lead Borrower for loan or advance, or other
financial accommodation under the Revolving Credit shall be irrevocable and
shall constitute certification by each Borrower that as of the date of such
request, each of the following is true and correct:
(i) There has been no material adverse change in the
Borrowers' financial condition from the most recent financial
information furnished Agent or any Revolving Credit Lender pursuant to
this Agreement.
(ii) If on any day that an advance is made hereunder, any
sales tax owed by the Borrowers is due and payable and remains unpaid,
then some or all of such advance shall be applied to cover the
Borrowers' payment of such sales tax.
(iii) Each representation which is made herein or in any of
the Loan Documents is then true and complete in all material respects
as of and as if made on the date of such request.
(iv) The granting of the request will not result in a breach
of or default under the 1995 Indenture.
(v) No Borrower is in Default.
(g) If, at any time or from time to time, any Borrower is in Default:
(i) The Agent may suspend the Revolving Credit immediately.
(ii) Neither the Agent nor any Revolving Credit Lender shall
be obligated, during such suspension, to make any loans or advance, or
to provide any financial accommodation hereunder or to seek the
issuance of any L/C.
(iii) The Agent may suspend the right of the Lead Borrower to
request any Eurodollar Loan or to convert any Base Margin Loan to a
31
Eurodollar Loan.
2-7 -Making of Revolving Credit Loans.
(a) A loan or advance under the Revolving Credit shall be made by the
transfer of the proceeds of such loan or advance to the Operating Account or as
otherwise instructed by the Lead Borrower.
(b) A loan or advance shall be deemed to have been made under the
Revolving Credit (and the Borrowers shall be indebted to the Agent and the
Revolving Credit Lenders for the amount thereof immediately) at the following:
(i) The Agent's initiation of the transfer of the proceeds of
such loan or advance in accordance with the Lead Borrower's
instructions (if such loan or advance is of funds requested by the Lead
Borrower).
(ii) The charging of the amount of such loan to the Loan
Account (in all other circumstances).
(c) There shall not be any recourse to or liability of the Agent or any
Revolving Credit Lender, on account of:
(i) Any delay beyond the reasonable control of the Agent in
the making of any loan or advance requested under the Revolving Credit.
(ii) Any delay by any bank or other depository institution in
treating the proceeds of any such loan or advance as collected funds.
(iii) Any delay in the receipt, and/or any loss, of funds
which constitute a loan or advance under the Revolving Credit, the wire
transfer of which was properly initiated by the Agent in accordance
with wire instructions provided to the Agent by the Lead Borrower.
2-8 -SwingLine Loans.
(a) For ease of administration, Base Margin Loans may be made by the
SwingLine Lender (in the aggregate, the "SwingLine Loans") in accordance with
the procedures set forth in this Agreement for the making of loans and advances
under the Revolving Credit. The unpaid principal balance of the SwingLine Loans
shall not at any one time be in excess of the SwingLine Loan Ceiling.
(b) The aggregate unpaid principal balance of SwingLine Loans shall
bear interest at the rate applicable to Base Margin Loans and shall be repayable
as a loan under the Revolving Credit.
(c) The Borrowers' obligation to repay SwingLine Loans shall be
evidenced by a Note in the form of EXHIBIT 2:2-8(c), annexed hereto, executed by
the Borrowers, and payable to the SwingLine Lender. Neither the original nor a
copy of that Note shall be required, however, to establish or prove any
32
Liability. The Borrowers shall execute a replacement of any SwingLine Note which
has been lost, mutilated, or destroyed thereof and deliver such replacement to
the SwingLine Lender.
(d) For all purposes of this Loan Agreement, the SwingLine Loans and
the Borrowers' obligations to the SwingLine Lender constitute Revolving Credit
Loans and are secured as "Liabilities".
(e) SwingLine Loans shall be subject to periodic settlement with the
Revolving Credit Lenders as provided in this Agreement.
2-9 -The Loan Account.
(a) An account ("Loan Account") shall be opened on the books of the
Agent in which a record shall be kept of all loans and advances made under the
Revolving Credit.
(b) The Agent shall also keep a record (either in the Loan Account or
elsewhere, as the Agent may from time to time elect) of all interest, fees,
service charges, costs, expenses, and other debits owed to the Agent and each
Revolving Credit Lender on account of the Liabilities and of all credits against
such amounts so owed.
(c) All credits against the Liabilities shall be conditional upon final
payment to the Agent for the account of each Revolving Credit Lender of the
items giving rise to such credits. The amount of any item credited against the
Liabilities which is charged back against the Agent or any Revolving Credit
Lender for any reason or is not so paid shall be a Liability and shall be added
to the Loan Account, whether or not the item so charged back or not so paid is
returned.
(d) Except as otherwise provided herein, all fees, service charges,
costs, and expenses for which any Borrower is obligated hereunder are payable on
demand. In the determination of Availability, the Agent may deem fees, service
charges, accrued interest, and other payments which will be due and payable
between the date of such determination and the first day of the then next
succeeding month as having been advanced under the Revolving Credit whether or
not such amounts are then due and payable.
(e) The Agent, without the request of the Lead Borrower, may advance
under the Revolving Credit any interest, fee, service charge, or other payment
to which the Agent or any Revolving Credit Lender is entitled from any Borrower
pursuant hereto and may charge the same to the Loan Account notwithstanding that
such amount so advanced may result in Borrowing Base's being exceeded. Such
action on the part of the Agent shall not constitute a waiver of the Agent's
rights and each Borrower's obligations under Section 2:2-11(b). Any amount which
is added to the principal balance of the Loan Account as provided in this
Section 2:2-9(e) shall bear interest at the interest rate then and thereafter
applicable to Base Margin Loans.
(f) Any written statement rendered by the Agent or any Revolving Credit
33
Lender to the Lead Borrower concerning the Liabilities shall be reviewed
promptly by the Lead Borrower. To the extent that the Lead Borrower believes
that there is any mistake in such statement the Lead Borrower shall promptly
provide the Agent with written objection thereto, which written objection shall
indicate, with particularity, the reason for such objection. The Loan Account
and the Agent's books and records concerning the loan arrangement contemplated
herein and the Liabilities shall be prima facie evidence of the items described
therein.
2-10 -The Revolving Credit Notes. The Borrowers' obligation to repay loans and
advances under the Revolving Credit, with interest as provided herein, shall be
evidenced by Notes (each, a "Revolving Credit Note") in the form of EXHIBIT
2:2-10, annexed hereto, executed by each Borrower, one payable to each Revolving
Credit Lender. Neither the original nor a copy of any Revolving Credit Note
shall be required, however, to establish or prove any Liability. In the event
that any Revolving Credit Note is ever lost, mutilated, or destroyed, each
Borrower, at the request of the Agent, shall execute a replacement thereof and
deliver such replacement to the Agent.
2-11 -Payment of The Loan Account.
(a) The Borrowers may repay all or any portion of the principal balance
of the Loan Account from time to time until the Termination Date.
(b) The Borrowers, without notice or demand from the Agent or any
Revolving Credit Lender, shall pay the Agent that amount, from time to time,
which is necessary so that there is no OverLoan outstanding.
(c) Subject to Section 7:7-4(c), following the occurrence of a Cash
Control Event, the Borrowers shall repay the Revolving Credit:
(i) in an amount equal to the proceeds realized from the sale,
refinancing, or other disposition of, or realization upon, any
Collateral; and
(ii) in accordance with the provisions of Article 7 hereof.
All amounts prepaid under this Section 2:2-11(c) may be reborrowed
under the Revolving Credit, subject to and in accordance with, the
terms of this Agreement.
(d) The Borrowers shall repay the then entire unpaid balance of the
Loan Account and all other Liabilities on the Termination Date.
(e) The Agent shall follow the Lead Borrower's timely instructions with
respect to the application of payments against Eurodollar Loans. In the absence
of timely instructions from the Lead Borrower, the Agent shall endeavor to cause
the application of payments (if any), pursuant to Sections 2:2-11(a) and
2:2-11(b) against Eurodollar Loans then outstanding in such manner as results in
the least cost to the Borrowers, but shall not have any affirmative obligation
to do so nor liability on account of the Agent's failure to have done so. In no
34
event shall action or inaction taken by the Agent excuse any Borrower from any
indemnification obligation under Section 2:2-11(f).
(f) The Borrowers shall indemnify the Agent and each Revolving Credit
Lender and hold the Agent and each Revolving Credit Lender harmless from and
against any loss, cost or expense (including amounts payable by the Agent or
such Revolving Credit Lender on account of "breakage fees" (so-called)) which
the Agent or such Revolving Credit Lender may sustain or incur (including,
without limitation, by virtue of acceleration after the occurrence of any Event
of Default) as a consequence of the following:
(i) Default by any Borrower in payment of the principal amount
of or any interest on any Eurodollar Loan as and when due and payable,
including any such loss or expense arising from interest or fees
payable by such Revolving Credit Lender in order to maintain its
Eurodollar Loans.
(ii) Default by any Borrower in making a borrowing or
conversion after the Borrower has given (or is deemed to have given) a
request for a Revolving Credit Loan or a request to convert a Revolving
Credit Loan from one applicable interest rate to another.
(iii) The making of any payment on a Eurodollar Loan or the
making of any conversion of any such Eurodollar Loan to a Base Margin
Loan on a day that is not the last day of the applicable Interest
Period with respect thereto.
2-12 -Interest on Revolving Credit Loans.
(a) Each Revolving Credit Loan shall bear interest at the Base Margin
Rate unless timely notice is given (as provided in Section 2:2-6) that the
subject Revolving Credit Loan (or a portion thereof) is, or is to be converted
to, a Eurodollar Loan.
(b) Each Revolving Credit Loan which consists of a Eurodollar Loan
shall bear interest at the applicable Eurodollar Rate.
(c) Subject to, and in accordance with, the provisions of this
Agreement, the Lead Borrower may cause all or a part of the unpaid principal
balance of the Loan Account to bear interest at the Base Margin Rate or the
Eurodollar Rate as specified from time to time by the Lead Borrower.
(d) The Lead Borrower shall not select, renew, or convert any interest
rate for a Revolving Credit Loan such that, in addition to interest at the Base
Margin Rate, there are more than five (5) Eurodollar Rates applicable to the
Revolving Credit Loans at any one time.
(e) The Borrowers shall pay accrued and unpaid interest on each
Revolving Credit Loan in arrears as follows:
(i) On the applicable Interest Payment Date for that Revolving
Credit Loan.
(ii) On the Termination Date and on the End Date.
(iii) Following the occurrence of any Event of Default, with
35
such frequency as may be determined by the Agent.
(f) Following the occurrence of any Event of Default (and whether or
not the Agent exercises the Agent's rights on account thereof), all Revolving
Credit Loans shall bear interest, at the option of the Agent or at the
instruction of the SuperMajority Lenders at rate which is the aggregate of the
rate applicable to Base Margin Loans plus two Percent (2%) per annum.
2-13 -Revolving Credit Commitment Fee. In consideration of the commitment to
make loans and advances to the Borrowers under the Revolving Credit, and to
maintain sufficient funds available for such purpose, there has been earned and
the Borrowers shall pay the "Revolving Credit Commitment Fee" (so referred to
herein) in the amount and payable as provided in the Fee Letter.
2-14 -Agent's Fee. In addition to any other fee or expense to be paid by the
Borrowers on account of the Revolving Credit, the Borrowers shall pay the Agent
the " Agent's Fee" at the times and in the amounts as set forth the Fee Letter.
2-15 -Unused Line Fee. In addition to any other fee to be paid by the Borrowers
on account of the Revolving Credit, the Borrowers shall pay the Agent the
"Unused Line Fee" (so referred to herein) of 0.25% per annum of the average
difference, during the quarter just ended (or relevant period with respect to
the payment being made on the Termination Date) between the Revolving Credit
Ceiling and the aggregate of the unpaid principal balance of the Loan Account
and the undrawn Stated Amount of L/C's outstanding during the relevant period.
The Unused Line Fee shall be paid in arrears, on the first day of each quarter
after the execution of this Agreement and on the Termination Date.
2-16 -Early Termination Fee. In the event that the Termination Date occurs, for
any reason, prior to the second anniversary hereof (other than by virtue of the
Borrower's refinancing of the Liabilities with FRFI or Fleet National Bank or
any of their respective Affiliates), the Borrowers shall pay to the Agent, for
the benefit of the Revolving Credit Lenders, the "Revolving Credit Early
Termination Fee" (so referred to herein) in an amount equal to the following
percentage of the Revolving Credit Ceiling in effect on the date of this
Agreement:
(a) Termination Date on or before November 30, 2001: 1.0%.
(b) Termination Date after November 30, 2001 and on or before November
30, 2002: 0.5%.
2-17 -Concerning Fees.
(a) In addition to any other right to which the Agent is then entitled
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on account thereof, the Agent may assess an additional fee payable by the
Borrowers on account of the accommodation, from time to time, by the Agent of
the Lead Borrower's request that the Agent depart or dispense with one or more
of the administrative provisions of this Agreement and/or any Borrower's failure
to comply with any of such provisions.
(b) By way of non-exclusive example, the Agent may assess a fee on
account of any of the following:
(i) The Borrowers' failure to pay that amount which is
necessary so that no OverLoan is outstanding (as required under Section
2:2-11(b) hereof).
(ii) The providing of a loan or advance under the Revolving
Credit or charging of the Loan Account such that an OverLoan is made.
(iii) The foreshortening of any of the time frames with
respect to the making of Revolving Credit Loans as set forth in Section
2:2-6.
(iv) The Lead Borrower's failure to provide a financial
statement or report within the applicable time frame provided for such
report under Article 5: hereof.
(c) The Borrowers shall not be entitled to any credit, rebate or
repayment of any fee earned by the Agent or any Revolving Credit Lender pursuant
to this Agreement or any Loan Document notwithstanding any termination of this
Agreement or suspension or termination of the Agent's and any Revolving Credit
Lender's respective obligation to make loans and advances hereunder.
2-18 -Agent's and Revolving Credit Lenders' Discretion.
(a) Each reference in the Loan Documents to the exercise of discretion
or the like by the Agent or any Revolving Credit Lender shall be to such
Person's reasonable exercise of its judgment, in good faith (which shall be
presumed), based upon such Person's reasonable consideration of any such factors
as the Agent or that Revolving Credit Lender, taking into account information of
which that Person then has actual knowledge, believes:
(i) Will or reasonably could be expected to affect the value
of the Collateral, the enforceability of the Agent's Collateral
Interests therein, or the amount which the Agent would likely realize
therefrom (taking into account delays which may possibly be encountered
in the Agent's realizing upon the Collateral and likely Costs of
Collection).
(ii) Indicates that any report or financial information
delivered to the Agent or any Revolving Credit Lender by or on behalf
of any Borrower is incomplete, inaccurate, or misleading in any
material manner or was not prepared in accordance with the requirements
of this Agreement.
(iii) Suggests an increase in the likelihood that any Borrower
will become the subject of a bankruptcy or insolvency proceeding.
(iv) Suggests that any Borrower is in Default.
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(b) In the exercise of such judgment, the Agent and each Revolving
Credit Lender also may take into account any of the following factors:
(i) Those included in, or tested by, the definitions of
"Eligible Accounts," "Eligible Inventory", "Eligible L/C Inventory",
"Eligible Receivables" and "Cost".
(ii) The current financial and business climate of the
industry in which each Borrower competes (having regard for that
Borrower's position in that industry).
(iii) General macroeconomic conditions which have a material
effect on the Borrowers' cost structure.
(iv) Material changes in or to the mix of the Borrowers'
Inventory.
(v) Seasonality with respect to the Borrowers' Inventory and
patterns of retail sales.
(vi) Such other factors as the Agent and each Revolving Credit
Lender determines as having a material bearing on credit risks
associated with the providing of loans and financial accommodations to
the Borrowers.
(c) The burden of establishing the failure of the Agent or any
Revolving Credit Lender to have acted in a reasonable manner in such Person's
exercise of such discretion shall be the Borrowers' and may be made only by
clear and convincing evidence.
2-19 -Procedures For Issuance of L/C's.
(a) The Lead Borrower may request that the Agent cause the issuance by
the Issuer of L/C's for the account of any Borrower. Each such request shall be
in such manner as may from time to time be acceptable to the Agent.
(b) The Agent will cause the issuance of any L/C so requested by the
Lead Borrower, provided that , at the time that the request is made, the
Revolving Credit has not been suspended as provided in Section 2:2-6(g) and if
so issued:
(i) The aggregate Stated Amount of all L/C's then outstanding,
does not exceed Twenty Million Dollars ($20,000,000.00).
(ii) The expiry of the L/C is not later than the earlier of
thirty (30) days prior to the Maturity Date or the following:
(A) Standby's: One (1) year from initial issuance.
(B) Documentary's: Sixty (60) days from issuance.
(iii) An OverLoan will not result from the issuance of the
subject L/C.
(c) Each Borrower shall execute such documentation to apply for an L/C
as may be required by the Issuer.
(d) There shall not be any recourse to, nor liability of, the Agent or
any Revolving Credit Lender on account of any of the following beyond the
reasonable control of the Agent:
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(i) Any delay or refusal by an Issuer to issue an L/C:
(ii) Any action or inaction of an Issuer on account of or in
respect to, any L/C.
(e) The Borrowers shall reimburse the Issuer for the amount of any
honoring of a drawing under an L/C on the same day on which such honoring takes
place. The Agent, without the request of any Borrower, may advance under the
Revolving Credit (and charge to the Loan Account) the amount of any honoring of
any L/C and other amount for which any Borrower, the Issuer, or the Revolving
Credit Lenders become obligated on account of, or in respect to, any L/C. Such
advance shall be made whether or not any Borrower is in Default or such advance
would result in an OverLoan. Such action shall not constitute a waiver of the
Agent's rights under Section 2:2-11(b) hereof.
2-20 -Fees For L/C's.
(a) The Borrowers shall pay to the Agent, for the benefit of the
Revolving Credit Lenders, a fee, on account of L/C's, the issuance of which had
been procured by the Agent, monthly in arrears, and on the Termination Date and
on the End Date, equal to the applicable L/C Fees of the weighted average Stated
Amount of all standby and documentary L/C's, as applicable, outstanding during
the period in respect of which such fee is being paid except that, following the
occurrence of any Event of Default, such fee shall be increased by two percent
(2%) per annum.
(b) In addition to the fee to be paid as provided in Subsection
2:2-20(a), above, the Borrowers shall pay to the Agent (or to the Issuer, if so
requested by Agent), on demand, all issuance, processing, negotiation,
amendment, and administrative fees and other amounts charged by the Issuer on
account of, or in respect to, any L/C.
(c)If any change in Applicable Law shall either:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirements against letters of credit heretofore or
hereafter issued by any Issuer or with respect to which any Revolving
Credit Lender or any Issuer has an obligation to lend to fund drawings
under any L/C; or
(ii) impose on any Issuer any other condition or requirements
relating to any such letters of credit; and the result of any event
referred to in Section 2:2-20(c)(i) or 2:2-20(c)(ii), above, shall be
to increase the cost to any Revolving Credit Lender or to any Issuer of
issuing or maintaining any L/C (which increase in cost shall be the
result of such Issuer's reasonable allocation among that Revolving
Credit Lender's or Issuer's letter of credit customers of the aggregate
of such cost increases resulting from such events), then, upon demand
by the Agent and delivery by the Agent to the Lead Borrower of a
certificate of an officer of the subject Revolving Credit Lender or the
subject Issuer describing such change in law, executive order,
regulation, directive, or interpretation thereof, its effect on such
39
Revolving Credit Lender or such Issuer, and the basis for determining
such increased costs and their allocation, the Borrowers shall
immediately pay to the Agent, from time to time as specified by the
Agent, such amounts as shall be sufficient to compensate the subject
Revolving Credit Lender or the subject Issuer for such increased cost.
Any Revolving Credit Lender's or any Issuer's determination of costs
incurred under Section 2:2-20(c)(i) or 2:2-20(c)(ii), above, and the
allocation, if any, of such costs among the Borrowers and other letter
of credit customers of such Revolving Credit Lender or such Issuer, if
done in good faith and made on an equitable basis and in accordance
with such officer's certificate, shall be conclusive and binding on the
Borrowers.
2-21 -Concerning L/C's.
(a) None of the Issuer, the Issuer's correspondents, any Revolving
Credit Lender, the Agent, or any advising, negotiating, or paying bank with
respect to any L/C shall be responsible in any way for:
(i) The performance by any beneficiary under any L/C of that
beneficiary's obligations to any Borrower.
(ii) The form, sufficiency, correctness, genuineness,
authority of any person signing; falsification; or the legal effect of;
any documents called for under any L/C if (with respect to the
foregoing) such documents on their face appear to be in order.
(b) The Issuer may honor, as complying with the terms of any L/C and of
any drawing thereunder, any drafts or other documents otherwise in order, but
signed or issued by an administrator, executor, conservator, trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
liquidator, receiver, or other legal representative of the party authorized
under such L/C to draw or issue such drafts or other documents.
(c) Unless otherwise agreed to, in the particular instance, each
Borrower hereby authorizes any Issuer to:
(i) Select an advising bank, if any.
(ii) Select a paying bank, if any.
(iii) Select a negotiating bank.
(d) All directions, correspondence, and funds transfers relating to any
L/C are at the risk of the Borrowers. The Issuer shall have discharged the
Issuer's obligations under any L/C which, or the drawing under which, includes
payment instructions, by the initiation of the method of payment called for in,
and in accordance with, such instructions (or by any other commercially
reasonable and comparable method). None of the Agent, any Revolving Credit
Lender, or the Issuer shall have any responsibility for any inaccuracy,
interruption, error, or delay in transmission or delivery by post, telegraph or
cable, or for any inaccuracy of translation.
(e) The Agent's, each Revolving Credit Lender's, and the Issuer's
40
rights, powers, privileges and immunities specified in or arising under this
Agreement are in addition to any heretofore or at any time hereafter otherwise
created or arising, whether by statute or rule of law or contract.
(f) Except to the extent otherwise expressly provided hereunder or
agreed to in writing by the Issuer and the Lead Borrower, documentary L/C's will
be governed by the Uniform Customs and Practice for Documentary Credits,
International Chamber of Commerce, Publication No. 500, and standby L/C's will
be governed by International Standby Practices ISP98 (adopted by the
International Chamber of Commerce on April 6, 1998) and any respective
subsequent revisions thereof.
(g) The obligations of the Borrowers under this Agreement with respect
to L/C's are absolute, unconditional, and irrevocable and shall be performed
strictly in accordance with the terms hereof under all circumstances, whatsoever
including, without limitation, the following:
(i) Any lack of validity or enforceability or restriction,
restraint, or stay in the enforcement of this Agreement, any L/C, or
any other agreement or instrument relating thereto.
(ii) Any Borrower's consent to any amendment or waiver of, or
consent to the departure from, any L/C.
(iii) The existence of any claim, set-off, defense, or other
right which any Borrower may have at any time against the beneficiary
of any L/C.
2-22 -Changed Circumstances.
(a) The Agent may advise the Lead Borrower that the Agent has made the
good faith determination (which determination shall be final and conclusive) of
any of the following:
(i) Adequate and fair means do not exist for ascertaining the
rate for Eurodollar Loans.
(ii) The continuation of or conversion of any Revolving Credit
Loan to a Eurodollar Loan has been made impracticable or unlawful by
the occurrence of a contingency that materially and adversely affects
the applicable market or the compliance by the Agent or any Revolving
Credit Lender in good faith with any Applicable Law.
(iii) The indices on which the interest rates for Eurodollar
Loans are based shall no longer represent the effective cost to the
Agent or any Revolving Credit Lender for U.S. dollar deposits in the
interbank market for deposits in which it regularly participates.
(b) In the event that the Agent advises the Lead Borrower of an
occurrence described in Section 2:2-22(a), then, until the Agent notifies the
Lead Borrower that the circumstances giving rise to such notice no longer apply:
(i) The obligation of the Agent or each Revolving Credit
Lender to make loans of the type affected by such changed circumstances
or to permit the Lead Borrower to select the affected interest rate as
otherwise applicable to any Revolving Credit Loans shall be suspended.
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(ii) Any notice which the Lead Borrower had given the Agent
with respect to any Eurodollar Loan, the time for action with respect
to which has not occurred prior to the Agent's having given notice
pursuant to Section 2:2-22(a), shall be deemed at the option of the
Agent to not having been given.
2-23 -Designation of Lead Borrower as Borrowers' Agent.
(a) Each Borrower hereby irrevocably designates and appoints the Lead
Borrower as that Borrower's agent to obtain loans and advances under the
Revolving Credit, the proceeds of which shall be available to each Borrower for
those uses as those set forth in Section 2:2-1(d). As the disclosed principal
for its agent, each Borrower shall be obligated to the Agent and each Revolving
Credit Lender on account of loans and advances so made under the Revolving
Credit as if made directly by the Revolving Credit Lenders to that Borrower,
notwithstanding the manner by which such loans and advances are recorded on the
books and records of the Lead Borrower and of any Borrower.
(b) Each Borrower recognizes that credit available to it under the
Revolving Credit is in excess of and on better terms than it otherwise could
obtain on and for its own account and that one of the reasons therefor is its
joining in the credit facility contemplated herein with all other Borrowers.
Consequently, each Borrower hereby assumes and agrees to discharge all
Liabilities of all other Borrowers as if the Borrower so assuming were each
other Borrower.
(c) The Lead Borrower shall act as a conduit for each Borrower
(including itself, as a "Borrower") on whose behalf the Lead Borrower has
requested a Revolving Credit Loan.
(d) The proceeds of each loan and advance provided under the Revolving
Credit which is requested by the Lead Borrower shall be deposited into the
Operating Account or as otherwise indicated by the Lead Borrower. The Lead
Borrower shall cause the transfer of the proceeds thereof to the (those)
Borrower(s) on whose behalf such loan and advance was obtained. Neither the
Agent nor any Revolving Credit Lender shall have any obligation to see to the
application of such proceeds.
2-24 -Lenders' Commitments
(a) Subject to Section 16:16-1 (which provides for assignments and
assumptions of commitments), each Revolving Credit Lender's "Revolving Credit
Commitment Percentage", and "Revolving Credit Dollar Commitment" (respectively
so referred to herein) is set forth on EXHIBIT 2:2-24, annexed hereto.
(b) The obligations of each Revolving Credit Lender are several and not
joint. No Revolving Credit Lender shall have any obligation to make any loan or
advance under the Revolving Credit in excess of the lesser of the following:
(i) That Revolving Credit Lender's Revolving Credit Commitment
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Percentage of the subject loan or advance or of Availability.
(ii) that Revolving Credit Lender's Revolving Credit Dollar
Commitment.
(c) No Revolving Credit Lender shall have any liability to the
Borrowers on account of the failure of any other Revolving Credit Lender to
provide any loan or advance under the Revolving Credit nor any obligation to
make up any shortfall which may be created by such failure.
(d) The Revolving Credit Dollar Commitments, Revolving Credit
Commitment Percentages, and identities of the Revolving Credit Lenders may be
changed, from time to time by the reallocation or assignment of Revolving Credit
Dollar Commitments and Revolving Credit Commitment Percentages amongst the
Revolving Credit Lenders or with other Persons who determine to become
"Revolving Credit Lenders", as described in Section 16:16-1, below, provided,
however unless an Event of Default has occurred (in which event, no consent of
any Borrower is required) subsequent to the completion of the initial
syndication by the Syndication Agent, any assignment to a Person not then a
Revolving Credit Lender shall be subject to the prior consent of the Lead
Borrower (not to be unreasonably withheld), which consent will be deemed given
unless the Lead Borrower provides the Agent with written objection, not more
than five (5) Business Days after the Agent shall have given the Lead Borrower
written notice of a proposed assignment).
(e) . Upon written notice given the Lead Borrower from time to time by
the Agent, of any assignment or allocation referenced in Section 2:2-24(d):
(i) Each Borrower shall execute one or more replacement
Revolving Credit Notes to reflect such changed Revolving Credit Dollar
Commitments, Revolving Credit Commitment Percentages, and identities
and shall deliver such replacement Revolving Credit Notes to the Agent
(which promptly thereafter shall deliver to the Lead Borrower the
Revolving Credit Notes so replaced), provided, however, in the event
that a Revolving Credit Note is to be exchanged following its
acceleration or the entry of an order for relief under the Bankruptcy
Code with respect to any Borrower, the Agent, in lieu of causing the
Borrowers to execute one or more new Revolving Credit Notes, may issue
the Agent's Certificate confirming the resulting Revolving Credit
Dollar Commitments and Revolving Credit Commitment Percentages.
(ii) Such change shall be effective from the effective date
specified in such written notice and any Person added as a Revolving
Credit Lender shall have all rights, privileges, and obligations of a
Revolving Credit Lender hereunder thereafter as if such Person had been
a signatory to this Agreement and any other Loan Document to which a
Revolving Credit Lender is a signatory and any Person removed as a
Revolving Credit Lender shall be relieved of any obligations or
responsibilities of a Revolving Credit Lender hereunder thereafter
arising.
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Article 3: - Conditions Precedent:
As a condition to the effectiveness of this Agreement, the
establishment of the Revolving Credit, and the making of the first loan under
the Revolving Credit, each of the documents and conditions respectively
described below, shall have been delivered to the Agent, or satisfied (in form
and substance satisfactory to the Agent):
3-1 -Corporate Due Diligence.
(a) Certificates of corporate good standing for each Borrower,
respectively, issued by the Secretary of State for the state in which that
Borrower is incorporated.
(b) Certificates of due qualification, in good standing, issued by the
Secretary(ies) of State of each State in which the nature a Borrower's business
conducted or assets owned could require such qualification.
(c) Certificates of each Borrower's secretary of the due adoption,
continued effectiveness, and setting forth the texts of, each corporate
resolution adopted in connection with the establishment of the loan arrangement
contemplated by the Loan Documents and attesting to the true signatures of each
Person authorized as a signatory to any of the Loan Documents.
3-2 -Opinion. An opinion of counsel to the Borrowers in form and substance
satisfactory to the Agent.
3-3 -Additional Documents. Such additional instruments and documents as the
Agent or its counsel reasonably may require or request.
3-4 -Representations and Warranties. Each of the representations made by or on
behalf of each Borrower in this Agreement or in any of the other Loan Documents
or in any other report, statement, document, or paper provided by or on behalf
of each Borrower shall be true and complete in all material respects as of the
date as of which such representation or warranty was made.
3-5 -Perfection of Encumbrances. The Agent shall have received all documents and
instruments, including Uniform Commercial Code financing statements, required by
law or reasonably requested by the Agents to be filed, registered or recorded to
create or perfect the first priority Encumbrances intended to be created under
the Loan Documents and all such documents and instruments shall have been so
filed to the satisfaction of the Agent.
44
3-6 -Satisfaction of Existing Indebtedness. The Agent shall have received a
payoff letter from Bank of America reasonably satisfactory in form and substance
to the Agent, together with releases of all Encumbrances held by such Person on
the assets of the Borrower. Contemporaneously with the first advance under the
Revolving Credit, the Borrower shall pay all indebtedness reflected in such
payoff letter in full.
3-7 -Consents and Approvals. All necessary consents and approvals to the
transactions contemplated hereby shall have been obtained and shall be
reasonably satisfactory to the Agent.
3-8 -No Defaults under Applicable law or Material Agreements. The consummation
of the transactions contemplated hereby shall not (a) violate any Requirement of
Law or (b) conflict with, or result in a default or event of default under, any
material agreement of the Borrowers.
3-9 -No Litigation. There shall not exist any litigation or other proceedings,
the result of which has or is likely to have a Material Adverse Effect on any
Borrower.
3-10 -All Fees and Expenses Paid. All fees due at or immediately after the first
funding under the Revolving Credit and all costs and expenses incurred by the
Agent in connection with the establishment of the credit facilities contemplated
hereby (including the reasonable fees and expenses of counsel to the Agent)
shall have been paid in full.
3-11 -No Material Adverse Change. Except as otherwise disclosed in writing to
the Agent or in a filing with the SEC, no event shall have occurred or failed to
occur, which occurrence has or is reasonably likely to have a materially adverse
effect upon any Borrower's financial condition when compared with such financial
condition at September 2, 2000.
3-12 -Minimum Day One Availability. After giving effect to the first funding
under the Revolving Credit, Availability shall not be less than $50,000,000.00.
3-13 -Borrower Not In Default. No Borrower is in Default.
3-14 -Bond Indentures. Review of the 1995 Indenture satisfactory to the Agent,
including, without limitation, the Agent's satisfaction that no event of default
will arise thereunder by virtue of the consummation of loan the credit facility
described herein, and that the terms thereof do not impede the Agent's obtaining
45
a lien on the Borrower's assets and do not result in the bondholders' obtaining
a lien on any of the Borrower's assets. The Agent may require an opinion of
Borrower's counsel to the foregoing satisfactory to the Agent in all respects.
3-15 -Projections. The Agent shall have received and be satisfied with detailed
one-year financial projections and business assumptions for the Borrower.
3-16 -Other Information. Any other information (financial or otherwise)
requested by the Agent shall have been received by the Agent and shall be in
form and substance reasonably satisfactory to the Agent.
3-17 -No Negative Effect on Syndication. There shall not have occurred any
disruption or material adverse change in the financial or capital markets in
general that would, in the opinion of the Agent, have a material adverse effect
on the market for loan syndications or in the markets for equity securities in
particular, or adversely affecting the syndication.
3-18 -Government Regulations. The proposed financing is subject to the condition
that no material changes in governmental regulations or policies affecting the
Borrower, the Agent or Lenders involved in this transaction occur prior to
Closing.
3-19 -Benefit of Conditions Precedent. The conditions set forth in this Article
3: are for the sole benefit of the Agent and each Revolving Credit Lender and
may be waived by the Agent in whole or in part without prejudice to the Agent or
any Revolving Credit Lender.
No document shall be deemed delivered to the Agent or any Revolving Credit
Lender until received and accepted by the Agent at its offices in Boston,
Massachusetts. Under no circumstances shall this Agreement take effect until
executed and accepted by the Agent at said offices.
Article 4: - General Representations, Covenants and Warranties:
To induce each Revolving Credit Lender to establish the credit facility
contemplated herein and to induce the Revolving Credit Lenders to provide loans
and advances under the Revolving Credit (each of which loans shall be deemed to
have been made in reliance thereupon) the Borrowers, in addition to all other
representations, warranties, and covenants made by any Borrower in any other
46
Loan Document, make those representations, warranties, and covenants included in
this Agreement.
4-1 -Payment and Performance of Liabilities. The Borrowers shall pay each
payment Liability when due (or when demanded, if payable on demand) and shall
promptly, punctually, and faithfully perform each other Liability.
4-2 -Due Organization. Authorization. No Conflicts.
(a) Each Borrower presently is and hereafter shall remain in good
standing as a corporation under the laws of the State in which it is organized,
as set forth in the Preamble to this Agreement and is and shall hereafter remain
duly qualified and in good standing in every other State in which, by reason of
the nature or location of each Borrower's assets or operation of each Borrower's
business, such qualification may be necessary, except where the failure to so
qualify would have a Material Adverse Effect.
(b) Each Borrower's respective organizational identification number
assigned to it by the State of its incorporation and its respective federal
employer identification number is stated on EXHIBIT 4:4-2, annexed hereto.
(c) No Borrower shall change its State of organization; any
organizational identification number assigned to that Borrower by that State; or
that Borrower's federal taxpayer identification number.
(d) Each Affiliate is listed on EXHIBIT 4:4-2. The Lead Borrower shall
provide the Agent with prior written notice of any entity's becoming or ceasing
to be an Affiliate.
(e) Each Borrower has all requisite power and authority to execute and
deliver all Loan Documents to which that Borrower is a party and has and will
hereafter retain all requisite power to perform all Liabilities.
(f) The execution and delivery by each Borrower of each Loan Document
to which it is a party; each Borrower's consummation of the transactions
contemplated by such Loan Documents (including, without limitation, the creation
of Collateral Interests by that Borrower to secure the Liabilities); each
Borrower's performance under those of the Loan Documents to which it is a party;
the borrowings hereunder; and the use of the proceeds thereof:
(i) Have been duly authorized by all necessary action.
(ii) Do not, and will not, contravene in any material respect
any provision of any Requirement of Law or obligation of that Borrower.
(iii) Will not result in the creation or imposition of, or the
obligation to create or impose, any Encumbrance upon any assets of that
Borrower pursuant to any Requirement of Law or obligation, except
pursuant to the Loan Documents.
47
(g) The Loan Documents have been duly executed and delivered by each
Borrower and are the legal, valid and binding obligations of each Borrower,
enforceable against each Borrower in accordance with their respective terms.
4-3 -Trade Names.
(a) EXHIBIT 4:4-3, annexed hereto, is a listing of:
(i) All names under which any Borrower ever conducted its
business after September 11, 1995.
(ii) All Persons with whom any Borrower ever consolidated or
merged, or from whom any Borrower ever acquired in a single transaction
or in a series of related transactions substantially all of such
Person's assets.
(b) The Lead Borrower will provide the Agent with not less than
twenty-one (21) days prior written notice (with reasonable particularity) of any
change to any Borrower's name from that under which that Borrower is conducting
its business at the execution of this Agreement and will not effect such change
unless each Borrower is then in compliance with all provisions of this
Agreement.
4-4 -Infrastructure.
(a) Each Borrower has and will maintain a sufficient infrastructure to
conduct its business as presently conducted and as contemplated to be conducted
following its execution of this Agreement.
(b) Each Borrower owns and possesses, or has the right to use (and will
hereafter own, possess, or have such right to use) all patents, industrial
designs, trademarks, trade names, trade styles, brand names, service marks,
logos, copyrights, trade secrets, know-how, confidential information, and other
intellectual or proprietary property of any third Person necessary for that
Borrower's conduct of that Borrower's business.
(c) The conduct by each Borrower of that Borrower's business does not
presently infringe (nor will any Borrower conduct its business in the future so
as to infringe) the patents, industrial designs, trademarks, trade names, trade
styles, brand names, service marks, logos, copyrights, trade secrets, know-how,
confidential information, or other intellectual or proprietary property of any
third Person, to the extent that any infringement would have a Material Adverse
Effect.
4-5 -Locations.
(a) The Collateral, and the books, records, and papers of Borrowers'
pertaining thereto, are kept and maintained solely at the following locations:
(i) The Lead Borrower's chief executive offices which are at
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00 Xxxxxxx Xxxxx Xxxx, Xxxxxxxxxx, Xxxx 00000.
(ii) Those locations which are listed on EXHIBIT 4:4-5, annexed
hereto, which EXHIBIT includes, with respect to each such location, the
name and address of the landlord on the Lease which covers such
location (or an indication that a Borrower owns the subject location)
and of all service bureaus with which any such records are maintained
and the names and addresses of each of then Borrowers' landlords.
(b) Notwithstanding anything herein to the contrary, the Borrowers may
remove and destroy records and papers of the Borrowers pertaining to the
Collateral to the extent that it is consistent with Current Practices of the
Borrowers.
(c) No Borrower shall remove any of the Collateral from said chief
executive office or those locations listed on EXHIBIT 4:4-5 except for the
following purposes:
(i) To accomplish sales of Inventory in the ordinary course of
business.
(ii) To move Inventory from one such location to another such
location of the same Borrower.
(iii) To utilize such of the Collateral as is removed from
such locations in the ordinary course of business (such as motor
vehicles).
(d) No Borrower will execute any Lease other than where each of the
following conditions is satisfied:
(i) Such execution is in the ordinary course of business.
(ii) Neither such execution nor any Borrower's acting under
such Lease results in any Borrower's becoming in Default.
(iii) Not less than fifteen (15) days prior written notice
(with reasonable particularity) is given to the Agent of the execution
of the subject Lease.
(iv) Such execution will not result in the Borrowers' opening
of one or more Stores, if the opening of such Store or Stores is
otherwise prohibited by this Agreement.
(e) Each Borrower may alter, modify, or amend any Lease in the ordinary
course of its business; provided that such alteration, modification or
amendment does not cause any Borrower to become in Default.
(f) During any fiscal year during which this Agreement is in effect:
(i) The Borrowers may open and/or relocate up to an aggregate
of 10 Stores more than reflected in the forecast furnished to the
Agent, provided that such opening and/or relocation otherwise complies
with this Agreement.
(ii) The Borrowers may permanently close up to an aggregate of
10 Stores more than reflected in the forecast furnished to the Agent
("permanently close" meaning a Store's going dark for more than 30
consecutive days other than on account of an event or circumstance
which constitutes force majeures).
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(g) Except as otherwise disclosed pursuant to, or permitted by, this
Section 4:4-5, no tangible personal property of any Borrower is in the care or
custody of any third party or stored or entrusted with a bailee or other third
party and none shall hereafter be placed under such care, custody, storage, or
entrustment.
4-6 -Title to Assets.
(a) The Borrowers are, and shall hereafter remain, the owners of the
Collateral free and clear of all Encumbrances with the exceptions of Permitted
Encumbrances.
(b) No Borrower has, and none shall, have, possession of any property
on consignment to that Borrower other than such property disclosed in the
Borrowing Base Certificate.
(c) No Borrower shall acquire or obtain the right to use any Equipment
in which Equipment any third party has an interest, except for:
(i) Equipment which is used to conduct that Borrower's
business.
(ii) Equipment with respect to which the Agent has received an
agreement (substantially in the form of EXHIBIT 4:4-6(c)(ii), annexed
hereto) with the third party which has an interest in such Equipment.
4-7 -Indebtedness. The Borrowers do not and shall not hereafter have any
Indebtedness with the exceptions of:
(a) Any Indebtedness on account of the Revolving Credit.
(b) The Indebtedness (if any) listed on EXHIBIT 4:4-7, annexed hereto.
(c) Indebtedness incurred in connection with the financing or
refinancing of any Equipment and real estate.
(d) Indebtedness incurred in the refinancing and retirement of the 1995
Indenture.
(e) Indebtedness incurred in connection with loans made among
Borrowers.
4-8 -Insurance.
(a) EXHIBIT 4:4-8, annexed hereto, is a schedule of all insurance
policies owned by the Borrowers or under which any Borrower is the named
insured. Each of such policies is in full force and effect. Neither the issuer
of any such policy nor any Borrower is in material default or material violation
of any such policy.
(b) The Borrowers shall have and maintain at all times insurance
covering such risks, in such amounts, containing such terms, in such form, for
such periods, and written by such companies as may be satisfactory to the Agent.
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(c) All insurance carried by the Borrowers shall provide for a minimum
of thirty (30) days' written notice of cancellation to the Agent and all such
insurance which covers the Collateral shall include an endorsement in favor of
the Agent, which endorsement shall provide that the insurance, to the extent of
the Agent's interest therein, shall not be impaired or invalidated, in whole or
in part, by reason of any act or neglect of any Borrower or by the failure of
any Borrower to comply with any warranty or condition of the policy.
(d) The coverage reflected on EXHIBIT 4:4-8 presently satisfies the
foregoing requirements, it being recognized by each Borrower, however, that such
requirements may change hereafter to reflect changing circumstances.
(e) The Lead Borrower shall furnish the Agent from time to time with
certificates or other evidence satisfactory to the Agent regarding compliance by
the Borrowers with the foregoing requirements.
(f) In the event of the failure by the Borrowers to maintain insurance
as required herein, the Agent, at its option, may obtain such insurance,
provided, however, the Agent's obtaining of such insurance shall not constitute
a cure or waiver of any Event of Default occasioned by the Borrowers' failure to
have maintained such insurance.
4-9 -Licenses. Each license, distributorship, franchise, and similar agreement
issued to, or to which any Borrower is a party is in full force and effect in
all material respects. No party to any such license or agreement is in default
or violation thereof which would have a Material Adverse Effect. No Borrower has
received any notice or threat of cancellation of any such license or agreement
where such cancellation could have a Material Adverse Effect.
4-10 -Leases. EXHIBIT 4:4-10, annexed hereto, is a schedule of all presently
effective Capital Leases. (Exhibit 4:4-5 includes a list of all other presently
effective Leases). Each of such Leases and Capital Leases is in full force and
effect in all material respects. No party to any such Lease or Capital Lease is
in default or violation of any such Lease or Capital Lease which would have a
Material Adverse Effect. No Borrower has received any notice or threat of
cancellation of any such Lease or Capital Lease where such cancellation could
have a Material Adverse Effect. Each Borrower hereby authorizes the Agent at any
time and from time to time to contact any of the Borrowers' respective landlords
in accordance with commercially reasonable lending practices in order to confirm
the Borrowers' continued compliance with the terms and conditions of the
Lease(s) between the subject Borrower and that landlord and to discuss such
issues, concerning the subject Borrower's occupancy under such Lease(s), as the
Agent may determine.
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4-11 -Requirements of Law. Each Borrower is in compliance in all material
respects with, and shall hereafter comply with and use its assets in compliance
in all material respects with, all Requirements of Law if the failure to comply
with any Requirements of Law would have a Material Adverse Effect. No Borrower
has received any notice of any violation of any Requirement of Law where the
effect of such violation could have a Material Adverse Effect.
4-12 -Labor Relations. Except as described in EXHIBIT 4:4-12:
(a) No Borrower has been, and none is presently a party to any
collective bargaining or other labor contract.
(b) There is not presently pending and, to any Borrower's knowledge,
there is not threatened any of the following:
(i) Any strike, slowdown, picketing, work stoppage, or
employee grievance process.
(ii) Any proceeding against or affecting any Borrower relating
to the alleged violation of any Applicable Law pertaining to labor
relations or before National Labor Relations Board, the Equal
Employment Opportunity Commission, or any comparable governmental body,
organizational activity, or other labor or employment dispute against
or affecting any Borrower, which, if determined adversely to that
Borrower could have a Material Adverse Effect on that Borrower
(iii) Any lockout of any employees by any Borrower (and no
such action is contemplated by any Borrower).
(iv) Any application for the certification of a collective
bargaining agent.
(c) No event has occurred or circumstance exists which could provide
the basis for any work stoppage or other labor dispute.
(d) Each Borrower:
(i) Has complied in all material respects with all Applicable
Law relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing, if the failure to
comply with any such Applicable Laws would have a Material Adverse
Effect.
(ii) Is not liable for the payment of more than a de minimius
amount of compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for that Borrower's failure to comply with
any Applicable Law referenced in Section 4:4-12(d)(i), the failure of
which had or has a Material Adverse Effect.
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4-13 -Maintain Properties. The Borrowers shall:
(a) Keep the Collateral in good order and repair consistent with the
Borrowers' Current Practices (ordinary reasonable wear and tear and insured
casualty excepted).
(b) Not suffer or cause the waste or destruction of any material part
of the Collateral.
(c) Not use any material portion of the Collateral in violation of any
policy of insurance thereon.
(d) Not sell, lease, or otherwise dispose of any of the Collateral,
other than the following:
(i) The sale of Inventory in compliance with this Agreement.
(ii) The disposal of Equipment which is obsolete, worn out,
damaged beyond repair, or no longer useful in the business of a
Borrower, which Equipment is replaced to the extent necessary to
preserve or improve the operating efficiency of any Borrower.
(iii) The turning over to the Agent of all Receipts as
provided herein.
4-14 -Taxes.
(a) With respect to the Borrowers' federal, state, and local tax
liability and obligations:
(i) The Lead Borrower, in compliance with all Applicable Law,
has properly filed all returns due to be filed up to the date of this
Agreement.
(ii) Except as described on EXHIBIT 4:4-14:
(A) At no time during the past three (3) years has
any Borrower received from any taxing authority any request to
perform any examination of or with respect to any Borrower nor
any other written notice in any way relating to any claimed
failure by any Borrower to materially comply with all
Applicable Law concerning payment of any taxes or other
amounts in the nature of taxes, the failure of which would
have a Material Adverse Effect.
(B) No agreement is extant which waives or extends
any statute of limitations applicable to the right of any
taxing authority to assert a deficiency or make any other
claim for or in respect to federal income taxes.
(C) No issue has been raised in any tax examination
of any Borrower which, by application of similar principles,
reasonably could be expected to result in the assertion of a
deficiency for any fiscal year open for examination,
assessment, or claim by any taxing authority.
(b) The Borrowers have, and hereafter shall: pay, as they become due
and payable, all taxes and unemployment contributions and other charges of any
53
kind or nature levied, assessed or claimed against any Borrower or the
Collateral by any person or entity whose claim could result in an Encumbrance
upon any asset of any Borrower or by any governmental authority; properly
exercise any trust responsibilities imposed upon any Borrower by reason of
withholding from employees' pay or by reason of any Borrower's receipt of sales
tax or other funds for the account of any third party; timely make all
contributions and other payments as may be required pursuant to any Employee
Benefit Plan now or hereafter established by any Borrower; and timely file all
tax and other returns and other reports with each governmental authority to whom
any Borrower is obligated to so file.
4-15 -No Margin Stock. No Borrower is engaged in the business of extending
credit for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulations U, T, and X of the Board of Governors of the Federal
Reserve System of the United States). No part of the proceeds of any borrowing
hereunder will be used at any time to purchase or carry any such margin stock or
to extend credit to others for the purpose of purchasing or carrying any such
margin stock.
4-16 -ERISA.
(a) Except as described in EXHIBIT 4:4-16(a), neither any Borrower nor
any ERISA Affiliate, since September 11, 1995:
(i) Violated or failed to be in full compliance with any
Borrower's Employee Benefit Plan it maintains, except where such
failure or noncompliance could not reasonably be expected to have a
Material Adverse Effect.
(ii) Failed timely to file all reports and filings required by
ERISA to be filed by any Borrower, except where such failure or
noncompliance could not reasonably be expected to have a Material
Adverse Effect.
(iii) Engaged in any nonexempt "prohibited transactions" or
"reportable events" (respectively as described in ERISA).
(iv) Engaged in, or committed, any act such that a tax or
penalty reasonably could be imposed upon any Borrower on account
thereof pursuant to ERISA.
(v) Accumulated any material cumulative funding deficiency
within the meaning of ERISA.
(vi) Terminated any Employee Benefit Plan such that a lien
could be asserted against any assets of any Borrower on account thereof
pursuant to ERISA.
(vii) Been a member of, contributed to, or have any obligation
under any Employee Benefit Plan which is a multiemployer plan within
the meaning of Section 4001(a) of ERISA.
(b) Neither any Borrower nor any ERISA Affiliate shall ever engage in
54
any action of the type described in Section 4:4-16(a).
4-17 -Hazardous Materials.
(a) Except as described in EXHIBIT 4:4-17(a), no Borrower has since
September 11, 1995: (i) been held legally responsible for any release or threat
of release of any Hazardous Material in violation of any Environmental Laws, or
(ii) received notification of the incurrence of any expense in connection with
the assessment, containment, or removal of any Hazardous Material for which that
Borrower would be responsible.
(b) Each Borrower shall: (i) dispose of any Hazardous Material only in
compliance with all Environmental Laws and (ii) have possession of any Hazardous
Material only in the ordinary course of that Borrower's business and in
compliance with all Environmental Laws.
4-18 -Litigation. Except as described in EXHIBIT 4:4-18, annexed hereto, there
is not presently pending or threatened by or against any Borrower any suit,
action, proceeding, or investigation which, if determined adversely to any
Borrower, could have a Material Adverse Effect on a Borrower.
4-19 -Dividends. Investments. Corporate Action. No Borrower shall:
(a) Pay any cash dividend or make any other distribution in respect of
any class of that Borrower's capital stock.
(b) Own, redeem, retire, purchase, or acquire any of any Borrower's
capital stock other than
(i) in connection with the creation of a New Borrower (as to
which, see Section 4:4-20).
(ii) Permitted Repurchases.
(c) Invest in or purchase any stock or securities or rights to purchase
any such stock or securities, of any Person, including, without limitation,
Avatex Corporation, other than:
(i) In connection with the creation of a New Borrower (as to
which, see Section 4:4-20)
(ii) Permitted Investments.
(d) Merge or consolidate or be merged or consolidated with or into any
other corporation or other entity.
(e) Consolidate any of that Borrower's operations with those of any
other Person other than of another Borrower.
(f) Organize or create any Affiliate other than in connection with the
creation of a New Borrower (as to which, see Section 4:4-20).
55
(g) Subordinate any debts or obligations owed to that Borrower by any
third party to any other debts owed by such third party to any other Person.
(h) Acquire any assets other than in the ordinary course and conduct of
that Borrower's business as conducted at the execution of this Agreement, except
for assets acquired in connection with the opening of new stores (as permitted
hereunder), and otherwise with the consent of the Agent, such consent not to be
unreasonably withheld.
4-20 -New Borrowers.
(a) Subject to and conditioned on the satisfaction of the requirements
included and referred to in this Section 4:4-20, any Borrower may organize or
create a wholly owned subsidiary (a "New Borrower").
(b) A Borrower may organize or create a New Borrower provided that each
of the following is satisfied:
(i) The Borrowers are not then and will not thereby be
rendered in Default.
(ii) The Lead Borrower has furnished the Agent with the
following by no less than fifteen (15) days prior to any New Borrower's
acquiring any assets:
(A) A certificate of incorporation for the New
Borrower, issued no more than seven (7) days previous to the
date when so furnished, by the Secretary of State in which
that New Borrower is organized.
(B) Certificates of qualification to do business
issued by any State in which such qualification of the New
Borrower may be necessary.
(C) A Certificate of the Secretary of the New
Borrower which includes copies of the resolutions of the New
Borrower to become a party to this Agreement as a "Borrower".
(D) The written assumption agreement (in form
reasonably satisfactory to the Agent) by the New Borrower
pursuant to which the New Borrower assumes all Liabilities as
if the New Borrower were a Borrower immediately prior to such
assumption and agreement.
(E) Financing statements to satisfy the requirements
of Section 4:4-25 (which relates to additional assurances).
(F) Notifications to the New Borrower's depositories
(if different from that to which notices have previously been
provided pursuant to Section 7:7-1(b)(i)) in form reasonably
satisfactory to the Agent.
(G) Notices to the New Borrower's credit card
processor (if different from that to which notices have
previously been provided pursuant to Section 7:7-2(b)) in form
56
reasonably satisfactory to the Agent.
(H) All stock certificates (each with a separate
transfer power, executed in blank by the holder thereof) for
the New Borrower.
(I) Such other instruments and documents which the
Agent reasonably may request in connection with the subject
New Borrower.
(c) Any New Borrower shall be a "Borrower" within the meaning of this
Agreement from the earliest moment that such Person is required to be the
subject of the notice required by Section 4:4-20(b)(ii).
4-21 -Loans. No Borrower shall make any loans or advances to, nor acquire the
Indebtedness of, any Person, provided, however, the foregoing does not prohibit
any of the following:
(a) Advance payments made to that Borrower's suppliers in the ordinary
course.
(b) Advances to that Borrower's officers, employees, and salespersons
with respect to reasonable expenses to be incurred by such officers, employees,
and salespersons for the benefit of that Borrower, which expenses are properly
substantiated by the person seeking such advance and properly reimbursable by
that Borrower.
(c) Advances made to incentivize employees and prospective employees
employed or to be employed as pharmacists, not to exceed $20,000.00 per person
and $200,000.00 in any twelve (12) month period.
(d) Advances made to employees in the nature of bridge loans associated
with relocation expenses, not to exceed $200,000.00 per person and $1,000,000.00
in any twelve (12) month period.
(e) Loans made between two (2) or more Borrowers.
(f) Loans made to Cabot Noble, Inc. for the sole purpose of financing
Permitted Investments.
(g) Loans made to Xxxxxxx Building Associates not to exceed Two Hundred
Thousand Dollars ($200,000.00) in any twelve (12) month period.
4-22 -Protection of Assets. The Agent, in the Agent's discretion, and following
written notice to the Lead Borrower, and from time to time, may discharge any
tax or Encumbrance on any of the Collateral, or take any other action which the
Agent may deem necessary or desirable to repair, insure, maintain, preserve,
collect, or realize upon any of the Collateral. The Agent shall not have any
obligation to undertake any of the foregoing and shall have no liability on
account of any action so undertaken except where there is a specific finding in
a judicial proceeding (in which the Agent has had an opportunity to be heard),
from which finding no further appeal is available, that the Agent had acted in
57
actual bad faith or in a grossly negligent manner. The Borrowers shall pay to
the Agent, on demand, or the Agent, in its discretion, may add to the Loan
Account, all amounts paid or incurred by the Agent pursuant to this section
4:4-22.
4-23 -Line of Business. No Borrower shall engage in any business other than the
business in which it is currently engaged or a business reasonably related
thereto.
4-24 -Affiliate Transactions. No Borrower shall make any payment, nor give any
value to any Affiliate (other than another Borrower) except for goods and
services actually purchased by that Borrower from, or sold by that Borrower to,
such Affiliate for a price and on terms which shall:
(a) be competitive and fully deductible as an "ordinary and necessary
business expense" and/or fully depreciable under the Internal Revenue Code of
1986 and the Treasury Regulations, each as amended; and
(b) be no less favorable to that Borrower than those which would have
been charged and imposed in an arms length transaction.
4-25 -Further Assurances.
(a) Except for Permitted Encumbrances, no Borrower is the owner of, nor
has it any interest in, any property or asset which, immediately upon the
satisfaction of the conditions precedent to the effectiveness of the credit
facility contemplated hereby (Article 3:) will not be subject to a perfected
Collateral Interest in favor of the Agent (subject only to Permitted
Encumbrances) to secure the Liabilities.
(b) Except for Permitted Encumbrances, no Borrower will hereafter
acquire any asset or any interest in property which is not, immediately upon
such acquisition, subject to such a perfected Collateral Interest in favor of
the Agent to secure the Liabilities (subject only to Permitted Encumbrances).
(c) Each Borrower shall execute and deliver to the Agent such
instruments, documents, and papers, and shall do all such things from time to
time hereafter as the Agent reasonably may request to carry into effect the
provisions and intent of this Agreement; to protect and perfect the Agent's
Collateral Interests in the Collateral; and to comply with all applicable
statutes and laws, and facilitate the collection of the Receivables Collateral.
Each Borrower shall execute all such instruments as may be required by the Agent
with respect to the recordation and/or perfection of the Collateral Interests
created or contemplated herein.
(d) Each Borrower hereby designates the Agent as and for that
Borrower's true and lawful attorney, with full power of substitution, to sign
58
and file any financing statements in order to perfect or protect the Agent's
Collateral Interests in the Collateral.
(e) Each Borrower hereby authorizes the Agent to file such financing
statements as the Agent determines as appropriate to perfect or protect the
Agent's Collateral Interests in the Collateral.
(f) A carbon, photographic, or other reproduction of this Agreement or
of any financing statement or other instrument executed pursuant to this Section
4:4-25 shall be sufficient for filing to perfect the security interests granted
herein.
4-26 -Adequacy of Disclosure.
(a) All financial statements furnished to the Agent and to each
Revolving Credit Lender by each Borrower have been prepared in accordance with
GAAP consistently applied and present fairly the condition of the Borrowers at
the date(s) thereof and the results of operations and cash flows for the
period(s) covered (provided however, that unaudited financial statements are
subject to normal year end adjustments and to the absence of footnotes). Except
as otherwise disclosed in writing by the Lead Borrower to the Agent or in its
filings with the SEC, there has been no material change in the financial
condition, results of operations, or cash flows of the Borrowers since the
date(s) of such financial statements, other than changes in the ordinary course
of business, which changes have not been materially adverse, either singularly
or in the aggregate.
(b) No Borrower has any contingent obligations or obligation under any
Lease or Capital Lease which is not noted in the Borrowers' financial statements
furnished to the Agent and to each Revolving Credit Lender prior to the
execution of this Agreement (except to the extent not required by GAAP).
(c) No document, instrument, agreement, or paper now or hereafter given
the Agent and to each Revolving Credit Lender by or on behalf of each Borrower
or any guarantor of the Liabilities in connection with the execution of this
Agreement by the Agent and to each Revolving Credit Lender contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements therein not misleading.
There is no fact known to any Borrower which has, or which, is reasonably likely
to have, a material adverse effect on the financial condition of any Borrower
which has not been disclosed in writing to the Agent and to each Revolving
Credit Lender.
4-27 -No Restrictions on Liabilities. No Borrower shall enter into or directly
or indirectly become subject to any agreement which prohibits or restricts, in
any manner, any Borrower's:
(a) Creation of, and granting of Collateral Interests in favor of the
Agent.
(b) Incurrence of Liabilities.
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4-28 -Other Covenants. No Borrower shall indirectly do or cause to be done any
act which, if done directly by that Borrower, would breach any covenant
contained in this Agreement.
Article 5: Financial Reporting and Performance Covenants:
5-1 -Maintain Records. The Borrowers shall:
(a) At all times, keep proper books of account, in which full, true,
and accurate entries shall be made of all of the Borrowers' financial
transactions, all in accordance with GAAP applied consistently with prior
periods to fairly reflect the financial condition of the Borrowers at the close
of, and its results of operations for, the periods in question.
(b) Timely provide the Agent with those financial reports, statements,
and schedules required by this Article 5: or otherwise, each of which reports,
statements and schedules shall be prepared, to the extent applicable, in
accordance with GAAP applied consistently with prior periods to fairly reflect
the financial condition of the Borrowers at the close of, and the results of
operations for, the period(s) covered therein.
(c) At all times, keep accurate current records of the Collateral
including, without limitation, accurate current stock, cost, and sales records
of its Inventory, accurately and sufficiently itemizing and describing the
kinds, types, and quantities of Inventory and the cost and selling prices
thereof.
(d) At all times, retain independent certified public accountants who
are reasonably satisfactory to the Agent and instruct such accountants to fully
cooperate with, and be available to, the Agent to discuss the Borrowers'
financial performance, financial condition, operating results, controls, and
such other matters, within the scope of the retention of such accountants, as
may be raised by the Agent.
(e) Not change any Borrower's fiscal year.
5-2 -Access to Records.
(a) Each Borrower shall accord the Agent with access, at reasonable
times, on reasonable notice, from time to time as the Agent may require to all
properties owned by or over which any Borrower has control. The Agent shall have
the right, and each Borrower will permit the Agent from time to time as Agent
may request, to examine, inspect, copy, and make extracts from any and all of
the Borrowers' books, records, electronically stored data, papers, and files.
Each Borrower shall make all of that Borrower's copying facilities available to
the Agent.
(b) Each Borrower hereby authorizes the Agent to:
(i) Inspect, copy, duplicate, review, cause to be reduced to
60
hard copy, run off, draw off, and otherwise use any and all computer or
electronically stored information or data which relates to any
Borrower, or any service bureau, contractor, accountant, or other
person, and directs any such service bureau, contractor, accountant, or
other person fully to cooperate with the Agent with respect thereto.
(ii) Verify at any time the Collateral or any portion thereof,
including verification with Account Debtors, and/or with each
Borrower's computer billing companies, collection agencies, and
accountants (such verification to be undertaken in keeping with
commercially reasonable commercial lending practices) and to sign the
name of each Borrower on any notice to each Borrower's Account Debtors
or verification of the Collateral.
(c) Notwithstanding anything to the contrary herein, no Borrower shall
be required to deliver or disclose any customer pharmacy records to the extent
prohibited by Applicable Law.
(d) The Agent from time to time may designate one or more
representatives to exercise the Agent's rights under this Section 5:5-2 as fully
as if the Agent were doing so.
5-3 -Immediate Notice to Agent.
(a) The Lead Borrower shall provide the Agent with written notice
promptly upon the occurrence of any of the following events, which written
notice shall be with reasonable particularity as to the facts and circumstances
in respect of which such notice is being given:
(i) Any change in any Borrower's President, chief executive
officer, chief operating officer, and chief financial officer (without
regard to the title(s) actually given to the Persons discharging the
duties customarily discharged by officers with those titles).
(ii) Any ceasing of any Borrower's making of payment, in the
ordinary course, to any of its creditors (other than its ceasing of
making of such payments on account of a dispute in the ordinary
course).
(iii) Any failure by any Borrower to pay rent at any of that
Borrower's locations, which failure continues for more than Three (3)
days following the last day on which such rent was payable without more
than a de minimis adverse effect to that Borrower.
(iv) Any material adverse change in the business, operations,
or financial affairs of any Borrower.
(v) Any Borrower's becoming in Default.
(vi) Any intention on the part of any Borrower to discharge
that Borrower's present independent accountants or any withdrawal or
resignation by such independent accountants from their acting in such
capacity (as to which, see Subsection 5:5-1(d)).
(vii) Any litigation which, if determined adversely to any
Borrower, might have a material adverse effect on the financial
condition of that Borrower.
(b) The Lead Borrower shall:
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(i) Provide the Agent, when so distributed, with copies of any
materials distributed to the shareholders of the Lead Borrower (qua
such shareholders).
(ii) Provide the Agent:
(A) When filed, copies of all filings with the SEC.
(B) When received, copies of all correspondence from
the SEC, other than routine non-substantive general
communications from the SEC.
(iii) Add the Agent as an addressee on all mailing lists
maintained by or for each Borrower.
(iv) At the request of the Agent, from time to time, provide
the Agent with copies of all advertising (including copies of all print
advertising and duplicate tapes of all video and radio advertising).
(v) Provide the Agent, when received by any Borrower, with a
copy of any management letter or similar communications from any
accountant of any Borrower.
5-4 -Borrowing Base Certificate. The Lead Borrower shall provide the Agent with
a collateral report and a Borrowing Base Certificate (in the form of EXHIBIT
5:5-4 annexed hereto, as such form may be revised from time to time by the
Agent) at such times as are set forth in EXHIBIT 5:5-5 hereto, provided that
upon the occurrence and continuance of a Cash Control Event, such reports shall
be provided by 2:00PM, weekly, on Friday of each week (as of the then
immediately preceding Saturday). Such Certificate may be sent to the Agent by
facsimile transmission, provided that the original thereof is mailed to the
Agent on the date of such transmission.
5-5 -Monthly Reports.
Monthly, the Lead Borrower shall provide the Agent with
original counterparts of the following (each in such form as the Agent from time
to time may specify):
(i) Those reports described in EXHIBIT 5:5-5 hereto, at the
times set forth in such EXHIBIT; and
(ii) The officer's compliance certificate described in Section
5:5-8.
5-6 -Quarterly Reports. Quarterly, within forty five (45) days following the end
of each of the Borrowers' fiscal quarters, the Lead Borrower shall provide the
Agent with the following:
(a) An original counterpart of a management prepared financial
statement of the Borrowers for the period from the beginning of the Borrowers'
then current fiscal year through the end of the subject quarter, with
comparative information for the same period of the previous fiscal year, which
statement shall include, at a minimum, a balance sheet, income statement (on a
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store specific and on a "consolidated" basis), statement of changes in
shareholders' equity, and cash flows and comparisons for the corresponding
quarter of the then immediately previous year.
(b) The officer's compliance certificate described in Section 5:5-8.
5-7 -Annual Reports.
(a) Annually, within ninety (90) days following the end of the
Borrowers' fiscal year, the Lead Borrower shall furnish the Agent with the
following:
(i) The Borrowers' annual financial statement, which statement
shall bear the unqualified opinion of, the Lead Borrower's independent
certified public accountants (i.e. said statement shall be "certified"
by such accountants) and shall include, at a minimum (with comparative
information for the then prior fiscal year) a balance sheet, income
statement, statement of changes in shareholders' equity, and cash
flows.
(ii) The officer's compliance certificate described in Section
5:5-8.
(b) No later than the earlier of Fifteen (15) days prior to the end of
each of the Borrowers' fiscal years or the date on which such accountants
commence their work on the preparation of the Borrowers' annual financial
statement, the Lead Borrower shall give written notice to such accountants (with
a copy of such notice, when sent, to the Agent) that:
(i) Such annual financial statement will be delivered by the
Lead Borrower to the Agent (for subsequent distribution to each
Revolving Credit Lender).
(ii) It is the primary intention of the Borrowers, in its
engagement of such accountants, to satisfy the financial reporting
requirements set forth in this Article 5:.
(iii) The Lead Borrower has been advised that the Agent and
each Revolving Credit Lender will rely thereon with respect to the
administration of, and transactions under, the credit facility
contemplated by this Agreement.
(c) Each annual statement shall be accompanied by such accountant's
Certificate indicating that, in conducting the audit for such annual statement,
nothing came to the attention of such accountants to believe that the Borrower
is in Default (or that, if the Borrower is in Default, the facts and
circumstances thereof).
5-8 -Officers' Certificates. The Lead Borrower shall cause either the Lead
Borrower's President, Chief Financial Officer, or its Controller, in each
instance, to provide such Person's Certificate with those monthly statements
required pursuant to Section 5:5-5(a)(ii), quarterly, and annual statements to
be furnished pursuant to this Agreement, which Certificate shall:
(a) Indicate that, to the best of such Person's knowledge, after
inquiry, the subject statement was prepared in accordance with GAAP consistently
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applied and presents fairly the financial condition of the Borrowers at the
close of, and the results of the Borrowers' operations and cash flows for, the
period(s) covered, subject, however to the following:
(i) Usual year end adjustments (this exception shall not be
included in the Certificate which accompanies such annual statement).
(ii) Material Accounting Changes (in which event, such
Certificate shall include a schedule (in reasonable detail) of the
effect of each such Material Accounting Change) not previously
specifically taken into account in the determination of the financial
performance covenant imposed pursuant to Section 5:5-11.
(b) Indicate either that (i) no Borrower is in Default, or (ii) if such
an event has occurred, its nature (in reasonable detail) and the steps (if any)
being taken or contemplated by the Borrowers to be taken on account thereof.
5-9 -Inventories, Appraisals, and Audits.
(a) The Agent, at the expense of the Borrowers, may participate in
and/or observe each physical count and/or inventory of so much of the Collateral
as consists of Inventory which is undertaken on behalf of any Borrower.
(b) The Borrowers, at their own expense, shall cause not less than one
(1) physical inventory to be undertaken in each Fiscal year during which this
Agreement is in effect, conducted by such inventory takers as are reasonably
satisfactory to the Agent and following such methodology as is reasonably
satisfactory to the Agent.
(i) Each such inventory shall be reconciled and recorded in
the Borrowers' financial statements within thirty (30) days of the date
following the completion of such inventory.
(ii) The Lead Borrower, within thirty (30) days following the
end of each month, shall provide the Agent with the results of each
such inventory that was recorded in that month.
(iii) The Agent, in its discretion, if any Borrower is in
Default, may cause such additional inventories to be taken as the Agent
determines (each, at the expense of the Borrowers).
(c) The Agent may obtain appraisals of the Collateral, from time to
time (in all events, at the Borrowers' expense), up to a maximum cost to the
Borrowers of $50,000.00 in any twelve (12) month period provided that no Default
or Event of Default has occurred, conducted by such appraisers as are reasonably
satisfactory to the Agent.
(d) The Agent contemplates conducting three (3) commercial finance
field examinations (in each event, at the Borrowers' expense up to a maximum
cost to the Borrowers of $45,000.00 in any twelve (12) month period provided
that no Default or Event of Default has occurred, and in each event on
reasonable prior notice to the Lead Borrower) of the Borrowers' books and
records during any twelve (12) month period during which this Agreement is in
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effect, but in its discretion, may undertake additional such audits during such
period.
5-10 -Additional Financial Information.
a) In addition to all other information required to be provided
pursuant to this Article 5:, the Lead Borrower promptly shall provide the Agent
(and any guarantor of the Liabilities), with such other and additional
information concerning the Borrowers, the Collateral, the operation of the
Borrowers' business, and the Borrowers' financial condition, as the Agent may
from time to time reasonably request from the Lead Borrower.
(b) The Lead Borrower may provide the Agent, from time to time
hereafter, with updated forecasts of the Borrowers' anticipated performance and
operating results.
(c) In all events, the Lead Borrower, no sooner than Ninety (90) days
prior to the end of each of the Borrowers' fiscal years, shall provide the Agent
with an updated and extended forecast which shall go out at least through the
end of the then next fiscal year and shall include an income statement, balance
sheet, and statement of cash flow, by month, each prepared in conformity with
GAAP and consistent with the Borrowers' then current practices.
(d) The Agent and each of the Revolving Credit Lenders agrees that,
except with the prior consent of the Lead Borrower, it will not disclose any
confidential information with respect to the Borrowers which is now or in the
future furnished pursuant to this Agreement or any other Loan Document ,
provided, however, that the Agent and each Revolving Credit Lender may disclose
any such information as follows:
(i) To the following (but only if the Person to whom so
disclosed is instructed to treat such information as confidential):
(A) To its employees, Affiliates, advisors or
counsel.
(B) To any prospective or actual transferee or
participant in connection with any contemplated transfer or
participation of this Agreement, the Liabilities, or any
interest therein by the Agent or any Revolving Credit Lender,
which transfer or participation is permitted by the terms of
this Agreement.
(C) To the Agent and other Revolving Credit Lenders.
(ii) As has become generally available to the public.
(iii) As may be required or appropriate in any report,
statement or testimony submitted to any municipal, state, or federal
regulatory body having or claiming to have jurisdiction over the Agent
or any Revolving Credit Lender.
(iv) As may be required or appropriate in respect to any
summons or subpoena or in connection with any litigation
(v) In order to comply with any law, order, regulation or
ruling applicable to the Agent or any Revolving Credit Lender.
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5-11 -Financial Performance Covenants. In the event that Availability is less
than $20,000,000.00 the Borrowers, at all times thereafter, measured as of the
end of each month, shall maintain a Consolidated Net Worth of not less than
$45,000,000.00. Compliance with such financial performance covenant shall be
made as if no Material Accounting Changes had been made (other than any Material
Accounting Changes specifically taken into account in the setting of such
covenants). The Agent may determine the Borrowers' compliance with such covenant
based upon financial reports and statements provided by the Lead Borrower to the
Agent (whether or not such financial reports and statements are required to be
furnished pursuant to this Agreement) as well as by reference to interim
financial information provided to, or developed by, the Agent.
Article 6: - Use of Collateral:
6-1 -Use of Inventory Collateral.
(a) No Borrower shall engage
(i) In any sale of the Inventory other than for (a) fair
consideration in the conduct of the Borrowers' business in the ordinary
course, or (b) dispositions of damaged or unsaleable Inventory
consistent with Current Practices .
(ii) Sales or other dispositions to creditors.
(iii) Sales or other dispositions in bulk.
(iv) Sales of any Collateral in breach of any provision of
this Agreement.
(b) No sale of Inventory shall be on consignment, approval, or under
any other circumstances such that, with the exception of the Borrowers'
customary return policy applicable to the return of inventory purchased by the
Borrowers' retail customers in the ordinary course, such Inventory may be
returned to a Borrower without the consent of the Agent.
6-2 -Inventory Quality. All Inventory now owned or hereafter acquired by each
Borrower is and will be of good and merchantable quality and free from material
defects (other than defects within customary trade tolerances).
6-3 -Adjustments and Allowances. Each Borrower may grant such allowances or
other adjustments to that Borrower's Account Debtors (exclusive of extending the
time for payment of any Account or Account Receivable, which shall not be done
without first obtaining the Agent's prior written consent in each instance) as
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that Borrower may reasonably deem to accord with sound business practice,
provided, however, the authority granted the Borrowers pursuant to this Section
6:6-3 may be limited or terminated by the Agent at any time in the Agent's
discretion.
6-4 -Validity of Accounts.
(a) The amount of each Account shown on the books, records, and
invoices of the Borrowers represented as owing by each Account Debtor is and
will be the correct amount actually owing by such Account Debtor and shall have
been fully earned by performance by the Borrowers.
(b) The Agent from time to time may verify the Receivables Collateral
directly with the Borrowers' Account Debtors, such verification to be undertaken
in keeping with commercially reasonable commercial lending standards.
(c) No Borrower has any knowledge of any impairment of the validity or
collectibility of any of the Accounts. The Lead Borrower shall notify the Agent
of any such impairment immediately after any Borrower becomes aware of any such
impairment.
6-5 -Notification to Account Debtors. The Agent shall have the right (after an
Event of Default has occurred), to notify any of the Borrowers' Account Debtors
to make payment directly to the Agent and to collect all amounts due on account
of the Collateral.
Article 7: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
7-1 -DEPOSITORY ACCOUNTS.
(a) Annexed hereto as EXHIBIT 7:7-1(a) is a Schedule of all present
DDA's, which Schedule includes, with respect to each depository (i) the name and
address of that depository; (ii) the account number(s) of the account(s)
maintained with such depository; and (iii) a contact person at such depository.
(b) The Lead Borrower shall deliver the following to the Agent, as a
condition to the effectiveness of this Agreement:
(i) Notification, executed on behalf of each Borrower, to
each depository institution with which any DDA is maintained (other
than any Exempt DDA and the Blocked Account), in form reasonably
satisfactory to the Agent of the Agent's interest in such DDA.
(ii) A Blocked Account Agreement substantially in the form of
EXHIBIT 7:7-1(b)(ii), annexed hereto, with any depository institution
at which either of the following conditions applies:
(A) Both any DDA (other than the Operating Account)
and the Operating Account is maintained.
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(B) A Blocked Account is maintained.
(c) No Borrower will establish any DDA hereafter (other than an Exempt
DDA) unless, contemporaneous with such establishment, the Lead Borrower delivers
the following to the Agent:
(i) Notification to the depository at which such DDA is
established if the same would have been required pursuant to Section
7:7-1(b)(ii)(A) if the subject DDA were open at the execution of this
Agreement.
(ii) A Blocked Account Agreement executed on behalf of the
depository at which such DDA is established if the same would have been
required pursuant to Section 7:7-1(b)(ii)(B) if the subject DDA were
open at the execution of this Agreement.
7-2 -Credit Card Receipts.
(a) Annexed hereto as EXHIBIT 7:7-2, is a Schedule which describes all
arrangements to which any Borrower is a party with respect to the payment to
that Borrower of the proceeds of credit card charges for sales by that Borrower.
(b) The Lead Borrower shall deliver to the Agent, as a condition to the
effectiveness of this Agreement, notification, executed on behalf of each
Borrower, to each of each Borrower's credit card clearinghouses and processors
of notice (in form reasonably satisfactory to the Agent), which notice provides
that upon notification by the Agent, payment of all credit card charges
submitted by that Borrower to that clearinghouse or other processor and any
other amount payable to that Borrower by such clearinghouse or other processor
shall be directed to the Blocked Account or as otherwise designated from time to
time by the Agent. No Borrower shall change such direction or designation except
upon and with the prior written consent of the Agent.
7-3 -The Concentration, Blocked, and Operating Accounts .
(a) The following checking accounts have been or will be established
(and are so referred to herein):
(i) The "Concentration Account" (so referred to herein):
Established by the Agent with Fleet National Bank.
(ii) The "Blocked Account" (so referred to herein):
Established by the Lead Borrower with PNC Bank.
(iii) The "Operating Account" (so referred to herein):
Established by the Borrower with PNC Bank.
(b) The contents of each DDA (other than the Operating Account) and of
the Blocked Account constitutes Collateral and Proceeds of Collateral. The
contents of the Concentration Account constitutes proceeds of the Collateral.
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(c) The Borrowers shall pay all fees and charges of, and maintain such
impressed balances as may be required by the depository in which any account is
opened as required hereby (even if such account is opened by and/or is the
property of the Agent).
7-4 -Proceeds and Collections .
(a) All Receipts constitute Collateral and proceeds of Collateral.
(b) Subject to Section 7:7-4(c), upon notice from the Agent to the
Lead Borrower that a Cash Control Event has occurred:
(i) All Receipts:
(A) Shall be held in trust by the Borrowers for the Agent.
(B) Shall not be commingled with any of any Borrower's other
funds.
(C) Shall be deposited and/or transferred only to the
Blocked Account or the Concentration Account.
(ii) The Lead Borrower shall cause the ACH or wire transfer to
the Blocked Account or the Concentration Account (except in those
instances in which such transfer is not within the control of the Lead
Borrower or any other Borrower), no less frequently than daily (and
whether or not there is then an outstanding balance in the Loan
Account) of the following:
(A) The then contents of each DDA (other than any Exempt
DDA), each such transfer to be net of any minimum balance, not to
exceed $2,000.00, as may be required to be maintained in the
subject DDA by the bank at which such DDA is maintained.
(B) The proceeds of all credit card charges not otherwise
provided for pursuant hereto.
(iii) In the event that, notwithstanding the provisions of this
Section 7:7-4(b) the Borrower receives or otherwise has dominion and
control of any Receipts, or any proceeds or collections of any
Collateral, such Receipts, proceeds, and collections shall be held in
trust by that Borrower for the Agent and shall not be commingled with
any of that Borrower's other funds or deposited in any account of any
Borrower other than as instructed by the Agent.
(c) The effect of a Cash Control Event is subject to the following:
(i) The Lead Borrower has a one-time opportunity, following the
Agent's giving of notice of the occurrence of a Cash Control Event, to
cancel the effectiveness of Sections 2:2-11(c) (which relates to
certain mandatory payments to be made by the Borrowers), 7:7-4(b)
(which relates to the imposition of certain cash management features),
and Section 5:5-4 (which relates to the Lead Borrower's furnishing of
periodic Borrowing Base Certificates).
(ii) Such one-time opportunity may be exercised by the Lead
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Borrower on written notice to the Agent if (and only if) Availability
following the occurrence of a Cash Control Event has been equal to or
in excess of $20,000,000.00 for not less than 180 consecutive days.
(iii) In the event that Section 2:2-11(c) becomes operative
and/or the Agent invokes the provisions of Sections 7:7-4(b) and 5:5-4
thereafter on account of the occurrence of a subsequent Cash Control
Event, the Lead Borrower shall not have another opportunity to cancel
the effectiveness of those Sections.
7-5 -Payment of Liabilities.
(a) On each Business Day, the Agent shall apply the then collected
balance of the Concentration Account (net of fees charged, and of such
impressed balances as may be required by the bank at which the
Concentration Account is maintained) First, towards the SwingLine Loans and
Second, towards the unpaid balance of the Loan Account and all other
Liabilities.
(b) The following rules shall apply to deposits and payments under and
pursuant to this Agreement:
(i) Funds shall be deemed to have been deposited to the
Concentration Account on the Business Day on which deposited.
(ii) Funds paid to the Agent, other than by deposit to the
Concentration Account, shall be deemed to have been received on the
Business Day when they are good and collected funds, provided that
notice of such payment is available to the Agent by 2:00PM on that
Business Day.
(iii) If notice of a deposit to the Concentration Account
(Section 7:7-5(b)(i)) or payment (Section 7:7-5(b)(ii)) is not
available to the Agent until after 2:00PM on a Business Day, such
deposit or payment shall be deemed to have been made at 9:00AM on the
then next Business Day.
(iv) All deposits to the Concentration Account and other payments
to the Agent are subject to clearance and collection.
(c) The Agent shall transfer to the Operating Account any surplus in
the Concentration Account remaining after the application towards the
Liabilities referred to in Section 7:7-5(a), above (less those amount which
are to be netted out, as provided therein) provided, however, in the event
that
(i) any Borrower is in Default; and
(ii) one or more L/C's are then outstanding, then the Agent may
establish a funded reserve of up to 110% of the aggregate Stated
Amounts of such L/C's. Such funded reserve shall either be (i)
returned to the Lead Borrower provided that no Borrower is in Default
or (ii) applied towards the Liabilities following the occurrence of
any Event of Default described in Section 10:10-12 or acceleration
following the occurrence of any other Event of Default.
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7-6 -The Operating Account. Except as otherwise specifically provided in, or
permitted by, this Agreement, all check clearings and other disbursements shall
be funded by the Lead Borrower solely from, the Operating Account.
Article 8: - Grant of Security Interest:
8-1 -Grant of Security Interest. To secure the Borrowers' prompt, punctual, and
faithful performance of all and each of the Liabilities, each Borrower hereby
grants to the Agent, for the ratable benefit of the Revolving Credit Lenders, a
continuing security interest in and to, and assigns to the Agent, for the
ratable benefit of the Revolving Credit Lenders, the following, and each item
thereof, whether now owned or now due, or in which that Borrower has an
interest, or hereafter acquired, arising, or to become due, or in which that
Borrower obtains an interest, and all products, Proceeds, substitutions, and
accessions of or to any of the following (all of which, together with any other
property in which the Agent may in the future be granted a security interest, is
referred to herein as the "Collateral"):
(a) All Accounts and accounts receivable.
(b) All Inventory.
(c) All General Intangibles.
(d) All Chattel Paper.
(e) All Letter-of-Credit Rights.
(f) All Payment Intangibles.
(g) All Supporting Obligations.
(h) All books, records, and information relating to the Collateral
and/or to the operation of each Borrower's business, and all rights of
access to such books, records, and information, and all property in which
such books, records, and information are stored, recorded, and maintained.
(i) All Investment Property, Instruments, Documents, Deposit Accounts,
money, policies and certificates of insurance, deposits, impressed
accounts, compensating balances, and cash (but not equipment (as defined in
the UCC) or real estate).
(j) All insurance proceeds, refunds, and premium rebates, including,
without limitation, proceeds of fire and credit insurance, whether any of
such proceeds, refunds, and premium rebates arise out of any of the
foregoing. (8:8-1(a) through 8:8-1(i)).
(k) All liens, guaranties, rights, remedies, and privileges pertaining
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to any of the foregoing (8:8-1(a) through 8:8-1(j)), including the right of
stoppage in transit.
8-2 -Extent and Duration of Security Interest.
(a) The security interest created and granted herein is in addition
to, and supplemental of, any security interest previously granted by any
Borrower to the Agent and shall continue in full force and effect
applicable to all Liabilities until both (a) all Liabilities have been paid
and/or satisfied in full and (b) the security interest created herein is
specifically terminated in writing by a duly authorized officer of the
Agent.
(b) It is intended that the Collateral Interests created herein extend
to and cover all assets of each Borrower other than Equipment and real
estate.
(c) It is further intended that, with respect to any term used herein
to describe Collateral, which term is defined in either (or both) the UCC
as in effect on the date when this Agreement was executed by the Borrowers
or in UCC9'99, the meaning given that term shall be the more encompassing
of the two definitions.
Article 9: - Agent As Borrower's Attorney-In-Fact:
9-1 -Appointment as Attorney-In-Fact. Each Borrower hereby irrevocably
constitutes and appoints the Agent as that (acting through any of its officers)
Borrower's true and lawful attorney, with full power of substitution, following
the occurrence of an Event of Default, to convert the Collateral into cash at
the sole risk, cost, and expense of that Borrower. The rights and powers granted
the Agent by this appointment include but are not limited to the right and power
to:
(a) Prosecute, defend, compromise, or release any action relating to
the Collateral.
(b) Sign change of address forms to change the address to which each
Borrower's mail is to be sent to such address as the Agent shall designate;
receive and open each Borrower's mail; remove any Receivables Collateral
and Proceeds of Collateral therefrom and turn over the balance of such mail
either to the Lease Borrower or to any trustee in bankruptcy or receiver of
the Lead Borrower, or other legal representative of a Borrower whom the
Agent determines to be the appropriate person to whom to so turn over such
mail.
(c) Endorse the name of the relevant Borrower in favor of the Agent
upon any and all checks, drafts, notes, acceptances, or other items or
instruments; sign and endorse the name of the relevant Borrower on, and
receive as secured party, any of the Collateral, any invoices, schedules of
Collateral, freight or express receipts, or bills of lading, storage
receipts, warehouse receipts, or other documents of title respectively
relating to the Collateral.
(d) Sign the name of the Borrower on any notice to the Borrower's
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Account Debtors or verification of the Receivables Collateral; sign any
Borrower's name on any Proof of Claim in Bankruptcy against Account
Debtors, and on notices of lien, claims of mechanic's liens, or assignments
or releases of mechanic's liens securing the Accounts.
(e) Take all such action as may be necessary to obtain the payment of
any letter of credit and/or banker's acceptance of which any Borrower is a
beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver, alter
or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any customer of each Borrower.
(g) Use, license or transfer any or all General Intangibles of each
Borrower.
9-2 -No Obligation to Act. The Agent shall not be obligated to do any of the
acts or to exercise any of the powers authorized by Section 9:9-1 herein, but if
the Agent elects to do any such act or to exercise any of such powers, it shall
not be accountable for more than it actually receives as a result of such
exercise of power, and shall not be responsible to any Borrower for any act or
omission to act except for any act or omission to act as to which there is a
final determination made in a judicial proceeding (in which proceeding the Agent
has had an opportunity to be heard) which determination includes a specific
finding that the subject act or omission to act had been grossly negligent or in
actual bad faith.
Article 10: - Events of Default:
The occurrence of any event described in this Article 10: respectively
shall constitute an "Event of Default" herein. Upon the occurrence of any Event
of Default described in Section 10:10-12, any and all Liabilities shall become
due and payable without any further act on the part of the Agent. Upon the
occurrence of any other Event of Default, the Agent may, and on the instruction
of the SuperMajority Lenders as provided in Section 13:13-1(b) shall, declare
any and all Liabilities shall become immediately due and payable. The occurrence
of any Event of Default shall also constitute, without notice or demand, a
default under all other agreements between the Agent or any Revolving Credit
Lender and any Borrower and instruments and papers heretofore, now, or hereafter
given the Agent or any Revolving Credit Lender by any Borrower.
10-1 -Failure to Pay the Revolving Credit. The failure by any Borrower to pay
when due any principal of, interest on, or fees in respect of, the Revolving
Credit.
10-2 -Failure To Make Other Payments. The failure by any Borrower to pay within
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five (5) days of when due any payment Liability other than any payment liability
on account of the principal of, or interest on, or fees in respect of, the
Revolving Credit.
10-3 -Failure to Perform Covenant or Liability (No Grace Period) . The failure
by any Borrower to promptly, punctually, faithfully and timely perform,
discharge, or comply with any covenant or Liability included in any of the
following provisions hereof:
Section Relates to:
------------------------------
4:4-7 Indebtedness
4:4-19 Dividends. Investments. Other Corporate Actions
4:4-24 Affiliate Transactions
Article 7: Cash Management
10-4 -Financial Reporting Requirements. The failure by the Lead Borrower to
promptly, punctually, faithfully and timely perform, discharge, or comply with
the financial reporting requirements included in Article 5, subject, however, to
the following limited number of grace periods applicable to certain of those
requirements:
------------------------------------- ------------------ -------------------------- --------------------------------
REPORT / STATEMENT REQUIRED BY GRACE PERIOD NUMBER OF GRACE PERIODS
SECTION
------------------------------------- ------------------ -------------------------- --------------------------------
------------------------------------- ------------------ -------------------------- --------------------------------
Borrowing Base Certificates 5:5:5-4 One Business Day 3 per fiscal Quarter
------------------------------------- ------------------ -------------------------- --------------------------------
Monthly Report (15 Days) 5:5-5 Three Business Days 4 in any 12 months
------------------------------------- ------------------ -------------------------- --------------------------------
10-5 -Failure to Perform Covenant or Liability (Grace Period). The failure by
any Borrower within twenty (20) days following the earlier of any Borrower's
actual knowledge of a breach of any covenant or Liability not described in any
of Sections 10:10-1,10:10-2, 10:10-3, or 10:10-4 or of its receipt of written
notice from the Agent of the breach of any of any of such covenants or
Liabilities.
10-6 -Misrepresentation. The determination by the Agent that any representation
or warranty at any time made by any Borrower to the Agent or any Revolving
Credit Lender was not true or complete in all material respects when given.
10-7 -Acceleration of Other Debt. Breach of Lease. The occurrence of any event
such that any Indebtedness of any Borrower in excess of $1,000,000.00 to any
creditor other than the Agent or any Revolving Credit Lender could be
accelerated or, without the consent of any Borrower, any Lease could be
terminated (whether or not the subject creditor or lessor takes any action on
account of such occurrence).
10-8 -Default Under Other Agreements. The occurrence of any breach of any
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covenant or Liability imposed by, or of any default under, any agreement
(including any Loan Document) between the Agent or any Revolving Credit Lender
and any Borrower or instrument given by any Borrower to the Agent or any
Revolving Credit Lender and the expiry, without cure, of any applicable grace
period (notwithstanding that the subject Agent or Revolving Credit Lender may
not have exercised all or any of its rights on account of such breach or
default).
10-9 -Uninsured Casualty Loss. The occurrence of any uninsured loss, theft,
damage, or destruction of or to any material portion of the Collateral.
10-10 -Attachment. Judgment. Restraint of Business.
(a) The service of process upon the Agent or any Revolving Credit
Lender or any Participant seeking to attach, by trustee, mesne, or other
process, any funds of any Borrower on deposit with, or assets of any
Borrower in the possession of, the Agent or that Revolving Credit or such
Participant.
(b) The entry of any judgment against any Borrower in excess of
$1,000,000.00, which judgment is not satisfied (if a money judgment) or
appealed from (with execution or similar process stayed) within fifteen
(15) days of its entry.
(c) The entry of any order or the imposition of any other process
having the force of law, the effect of which is to restrain in any material
way the conduct by any Borrower of its business in the ordinary course.
10-11 -Business Failure. Any act by, against, or relating to any Borrower, or
its property or assets, which act constitutes the determination, by any
Borrower, to initiate a program of partial or total self-liquidation;
application for, consent to, or sufferance of the appointment of a receiver,
trustee, or other person, pursuant to court action or otherwise, over all, or
any part of any Borrower's property; the granting of any trust mortgage or
execution of an assignment for the benefit of the creditors of any Borrower, or
the occurrence of any other voluntary liquidation or extension of debt agreement
for any Borrower or involuntary liquidation which is not timely contested, or if
timely contested, is not dismissed within sixty (60) days of when filed; the
offering by or entering into by any Borrower of any composition, extension, or
any other arrangement seeking relief from or extension of the debts of any
Borrower; or the initiation of any judicial or non-judicial proceeding or
agreement by, against, or including any Borrower which seeks or intends to
accomplish a reorganization or arrangement with creditors; and/or the initiation
by or on behalf of any Borrower of the liquidation or winding up of all or any
part of any Borrower's business or operations
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10-12 -Bankruptcy. The failure by any Borrower to generally pay the debts of any
Borrower as they mature; adjudication of bankruptcy or insolvency relative to
any Borrower; the entry of an order for relief or similar order with respect to
any Borrower in any proceeding pursuant to the Bankruptcy Code or any other
federal bankruptcy law; the filing of any complaint, application, or petition by
any Borrower initiating any matter in which any Borrower is or may be granted
any relief from the debts of that Borrower pursuant to the Bankruptcy Code or
any other insolvency statute or procedure; the filing of any complaint,
application, or petition against any Borrower initiating any matter in which
that Borrower is or may be granted any relief from the debts of that Borrower
pursuant to the Bankruptcy Code or any other insolvency statute or procedure,
which complaint, application, or petition is not timely contested in good faith
by that Borrower by appropriate proceedings or, if so contested, is not
dismissed within sixty (60) days of when filed.
10-13 -Default by Guarantor. The occurrence of any of the foregoing Events of
Default with respect to any guarantor or endorser of the Liabilities as if such
guarantor were a "Borrower" described therein.
10-14 -Indictment - Forfeiture. The indictment of, or institution of any legal
process or proceeding against, any Borrower, under any Applicable Law where the
relief, penalties, or remedies sought or available include the forfeiture of any
property of any Borrower aggregating for all Borrowers an amount not to exceed
$1,000,000.00,and/or the imposition of any stay or other order, the effect of
which would have a Material Adverse Effect.
10-15 -Termination of Guaranty. The termination or attempted termination of any
guaranty by any guarantor of the Liabilities.
10-16 -Challenge to Loan Documents.
(a) Any challenge by or on behalf of any Borrower or any guarantor of
the Liabilities to the validity of any Loan Document or the applicability
or enforceability of any Loan Document which seeks to void, avoid, limit,
or otherwise adversely affect any security interest created by or in any
Loan Document or any payment made pursuant thereto.
(b) Any determination by any court or any other judicial or government
authority that any Loan Document is not enforceable or which voids, avoids,
limits, or otherwise adversely affects any security interest created by any
Loan Document or any payment made pursuant thereto.
10-17 -Change in Control. Any Change in Control.
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Article 11: - Rights and Remedies Upon Default:
11-1 -Acceleration. Upon the occurrence of any Event of Default as described in
Section 10:10-12, all Indebtedness of the Borrower to the Revolving Credit
Lenders shall be immediately due and payable. Upon the occurrence of any Event
of Default other than as described in Section 10:10-12, the Agent may (and on
the issuance of Acceleration Notice(s) requisite to the causing of Acceleration,
the Agent shall) declare all Indebtedness of the Borrower to the Revolving
Credit Lenders to be immediately due and payable and may exercise all of the
Agent's Rights and Remedies as the Agent from time to time thereafter determines
as appropriate.
11-2 -Rights of Enforcement. Following the occurrence of any Event of Default,
the Agent shall have all of the rights and remedies of a secured party upon
default under the UCC, in addition to which the Agent shall have all and each of
the following rights and remedies:
(a) To give notice to any bank at which any DDA or Blocked Account is
maintained and in which Proceeds of Collateral are deposited, to turn over
such Proceeds directly to the Agent.
(b) To give notice to any customs broker of any of the Borrowers to
follow the instructions of the Agent as provided in any written agreement
or undertaking of such broker in favor of the Agent.
(c) To collect the Receivables Collateral with or without the taking
of possession of any of the Collateral.
(d) To take possession of all or any portion of the Collateral.
(e) To sell, lease, or otherwise dispose of any or all of the
Collateral, in its then condition or following such preparation or
processing as the Agent deems advisable and with or without the taking of
possession of any of the Collateral.
(f) To conduct one or more going out of business sales which include
the sale or other disposition of the Collateral.
(g) To apply the Receivables Collateral or the Proceeds of the
Collateral towards (but not necessarily in complete satisfaction of) the
Liabilities.
(h) To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.
11-3 -Sale of Collateral.
(a) Any sale or other disposition of the Collateral may be at public
or private sale upon such terms and in such manner as the Agent deems
advisable, having due regard to compliance with any statute or regulation
which might affect, limit, or apply to the Agent's disposition of the
Collateral.
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(b) The Agent, in the exercise of the Agent's rights and remedies upon
default, may conduct one or more going out of business sales, in the
Agent's own right or by one or more agents and contractors. Such sale(s)
may be conducted upon any premises owned, leased, or occupied by any
Borrower. The Agent and any such agent or contractor, in conjunction with
any such sale, may augment the Inventory with other goods (all of which
other goods shall remain the sole property of the Agent or such agent or
contractor). Any amounts realized from the sale of such goods which
constitute augmentations to the Inventory (net of an allocable share of the
costs and expenses incurred in their disposition) shall be the sole
property of the Agent or such agent or contractor and neither any Borrower
nor any Person claiming under or in right of any Borrower shall have any
interest therein.
(c) Unless the Collateral is perishable or threatens to decline
speedily in value, or is of a type customarily sold on a recognized market
(in which event the Agent shall provide the Lead Borrower such notice as
may be practicable under the circumstances), the Agent shall give the Lead
Borrower at least ten (10) days prior written notice of the date, time, and
place of any proposed public sale, and of the date after which any private
sale or other disposition of the Collateral may be made. Each Borrower
agrees that such written notice shall satisfy all requirements for notice
to that Borrower which are imposed under the UCC or other applicable law
with respect to the exercise of the Agent's rights and remedies upon
default.
(d) The Agent and any Revolving Credit Lender may purchase the
Collateral, or any portion of it at any sale held under this Article.
(e) If any of the Collateral is sold, leased, or otherwise disposed of
by the Agent on credit, the Liabilities shall not be deemed to have been
reduced as a result thereof unless and until payment is finally received
thereon by the Agent.
(f) The Agent shall apply the proceeds of the Agent's exercise of its
rights and remedies upon default pursuant to this Article 11: in accordance
with Sections 13:13-6 and 13:13-7.
11-4 -Occupation of Business Location. In connection with the Agent's exercise
of the Agent's rights under this Article 11:, the Agent may enter upon, occupy,
and use any premises owned or occupied by each Borrower, and may exclude each
Borrower from such premises or portion thereof as may have been so entered upon,
occupied, or used by the Agent. The Agent shall not be required to remove any of
the Collateral from any such premises upon the Agent's taking possession
thereof, and may render any Collateral unusable to the Borrowers. In no event
shall the Agent be liable to any Borrower for use or occupancy by the Agent of
any premises pursuant to this Article 11:, nor for any charge (such as wages for
any Borrower's employees and utilities) incurred in connection with the Agent's
exercise of the Agent's Rights and Remedies.
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11-5 -Grant of Nonexclusive License. Each Borrower hereby grants to the Agent a
royalty free nonexclusive irrevocable license to (i) use, apply, and affix any
trademark, trade name, logo, or the like in which any Borrower now or hereafter
has rights, and/or (ii) use any of any Borrower's Equipment and Fixtures, such
license being with respect to the Agent's exercise of the rights hereunder
including, without limitation, in connection with any completion of the
manufacture of Inventory or sale or other disposition of Inventory.
11-6 -Assembly of Collateral. The Agent may require any Borrower to assemble the
Collateral and make it available to the Agent at the Borrowers' sole risk and
expense at a place or places which are reasonably convenient to both the Agent
and the Lead Borrower.
11-7 -Rights and Remedies. The rights, remedies, powers, privileges, and
discretions of the Agent hereunder (herein, the "Agent's Rights and Remedies")
shall be cumulative and not exclusive of any rights or remedies which it would
otherwise have. No delay or omission by the Agent in exercising or enforcing any
of the Agent's Rights and Remedies shall operate as, or constitute, a waiver
thereof. No waiver by the Agent of any Event of Default or of any default under
any other agreement shall operate as a waiver of any other default hereunder or
under any other agreement. No single or partial exercise of any of the Agent's
Rights or Remedies, and no express or implied agreement or transaction of
whatever nature entered into between the Agent and any person, at any time,
shall preclude the other or further exercise of the Agent's Rights and Remedies.
No waiver by the Agent of any of the Agent's Rights and Remedies on any one
occasion shall be deemed a waiver on any subsequent occasion, nor shall it be
deemed a continuing waiver. The Agent's Rights and Remedies may be exercised at
such time or times and in such order of preference as the Agent may determine.
The Agent's Rights and Remedies may be exercised without resort or regard to any
other source of satisfaction of the Liabilities.
Article 12: - Revolving Credit Fundings and Distributions:
12-1 -Revolving Credit Funding Procedures. Subject to Section 12:12-2:
(a) The Agent shall advise each Revolving Credit Lender, no later than
2:00PM on a date on which any Revolving Credit Loan (other than a SwingLine
Loan) is to be made on that date. Such advice, in each instance, may be by
telephone or facsimile transmission, provided that if such advice is by
telephone, it shall be confirmed in writing. Advice of a Revolving Credit
Loan shall include the amount of and interest rate applicable to the
subject Revolving Credit Loan.
(b) Subject to that Revolving Credit Lender's Revolving Credit Dollar
Commitment, each Revolving Credit Lender, by no later than the end of
business on the day on which the subject Revolving Credit Loan is to be
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made, shall Transfer that Revolving Credit Lender's Revolving Credit
Commitment Percentage of the subject Revolving Credit Loan to the Agent.
12-2 -SwingLine Loans.
(a) In the event that, when a Revolving Credit Loan is requested, the
aggregate unpaid balance of the SwingLine Loan is less than the SwingLine
Loan Ceiling, then the SwingLine Lender may advise the Agent that the
SwingLine Lender has determined to include up to the amount of the
requested Revolving Credit Loan as part of the SwingLine Loan. In such
event, the SwingLine Lender shall Transfer the amount of the requested
Revolving Credit Loan to the Agent.
(b) The SwingLine Loan shall be converted to a Revolving Credit Loan
in which all Revolving Credit Lenders participate as follows:
(i) At any time and from time to time, the SwingLine Lender may
advise the Agent that all, or any part of the SwingLine Loan is to be
converted to a Revolving Credit Loan in which all Revolving Credit
Lenders participate, provided that if the Agent is not so advised by
the SwingLine Lender, then all SwingLine Loans shall be converted to
Revolving Credit Loans in which all Revolving Credit Lenders
participate no less frequently than weekly.
(ii) At the initiation of a Liquidation, the then entire unpaid
principal balance of the SwingLine Loan shall be converted to a
Revolving Credit Loan in which all Revolving Credit Lenders
participate.
In either such event, the Agent shall advise each Revolving Credit Lender of
such conversion as if, and with the same effect as if such conversion were the
making of a Revolving Credit Loan as provided in Section 12:12-1.
(c) The SwingLine Lender, in separate capacities, may also be the
Agent and a Revolving Credit Lender.
(d) The SwingLine Lender, in its capacity as SwingLine Lender, is not
a "Revolving Credit Lender" for any of the following purposes:
(i) Except as otherwise specifically provided in the relevant
Section, any distribution pursuant to Section 13:13-6.
(ii) Determination of whether the requisite Loan Commitments have
Consented to action requiring such Consent.
12-3 -Agent's Covering of Fundings:
(a) Each Revolving Credit Lender shall make available to the Agent, as
provided herein, that Revolving Credit Lender's Revolving Credit Commitment
Percentage of the following:
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(i) Each Revolving Credit Loan, up to the maximum amount of that
Revolving Credit Lender's Revolving Credit Dollar Commitment of the
Revolving Credit Loans.
(ii) Up to the maximum amount of that Revolving Credit Lender's
Revolving Credit Dollar Commitment of each L/C Drawing (to the extent
that such L/C Drawing is not "covered" by a Revolving Credit Loan as
provided herein).
(b) In all circumstances, the Agent may:
(i) Assume that each Revolving Credit Lender, subject to Section
12:12-3(a), timely shall make available to the Agent that Revolving
Credit Lender's Revolving Credit Commitment Percentage of each
Revolving Credit Loan, notice of which is provided pursuant to Section
12:12-1.
(ii) In reliance upon such assumption, make available the
corresponding amount to the Borrowers.
(iii) Assume that each Revolving Credit Lender timely shall pay,
and shall make available, to the Agent all other amounts which that
Revolving Credit Lender is obligated to so pay and/or make available
hereunder or under any of the Loan Documents.
(c) In the event that, in reliance upon any of such assumptions, the
Agent makes available, a Revolving Credit Lender's Revolving Credit
Commitment Percentage of one or more Revolving Credit Loans, or any other
amount to be made available hereunder or under any of the Loan Documents,
which amount a Revolving Credit Lender (a "Delinquent Revolving Credit
Lender") fails to provide to the Agent within One (1) Business Day of
written notice of such failure, then:
(i) The amount which had been made available by the Agent is an "
Agent's Cover" (and is so referred to herein).
(ii) All interest paid by the Borrowers on account of the
Revolving Credit Loan or coverage of the subject L/C Drawing which
consist of the Agent's Cover shall be retained by the Agent until the
Agent's Cover, with interest, has been paid.
(iii) The Delinquent Revolving Credit Lender shall pay to the
Agent, on demand, interest at a rate equal to the prevailing federal
funds rate on any Agent's Cover in respect of that Delinquent
Revolving Credit Lender.
(iv) The Agent shall have succeeded to all rights to payment to
which the Delinquent Revolving Credit Lender otherwise would have been
entitled hereunder in respect of those amounts paid by or in respect
of the Borrowers on account of the Agent's Cover together with
interest until it is repaid. Such payments shall be deemed made first
towards the amounts in respect of which the Agent's Cover was provided
and only then towards amounts in which the Delinquent Revolving Credit
Lender is then participating. For purposes of distributions to be made
pursuant to Section 12:12-4(a) (which relates to ordinary course
distributions) or Section 13:13-6 (which relates to distributions of
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proceeds of a Liquidation) below, amounts shall be deemed
distributable to a Delinquent Revolving Credit Lender (and
consequently, to the Agent to the extent to which the Agent is then
entitled) at the highest level of distribution (if applicable) at
which the Delinquent Revolving Credit Lender would otherwise have been
entitled to a distribution.
(v) Subject to Subsection 12:12-3(c)(iv), the Delinquent
Revolving Credit Lender shall be entitled to receive any payments from
the Borrowers to which the Delinquent Revolving Credit Lender is then
entitled, provided however there shall be deducted from such amount
and retained by the Agent any interest to which the Agent is then
entitled on account of Section 12:12-3(c)(ii), above.
(d) A Delinquent Revolving Credit Lender shall not be relieved of any
obligation of such Delinquent Revolving Credit Lender hereunder (all and
each of which shall constitute continuing obligations on the part of any
Delinquent Revolving Credit Lender).
(e) A Delinquent Revolving Credit Lender may cure its status as a
Delinquent Revolving Credit Lender by paying the Agent the aggregate of the
following:
(i) The Agent's Cover (to the extent not previously repaid by the
Borrowers and retained by the Agent in accordance with Subsection
12:12-3(c)(iv), above) with respect to that Delinquent Revolving
Credit Lender.
Plus
(ii) The aggregate of the amount payable under Subsection
12:12-3(c)(iii), above (which relates to interest to be paid by that
Delinquent Revolving Credit Lender).
Plus
(iii) All such costs and expenses as may be incurred by the Agent
in the enforcement of the Agent's rights against such Delinquent
Revolving Credit Lender.
12-4 -Ordinary Course Distributions. (This Section 12:12-4 applies unless the
provisions of Section 13:13-6 (which relates to distributions in the event of a
Liquidation) becomes operative).
(a) Weekly, on such day as may be set from time to time by the Agent
(or more frequently at the Agent's option) the Agent and each Revolving
Credit Lender shall settle up on amounts advanced under the Revolving
Credit and collected funds received in the Concentration Account.
(b) The Agent shall distribute to the SwingLine Lender and to each
Revolving Credit Lender, such Person's respective Pro-Rata share of
interest payments on the Revolving Credit Loans when actually received and
collected by the Agent. For purposes of calculating interest due to a
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Revolving Credit Lender, that Revolving Credit Lender shall be entitled to
receive interest on the actual amount contributed by that Revolving Credit
Lender towards the principal balance of the Revolving Credit Loans
outstanding during the applicable period covered by the interest payment
made by the Borrowers. Any net principal reductions to the Revolving Credit
Loans received by the Agent in accordance with the Loan Documents during
such period shall not reduce such actual amount so contributed, for
purposes of calculation of interest due to that Revolving Credit Lender,
until the Agent has distributed to that Revolving Credit Lender its
pro-rata share thereof.
(c) The Agent shall distribute fees paid on account of the Revolving
Credit, as follows:
(i) The Agent shall pay each Revolving Credit Lender a portion of
the Revolving Credit Commitment Fee in accordance with the terms of
the letter agreement between the Agent and such Revolving Credit
Lender within two (2) Business days after such Person becomes a
Revolving Credit Lender hereunder.
(ii) The Agent shall distribute the Unused Fee, the L/C Fees, and
the Early Termination Fees to the Revolving Credit Lenders pro rata
based upon their respective Revolving Credit Commitment Percentages,
within two (2) Business Days after the Agent's receipt thereof.
(d) No Revolving Credit Lender shall have any interest in, or right to
receive any part of, the Agent's Fee to be paid by the Borrowers to the
Agent pursuant to this Agreement.
(e) Any amount received by the Agent as reimbursement for any cost or
expense (including without limitation, reasonable attorneys' fees) shall be
distributed by the Agent to that Person which is entitled to such
reimbursement as provided in this Agreement (and if such Person(s) is (are)
the Revolving Credit Lenders, pro-rata based upon their respective
Revolving Credit Commitment Percentages at the date on which the expense,
in respect of which such reimbursement is being made, was incurred).
(f) Each distribution pursuant to this Section 12:12-4 is subject to
Section 12:12-3(c), above.
Article 13: - Acceleration and Liquidation:
13-1 -Acceleration Notices
(a) The Agent may give the Revolving Credit Lenders an Acceleration
Notice at any time following the occurrence of an Event of Default.
(b) The SuperMajority Lenders may give the Agent an Acceleration
Notice at any time following the occurrence of an Event of Default. Such
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notice may be by multiple counterparts, provided that counterparts executed
by the requisite Revolving Credit Lenders are received by the Agent within
a period of five (5) consecutive Business Days.
13-2 -Acceleration Unless stayed by judicial or statutory process, the Agent
shall Accelerate the Revolving Credit Obligations within a commercially
reasonable time following:
(a) The Agent's giving of an Acceleration Notice to the Revolving
Credit Lenders as provided in Section 13:13-1(a).
(b) The Agent's receipt of an Acceleration Notice from the
SuperMajority Lenders, in compliance with Section 13:13-1(b) .
13-3 -Initiation of Liquidation Unless stayed by judicial or statutory process,
a Liquidation shall be initiated by the Agent within a commercially reasonable
time following Acceleration of the Revolving Credit Obligations.
13-4 -Actions At and Following Initiation of Liquidation
(a) At the initiation of a Liquidation:
(i) The unpaid principal balance of the SwingLine Loan (if any)
shall be converted, pursuant to Section 12:12-2(b)(ii), to a Revolving
Credit Loan in which all Revolving Credit Lenders participate.
(ii) The Agent and the Revolving Credit Lenders shall "net out"
each Revolving Credit Lender's respective contributions towards the
Revolving Credit Loans, so that each Revolving Credit Lender holds
that Revolving Credit Lender's Revolving Credit Commitment Percentage
of the Revolving Credit Loans and advances.
(b) Following the initiation of a Liquidation, each Revolving Credit
Lender shall contribute, towards any L/C thereafter honored and not
immediately reimbursed by the Borrowers, that Revolving Credit Lender's
Revolving Credit Commitment Percentage of such honoring.
13-5 -Agent's Conduct of Liquidation
(a) Any Liquidation shall be conducted by the Agent, with the advice
and assistance of the Revolving Credit Lenders.
(b) The Agent may establish one or more Nominees to "bid in" or
otherwise acquire ownership to any Post Foreclosure Asset.
(c) The Agent shall manage the Nominee and manage and dispose of any
Post Foreclosure Assets with a view towards the realization of the economic
benefits of the ownership of the Post Foreclosure Assets and in such
regard, the Agent and/or the Nominee may operate, repair, manage, maintain,
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develop, and dispose of any Post Foreclosure Asset in such manner as the
Agent determines as appropriate under the circumstances.
(d) The Agent may decline to undertake or to continue taking a course
of action or to execute an action plan (whether proposed by the Agent or
any Revolving Credit Lender) unless indemnified to the Agent's satisfaction
by the Revolving Credit Lenders against any and all liability and expense
which may be incurred by the Agent by reason of taking or continuing to
take that course of action or action plan.
(e) Each Revolving Credit Lender shall execute all such instruments
and documents not inconsistent with the provisions of this Agreement as the
Agent and/or the Nominee reasonably may request with respect to the
creation and governance of any Nominee, the conduct of the Liquidation, and
the management and disposition of any Post Foreclosure Asset.
13-6 -Distribution of Liquidation Proceeds:
(a) The Agent may establish one or more reasonably funded reserve
accounts into which proceeds of the conduct of any Liquidation may be
deposited in anticipation of future expenses which may be incurred by the
Agent in the exercise of rights as a secured creditor of the Borrowers and
prior claims which the Agent anticipates may need to be paid.
(b) The Agent shall distribute the net proceeds of Liquidation in
accordance with the relative priorities set forth in Section 13:13-7.
(c) Each Revolving Credit Lender, on the written request of the Agent
and/or any Nominee, not more frequently than once each month, shall
reimburse the Agent and/or any Nominee, pro-rata, for any cost or expense
reasonably incurred by the Agent and/or the Nominee in the conduct of a
Liquidation, which amount is not covered out of current proceeds of the
Liquidation, which reimbursement shall be paid over to and distributed by
the Agent.
13-7 -Relative Priorities To Proceeds of Liquidation The relative priorities to
the proceeds of a Liquidation are as follows:
(a) To the Agent as reimbursement for all reasonable third party costs
and expenses incurred by the Agent and to Lenders' Special Counsel and to
any funded reserve established pursuant to Section 13:13-6(a); and then
(b) To the SwingLine Lender, on account of any SwingLine loans not
converted to Revolving Credit Loans pursuant to Section 13:13-4(a)(i); and
then
(c) To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to the unpaid principal balance of the
Revolving Credit; and then
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(d) To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to accrued interest on the Revolving
Credit; and then
(e) To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to those fees distributable hereunder
to the Revolving Credit Lenders; and then
(f) To any Delinquent Revolving Credit Lenders, pro-rata to amounts to
which such Revolving Credit Lenders otherwise would have been entitled
pursuant to Sections 13:13-7(c), 13:13-7(d), 13:13-7(e) ; and then
(g) To the Revolving Credit Lenders, pro-rata, to the extent of the
Revolving Credit Early Termination Fee; and then
(h) To any other Liabilities.
Article 14: - The Agent:
14-1 -Appointment of The Agent
(a) Each Lender appoints and designates Fleet Retail Finance Inc. as
the "Agent" hereunder and under the Loan Documents.
(b) Each Revolving Credit Lender authorizes the Agent:
(i) To execute those of the Loan Documents and all other
instruments relating thereto to which the Agent is a party.
(ii) To take such action on behalf of the Revolving Credit
Lenders and to exercise all such powers as are expressly delegated to
the Agent hereunder and in the Loan Documents and all related
documents, together with such other powers as are reasonably incident
thereto.
(c) Xxxxxx Financial, Inc. has been granted the title of " Co-Agent
and Documentation Agent", in which capacity, it shall not have any rights
nor any responsibilities. It may resign such position, at any time, on
written notice to the Agent; and shall cease to be Co-Agent and
Documentation Agent contemporaneous with its ceasing to be a Revolving
Credit Lender.
14-2 -Responsibilities of Agent
(a) The Agent shall not have any duties or responsibilities to, or any
fiduciary relationship with, any Revolving Credit Lender except for those
expressly set forth in this Agreement.
(b) Neither the Agent nor any of its Affiliates shall be responsible
to any Revolving Credit Lender for any of the following:
(i) Any recitals, statements, representations or warranties made
by any Borrower or any other Person.
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(ii) Any appraisals or other assessments of the assets of any
Borrower or of any other Person responsible for or on account of the
Liabilities.
(iii) The value, validity, effectiveness, genuineness,
enforceability, or sufficiency of the Loan Agreement, the Loan
Documents or any other document referred to or provided for therein.
(iv) Any failure by any Borrower or any other Person (other than
the Agent) to perform its obligations under the Loan Documents.
(c) The Agent may employ attorneys, accountants, and other
professionals and agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such attorneys, accountants, and
other professionals or agents or attorneys-in-fact selected by the Agent
with reasonable care. No such attorney, accountant, other professional,
agent, or attorney-in-fact shall be responsible for any action taken or
omitted to be taken by any other such Person.
(d) Neither the Agent, nor any of its directors, officers, or
employees shall be responsible to any Revolving Credit Lender for any
action taken or omitted to be taken or omitted to be taken by any other of
them in connection herewith in reliance upon advice of its counsel nor, in
any other event except for any action taken or omitted to be taken as to
which a final judicial determination has been or is made (in a proceeding
in which such Person has had an opportunity to be heard) that such Person
had acted in a grossly negligent manner, in actual bad faith, or in willful
misconduct.
(e) The Agent shall not have any responsibility in any event for more
funds than the Agent actually receives and collects.
(f) The Agent, in its separate capacity as a Lender, shall have the
same rights and powers hereunder as any other Lender.
(g) The Syndication Agent (except as provided in the commitment letter
for this transaction) shall have no powers, rights, duties or
responsibilities with respect to this Agreement and the other Loan
Documents.
14-3 -Concerning Distributions By the Agent
(a) The Agent in the Agent's reasonable discretion based upon the
Agent's determination of the likelihood that additional payments will be
received, expenses incurred, and/or claims made by third parties to all or
a portion of such proceeds, may delay the distribution of any payment
received on account of the Liabilities.
(b) The Agent may disburse funds prior to determining that the sums
which the Agent expects to receive have been finally and unconditionally
paid to the Agent. If and to the extent that the Agent does disburse funds
and it later becomes apparent that the Agent did not then receive a payment
in an amount equal to the sum paid out, then any Revolving Credit Lender to
whom the Agent made the funds available, on demand from the Agent, shall
refund to the Agent the sum paid to that person.
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(c) If, in the opinion of the Agent, the distribution of any amount
received by the Agent might involve the Agent in liability, or might be
prohibited hereby, or might be questioned by any Person, then the Agent may
refrain from making distribution until the Agent's right to make
distribution has been adjudicated by a court of competent jurisdiction.
(d) The proceeds of any Revolving Credit Lender's exercise of any
right of, or in the nature of, set-off shall be deemed, First, to the
extent that a Revolving Credit Lender is entitled to any distribution
hereunder, to constitute such distribution and Second, shall be shared with
the other Revolving Credit Lenders as if distributed pursuant to (and shall
be deemed as distributions under) Section 13:13-7.
(e) Each Revolving Credit Lender recognizes that the crediting of the
Borrowers with the "proceeds" of any transaction in which a Post
Foreclosure Asset is acquired is a non-cash transaction and that, in
consequence, no distribution of such "proceeds" will be made by the Agent
to any Lender.
(f) In the event that (x) a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Agent is to be
repaid or disgorged or (y) the SuperMajority Lenders determine to effect
such repayment or disgorgement, then each Revolving Credit Lender to which
any such distribution shall have been made shall repay, to the Agent which
had made such distribution, that Revolving Credit Lender's Pro-Rata share
of the amount so adjudged or determined to be repaid or disgorged.
14-4 -Dispute Resolution: Any dispute among the Revolving Credit Lenders and/or
the Agent concerning the interpretation, administration, or enforcement of the
financing arrangements contemplated by this or any other Loan Document or the
interpretation or administration of this or any other Loan Document which cannot
be resolved amicably shall be resolved in the United States District Court for
the District of Massachusetts, sitting in Boston or in the Superior Court of
Suffolk County, Massachusetts, to the jurisdiction of which courts each
Revolving Credit Lender hereto hereby submits.
14-5 -Distributions of Notices and of Documents The Agent will forward to each
Revolving Credit Lender, promptly after the Agent's receipt thereof, a copy of
each notice or other document furnished to the Agent pursuant to this Agreement,
including monthly, quarterly, and annual financial statements received from the
Lead Borrower pursuant to Article 5: of this Agreement, other than any of the
following:
(a) Routine communications associated with requests for Revolving
Credit Loans and/or the issuance of L/C's.
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(b) Routine or nonmaterial communications.
(c) Any notice or document required by any of the Loan Documents to be
furnished to the Revolving Credit Lenders by the Lead Borrower.
(d) Any notice or document of which the Agent has knowledge that such
notice or document had been forwarded to the Revolving Credit Lenders other
than by the Agent.
14-6 -Confidential Information
(a) Each Revolving Credit Lender will maintain, as confidential, all
of the following:
(i) Proprietary approaches, techniques, and methods of analysis
which are applied by the Agent in the administration of the credit
facility contemplated by this Agreement.
(ii) Proprietary forms and formats utilized by the Agent in
providing reports to the Revolving Credit Lenders pursuant hereto,
which forms or formats are not of general currency.
(b) Nothing included herein shall prohibit the disclosure of any such
information as may be required to be provided by judicial process or by
regulatory authorities having jurisdiction over any party to this
Agreement.
14-7 -Reliance by Agent The Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telex, or
facsimile) reasonably believed by the Agent to be genuine and correct and to
have been signed or sent by or on behalf of the proper person or persons, and
upon advice and statements of attorneys, accountants and other experts selected
by the Agent. As to any matters not expressly provided for in this Agreement,
any Loan Document, or in any other document referred to therein, the Agent shall
in all events be fully protected in acting, or in refraining from acting, in
accordance with the applicable Consent required by this Agreement. Instructions
given with the requisite Consent shall be binding on all Revolving Credit
Lenders.
14-8 -Non-Reliance on Agent and Other Revolving Credit Lenders
(a) Each Revolving Credit Lender represents to all other Revolving
Credit Lenders and to the Agent that such Revolving Credit Lender:
(i) Independently and without reliance on any representation or
act by Agent or by any other Revolving Credit Lender, and based on
such documents and information as that Revolving Credit Lender has
deemed appropriate, has made such Revolving Credit Lender's own
appraisal of the financial condition and affairs of the Borrowers and
decision to enter into this Agreement.
(ii) Has relied upon that Revolving Credit Lender's review of
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the Loan Documents by that Revolving Credit Lender and by counsel to
that Revolving Credit Lender as that Revolving Credit Lender deemed
appropriate under the circumstances.
(b) Each Revolving Credit Lender agrees that such Revolving Credit
Lender, independently and without reliance upon Agent or any other
Revolving Credit Lender, and based upon such documents and information as
such Revolving Credit Lender shall deem appropriate at the time, will
continue to make such Revolving Credit Lender's own appraisals of the
financial condition and affairs of the Borrowers when determining whether
to take or not to take any discretionary action under this Agreement.
(c) The Agent, in the discharge of that Agent's duties hereunder,
shall not be required to make inquiry of, or to inspect the properties or
books of, any Person.
(d) Except for notices, reports, and other documents and information
expressly required to be furnished to the Revolving Credit Lenders by the
Agent hereunder (as to which, see Section 14:14-5), the Agent shall not
have any affirmative duty or responsibility to provide any Lender with any
credit or other information concerning any Person, which information may
come into the possession of Agent or any Affiliate of the Agent.
(e) Each Revolving Credit Lender, at such Revolving Credit Lender's
request, shall have reasonable access to all nonprivileged documents in the
possession of the Agent, which documents relate to the Agent's performance
of its duties hereunder.
14-9 -Indemnification Without limiting the liabilities of the Borrowers under
any this or any of the other Loan Documents, each Revolving Credit Lender shall
indemnify the Agent, Pro-Rata, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including reasonable attorneys' fees and
expenses and other out-of-pocket expenditures) which may at any time be imposed
on, incurred by, or asserted against the Agent and in any way relating to or
arising out of this Agreement or any other Loan Document or any documents
contemplated by or referred to therein or the transactions contemplated thereby
or the enforcement of any of terms hereof or thereof or of any such other
documents, provided, however, no Revolving Credit Lender shall be liable for any
of the foregoing to the extent that any of the foregoing arises from any action
taken or omitted to be taken by the Agent as to which a final judicial
determination has been or is made (in a proceeding in which the Agent has had an
opportunity to be heard) that the Agent had acted in a grossly negligent manner,
in actual bad faith, or in willful misconduct.
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14-10 -Resignation of Agent
(a) The Agent may resign at any time by giving 60 days prior written
notice thereof to the Revolving Credit Lenders. Upon receipt of any such
notice of resignation, the SuperMajority Lenders shall have the right to
appoint a successor to such Agent (and if no Event of Default has occurred,
with the consent of the Lead Borrower, not to be unreasonably withheld and,
in any event, deemed given by the Lead Borrower if no written objection is
provided by the Lead Borrower to the (resigning) Agent within seven (7)
Business Days notice of such proposed appointment). If a successor Agent
shall not have been so appointed and accepted such appointment within 30
days after the giving of notice by the resigning Agent, then the resigning
Agent may appoint a successor Agent, which shall be a financial institution
having a combined capital and surplus in excess of $1,000,000,000.00. The
consent of the Lead Borrower otherwise required by this Section 14:14-10(a)
shall not be required if an Event of Default has occurred.
(b) Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor shall thereupon succeed to, and become
vested with, all the rights, powers, privileges, and duties of the
(resigning) Agent so replaced, and the (resigning) Agent shall be
discharged from the (resigning) Agent's duties and obligations hereunder,
other than on account of any responsibility for any action taken or omitted
to be taken by the (resigning) Agent as to which a final judicial
determination has been or is made (in a proceeding in which the (resigning)
Person has had an opportunity to be heard) that such Person had acted in a
grossly negligent manner or in bad faith.
(c) After any retiring Agent's resignation, the provisions of this
Agreement and of all other Loan Documents shall continue in effect for the
retiring Person's benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Agent.
Article 15: - Action By Agents - Consents - Amendments - Waivers:
15-1 -Administration of Credit Facilities
(a) Except as otherwise specifically provided in this Agreement, the
Agent may take any action with respect to the credit facility contemplated
by the Loan Documents as the Agent determines to be appropriate , provided,
however, the Agent is not under any affirmative obligation to take any
action which it is not required by this Agreement or the Loan Documents
specifically to so take.
(b) Except as specifically provided in the following Sections of this
Agreement, whenever a Loan Document or this Agreement provides that action
may be taken or omitted to be taken in an Agent's discretion, the Agent
shall have the sole right to take, or refrain from taking, such action
without, and notwithstanding, any vote of the Revolving Credit Lender:
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Actions Described in Section Type of Consent Required
---------------------------- ------------------------
15:15-2 Majority Lenders
15:15-3 SuperMajority Lenders
15:15-4 Certain Consent
15:15-5 Unanimous Consent
15:15-6 Consent of SwingLine Lender
15:15-7 Consent of the Agent
(c) The rights granted to the Revolving Credit Lenders in those
sections referenced in Section 15:15-1(b) shall not otherwise limit or
impair the Agent's exercise of its discretion under the Loan Documents.
15-2 - Actions Requiring or On Direction of Majority Lenders Except as otherwise
provided in this Agreement, the Consent or direction of the Majority Lenders is
required for any amendment, waiver, or modification of any Loan Document.
15-3 -Actions Requiring or On Direction of SuperMajority Lenders The Consent or
direction of the SuperMajority Lenders is required as follows:
(a) The Revolving Credit Lenders agree that any loan or advance under
the Revolving Credit which results in a Permissible OverLoan may be made,
subject to Section 2:2-1(e), above, by the Agent in its discretion without
the Consent of the Revolving Credit Lenders and that each Revolving Credit
Lender shall be bound thereby, provided, however, the Consent or direction
of the SuperMajority Lenders is required to permit a Permissible OverLoan
to be outstanding for more than 45 consecutive Business Days or more than
twice in any twelve month period.
(b) If any Borrower is then in Default, the SuperMajority Lenders may
direct the Agent to suspend the Revolving Credit (including the making of
any Permissible OverLoans), whereupon, as long as a Borrower is in Default,
the only Revolving Credit Loans which may be made are either
(i) Revolving Credit Loans made or undertaken in the Agent's
discretion to protect and preserve the interests of the Revolving
Credit Lenders; or
(ii) Revolving Credit Loans made with Consent of the
SuperMajority Lenders.
(c) If an Event of Default has occurred and not been duly waived, the
SuperMajority Lenders may:
(i) Give the Agent an Acceleration Notice in accordance with
Section 13:13-1(b).
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(ii) Direct the Agent to increase the rate of interest to the
default rate of interest as provided in, and to the extent permitted
by, this Agreement.
15-4 - Action Requiring Certain Consent The consent of the SwingLine Lender and
Revolving Credit Lenders (other than Delinquent Revolving Credit Lenders)
holding 66 2/3 % or more of the Loan Commitments of the Revolving Credit Lenders
(other than any Loan Commitments held by Delinquent Revolving Credit Lenders)
shall be required to increase the SwingLine Loan Ceiling.
15-5 -Actions Requiring or Directed By Unanimous Consent None of the following
may take place except with the Consent of each Revolving Credit Lender adversely
affected thereby or with Unanimous Consent:
(a) Any increase in any Revolving Credit Lender's Revolving Credit
Dollar Commitment or Revolving Credit Commitment Percentage (other than by
reason of the application of Section 15:15-10 (which deals with
NonConsenting Revolving Credit Lenders) or Section 16:16-1 (which deals
with assignments and participations)).
(b) Any decrease in any interest rate or fee payable to the Revolving
Credit Lenders on account of the Revolving Credit Loans.
(c) Any extension of the Maturity Date.
(d) Any forgiveness of all or any portion of any payment Liability.
(e) Any decrease in any interest rate or fee payable under any of the
Loan Documents (other than any Agent's Fee (for which the consent of the
Agent shall also be required)) and of any fee provided for by the Fee
Letter (which may be amended by written agreement between the Lead Borrower
on the one hand, and the Agent on the other).
(f) Any release of a material portion of the Collateral not otherwise
required or provided for in the Loan Documents or to facilitate a
Liquidation.
(g) Any amendment of the definition of the terms "Borrowing Base" or
"Availability" or of any Definition of any component thereof, such that
more credit would be available to the Borrowers, based on the same assets,
as would have been available to the Borrowers immediately prior to such
amendment , it being understood, however, that:
(i) The foregoing shall not limit the adjustment by the Agent of
any Reserve in the Agent's administration of the Revolving Credit as
otherwise permitted by this Agreement.
(ii) The foregoing shall not prevent the Agent, in its
administration of the Revolving Credit, from restoring any component
of Borrowing Base which had been lowered by the Agent back to the
value of such component, as stated in this Agreement or to an
intermediate value.
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(h) Any release of any Person obligated on account of the Liabilities.
(i) The making of any Revolving Credit Loan which, when made, exceeds
Availability and is not either a Permissible OverLoan, provided, however,
(i) no Consent shall be required in connection with the making of
any Revolving Credit Loan to "cover" any honoring of a drawing under
any L/C; and
(ii) each Lender recognizes that subsequent to the making of a
Revolving Credit Loan which does not constitute a Permissible
OverLoan, the unpaid principal balance of the Loan Account may exceed
Borrowing Base on account of changed circumstances beyond the control
of the Agent (such as a drop in collateral value).
(j) The waiver of the obligation of the Borrowers to reduce the unpaid
principal balance of loans under the Revolving Credit to an amount which
does not exceed a Permissible OverLoan or, subject to the time limits
included in Section 15:15-3(a) (which places time and frequency limits on
Permissible OverLoans), to eliminate an OverLoan.
(k) Any amendment of this Article 15:.
(l) Amendment of any of the following Definitions:
"Majority Lender"
"Permissible OverLoan"
"SuperMajority Lenders
"Unanimous Consent"
15-6 -Actions Requiring SwingLine Lender Consent No action, amendment, or waiver
of compliance with, any provision of the Loan Documents or of this Agreement
which affects the SwingLine Lender may be undertaken without the Consent of the
SwingLine Lender.
15-7 -Actions Requiring Agent's Consent
(a) No action, amendment, or waiver of compliance with, any provision
of the Loan Documents or of this Agreement which affects the Agent in its
capacity as Agent may be undertaken without the written consent of the
Agent.
(b) No action referenced herein which affects the rights, duties,
obligations, or liabilities of the Agent shall be effective without the
written consent of the Agent.
15-8 -Miscellaneous Actions
(a) Notwithstanding any other provision of this Agreement, no single
Revolving Credit Lender independently may exercise any right of action or
enforcement against or with respect to any Borrower.
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(b) The Agent shall be fully justified in failing or refusing to take
action under this Agreement or any Loan Document on behalf of any Revolving
Credit Lender unless the Agent shall first
(i) receive such clear, unambiguous, written instructions as the
Agent deems appropriate; and
(ii) be indemnified to the Agent's satisfaction by the Revolving
Credit Lenders against any and all liability and expense which may be
incurred by the Agent by reason of taking or continuing to take any
such action, unless such action had been grossly negligent, in willful
misconduct, or in bad faith.
(c) The Agent may establish reasonable procedures for the providing of
direction and instructions from the Revolving Credit Lenders to the Agent,
including its reliance on multiple counterparts, facsimile transmissions,
and time limits within which such direction and instructions must be
received in order to be included in a determination of whether the
requisite Loan Commitments has provided its direction, Consent, or
instructions.
15-9 -Actions Requiring Borrower's Consent The Lead Borrower's consent is
required for any amendment of this Agreement, except that each of the following
Articles of this Agreement may be amended without the consent of the Lead
Borrower:
Article Title of Article
------- ----------------
12: Revolving Credit Fundings and Distributions
13: Acceleration and Liquidation
14: The Agent
15-10 -NonConsenting Revolving Credit Lender
(a) In the event that a Revolving Credit Lender (in this Section
15:15-10, a "NonConsenting Revolving Credit Lender") does not provide its
Consent to a proposal by the Agent to take action which requires consent
under this Article 15:, then one or more Revolving Credit Lenders who
provided Consent to such action may require the assignment, without
recourse and in accordance with the procedures outlined in Section 16:16-1,
below, of the NonConsenting Revolving Credit Lender's commitment hereunder
on fifteen (15) days written notice to the Agent and to the NonConsenting
Revolving Credit Lender.
(b) At the end of such fifteen (15) days, and provided that the
NonConsenting Revolving Credit Lender delivers the Revolving Credit Note
held by the NonConsenting Revolving Credit Lender to the Agent, the
Revolving Credit Lenders who have given such written notice shall Transfer
the following to the NonConsenting Revolving Credit Lender:
(i) Such NonConsenting Revolving Credit Lender's Pro-Rata share
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of the principal and interest of the Revolving Credit Loans to the
date of such assignment.
(ii) All fees distributable hereunder to the NonConsenting
Revolving Credit Lender to the date of such assignment.
(iii) Any out-of-pocket costs and expenses for which the
NonConsenting Revolving Credit Lender is entitled to reimbursement
from the Borrowers.
(c) In the event that the NonConsenting Revolving Credit Lender fails
to deliver to the Agent the Revolving Credit Note held by the NonConsenting
Revolving Credit Lender as provided in Section 15:15-10(b), then:
(i) The amount otherwise to be Transferred to the NonConsenting
Revolving Credit Lender shall be Transferred to the Agent and held by
the Agent, without interest, to be turned over to the NonConsenting
Revolving Credit Lender upon delivery of the Revolving Credit Note
held by that NonConsenting Revolving Credit Lender.
(ii) The Revolving Credit Note held by the NonConsenting
Revolving Credit Lender shall have no force or effect whatsoever.
(iii) The NonConsenting Revolving Credit Lender shall cease to be
a "Revolving Credit Lender".
(iv) The Revolving Credit Lender(s) which have Transferred the
amount to the Agent as described above shall have succeeded to all
rights and become subject to all of the obligations of the
NonConsenting Revolving Credit Lender as "Revolving Credit Lender".
(d) In the event that more than One (1) Revolving Credit Lender wishes
to require such assignment, the NonConsenting Revolving Credit Lender's
commitment hereunder shall be divided among such Revolving Credit Lenders,
pro-rata based upon their respective Revolving Credit Commitment
Percentages, with the Agent coordinating such transaction.
(e) The Agent shall coordinate the retirement of the Revolving Credit
Note held by the NonConsenting Revolving Credit Lender and the issuance of
Revolving Credit Notes to those Revolving Credit Lenders which "take-out"
such NonConsenting Revolving Credit Lender, provided, however, no
processing fee otherwise to be paid as provided in Section 16:16-2(b) shall
be due under such circumstances.
Article 16: - Assignments By Revolving Credit Lenders:
16-1 -Assignments and Assumptions:
(a) Except as provided herein, each Revolving Credit Lender (in this
Section 16:16-1(a), an "Assigning Revolving Credit Lender") may assign to
one or more Eligible Assignees (in this Section 16:16-1(a), each an
"Assignee Revolving Credit Lender") all or a portion of that Revolving
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Credit Lender's interests, rights and obligations under this Agreement and
the Loan Documents (including all or a portion of its Commitment) and the
same portion of the Revolving Credit Loans at the time owing to it, and of
the Revolving Credit Note held by the Assigning Revolving Credit Lender,
provided that:
(i) The Agent shall have given its prior written consent to such
assignment, which consent shall not be unreasonably withheld, but need
not be given if the proposed assignment would result in any resulting
Revolving Credit Lender's having a Dollar Commitment of less than the
"minimum hold" amount specified in Section 16:16-1(a)(iii).
(ii) Each such assignment shall be of a constant, and not a
varying, percentage of all the Assigning Revolving Credit Lender's
rights and obligations under this Agreement.
(iii) Following the effectiveness of such assignment, the
Assigning Revolving Credit Lender's Dollar Commitment (if not an
assignment of all of the Assigning Revolving Credit Lender's
Commitment) shall not be less than $10,000,000.00.
16-2 -Assignment Procedures. (This Section 16:16-2 describes the procedures to
be followed in connection with an assignment effected pursuant to this Article
16: and permitted by Section 16:16-1).
(a) The parties to such an assignment shall execute and deliver to the
Agent, for recording in the Register, an Assignment and Acceptance
substantially in the form of EXHIBIT 16:16-2, annexed hereto.
(b) The Assigning Revolving Credit Lender shall deliver to the Agent,
with such Assignment and Acceptance, the Revolving Credit Note held by the
subject Assigning Revolving Credit Lender and the Agent's processing fee of
$3,500.00, provided, however, no such processing fee shall be due where the
Assigning Revolving Credit Lender is one of the Revolving Credit Lenders at
the initial execution of this Agreement.
(c) The Agent shall maintain a copy of each Assignment and Acceptance
delivered to it and a register or similar list (the "Register") for the
recordation of the names and addresses of the Revolving Credit Lenders and
of the Revolving Credit Commitment Percentage and Revolving Credit
Commitment Percentage of each Revolving Credit Lender. The Register shall
be available for inspection by the Revolving Credit Lenders at any
reasonable time and from time to time upon reasonable prior notice. In the
absence of manifest error, the entries in the Register shall be conclusive
and binding on all Revolving Credit Lenders. The Agent and the Revolving
Credit Lenders may treat each Person whose name is recorded in the Register
as a "Revolving Credit Lender" hereunder for all purposes of this
Agreement.
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(d) The Assigning Revolving Credit Lender and Assignee Revolving
Credit Lender, directly between themselves, shall make all appropriate
adjustments in payments for periods prior to the effective date of an
Assignment and Acceptance.
16-3 -Effect of Assignment.
(a) From and after the effective date specified in an Assignment and
Acceptance which has been executed, delivered, and recorded (which
effective date the Agent may delay by up to five (5) Business Days after
the delivery of such Assignment and Acceptance):
(i) The Assignee Revolving Credit Lender:
(A) Shall be a party to this Agreement and the Loan
Documents (and to any amendments thereof) as fully as if the
Assignee Revolving Credit Lender had executed each.
(B) Shall have the rights of a Revolving Credit Lender
hereunder to the extent of the Revolving Credit Commitment
Percentage and Revolving Credit Commitment Percentage assigned by
such Assignment and Acceptance.
(ii) The Assigning Revolving Credit Lender shall be released from
the Assigning Revolving Credit Lender's obligations arising thereafter
under this Agreement and the Loan Documents to the extent of the
Commitment assigned by such Assignment and Acceptance.
(iii) The Agent shall undertake to obtain and distribute
replacement Revolving Credit Notes to the subject Assigning Revolving
Credit Lender and Assignee Revolving Credit Lender.
(b) By executing and delivering an Assignment and Acceptance, the
parties thereto confirm to and agree with each other and with all parties
to this Agreement as to those matters which are set forth in the subject
Assignment and Acceptance.
Article 17: - Notices:
17-1 -Notice Addresses. All notices, demands, and other communications made in
respect of any Loan Document (other than a request for a loan or advance or
other financial accommodation under the Revolving Credit) shall be made to the
following addresses, each of which may be changed upon seven (7) days written
notice to all others given by certified mail, return receipt requested:
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If to the Agent:
Fleet Retail Finance Inc.
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xx. Xxxxxxx X. Xxxxxx
Fax : 000 000-0000
With a copy to:
Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xxxxxx X. Xxxx, Esquire
Fax : 000 000-0000
If to the Borrower:
Phar-Mor, Inc.
00 Xxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention : Xx. Xxxxxx Xxxxxxx
Fax :
With a copy to:
Xxxxxxxx & Xxxxxxxx LLP
1290 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention : Xxxxx Xxxxxx, Esquire
Fax: : 000 000-0000
17-2 -Notice Given.
(a) Except as otherwise specifically provided herein, notices shall be
deemed made and correspondence received, as follows (all times being local
to the place of delivery or receipt):
(i) By mail: the sooner of when actually received or Three (3)
days following deposit in the United States mail, postage prepaid.
(ii) By recognized overnight express delivery: the Business Day
following the day when sent.
(iii) By Hand: If delivered on a Business Day after 9:00 AM and
no later than Three (3) hours prior to the close of customary business
hours of the recipient, when delivered. Otherwise, at the opening of
the then next Business Day.
(iv) By Facsimile transmission (which must include a header on
which the party sending such transmission is indicated): If sent on a
Business Day after 9:00 AM and no later than Three (3) hours prior to
the close of customary business hours of the recipient, one (1) hour
after being sent. Otherwise, at the opening of the then next Business
Day.
(b) Rejection or refusal to accept delivery and inability to deliver
because of a changed address or Facsimile Number for which no due notice
was given shall each be deemed receipt of the notice sent.
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Article 18: - Term:
18-1 -Termination of Revolving Credit. The Revolving Credit shall remain in
effect (subject to suspension as provided in Section 2:2-6(g) hereof) until the
Termination Date.
18-2 -Actions On Termination.
(a) On the Termination Date, the Borrowers shall pay the Agent
(whether or not then due), in immediately available funds, all then
Liabilities including, without limitation: the following:
(i) The entire balance of the Loan Account (including the unpaid
principal balance of the Revolving Credit Loans, and the SwingLine
Loan ).
(ii) Any then remaining installments of the Revolving Credit
Commitment Fee.
(iii) Any then remaining installments of the Agent's Fee.
(iv) Any payments due on account of the indemnification
obligations included in Section 2:2-11(f).
(v) Any accrued and unpaid Unused Line Fee.
(vi) All unreimbursed costs and expenses of the Agent and of
Lenders' Special Counsel for which the Borrower is responsible.
(b) On the Termination Date, the Borrowers shall also shall make such
arrangements concerning any L/C's then outstanding as are reasonably
satisfactory to the Agent.
(c) Until such payment (Section 18:18-2(a)) and arrangements
concerning L/C's (Section 18:18-2(b)), all provisions of this Agreement,
other than those included in Article 2: which place any obligation on the
Agent or any Revolving Credit Lender to make any loans or advances or to
provide any financial accommodations to any Borrower shall remain in full
force and effect until all Liabilities shall have been paid in full.
(d) The release by the Agent of the Collateral Interests granted the
Agent by the Borrowers hereunder may be upon such conditions and
indemnifications as the Agent reasonably may require.
Article 19: - General:
19-1 -Protection of Collateral. The Agent has no duty as to the collection or
protection of the Collateral beyond the safe custody of such of the Collateral
as may come into the possession of the Agent.
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19-2 -Publicity. The Agent may issue a "tombstone" notice of the establishment
of the credit facility contemplated by this Agreement and may make reference to
each Borrower (and may utilize any logo or other distinctive symbol associated
with each Borrower) in connection with any advertising, promotion, or marketing
undertaken by the Agent.
19-3 -Successors and Assigns. This Agreement shall be binding upon the Borrowers
and their respective representatives, successors, and assigns and shall enure to
the benefit of the Agent and each Revolving Credit Lender and their respective
successors and assigns, provided, however, no trustee or other fiduciary
appointed with respect to any Borrower shall have any rights hereunder. In the
event that the Agent or any Revolving Credit Lender assigns or transfers its
rights under this Agreement, the assignee shall thereupon succeed to and become
vested with all rights, powers, privileges, and duties of such assignor
hereunder and such assignor shall thereupon be discharged and relieved from its
duties and obligations hereunder.
19-4 -Severability. Any determination that any provision of this Agreement or
any application thereof is invalid, illegal, or unenforceable in any respect in
any instance shall not affect the validity, legality, or enforceability of such
provision in any other instance, or the validity, legality, or enforceability of
any other provision of this Agreement.
19-5 -Amendments. Course of Dealing.
(a) This Agreement and the other Loan Documents incorporate all
discussions and negotiations between each Borrower and the Agent and each
Revolving Credit Lender, either express or implied, concerning the matters
included herein and in such other instruments, any custom, usage, or course
of dealings to the contrary notwithstanding. No such discussions,
negotiations, custom, usage, or course of dealings shall limit, modify, or
otherwise affect the provisions thereof. No failure by the Agent or any
Revolving Credit Lender to give notice to the Lead Borrower of any
Borrower's having failed to observe and comply with any warranty or
covenant included in any Loan Document shall constitute a waiver of such
warranty or covenant or the amendment of the subject Loan Document. No
change made by the Agent to the manner by which Borrowing Base is
determined shall obligate the Agent to continue to determine Borrowing Base
in that manner (subject to the specific terms hereof).
(b) Each Borrower may undertake any action otherwise prohibited
hereby, and may omit to take any action otherwise required hereby, upon and
with the express prior written consent of the Agent. Subject to Article
15:, no consent, modification, amendment, or waiver of any provision of any
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Loan Document shall be effective unless executed in writing by or on behalf
of the party to be charged with such modification, amendment, or waiver
(and if such party is the Agent then by a duly authorized officer thereof).
Any modification, amendment, or waiver provided by the Agent shall be in
reliance upon all representations and warranties theretofore made to the
Agent by or on behalf of the Borrowers (and any guarantor, endorser, or
surety of the Liabilities) and consequently may be rescinded in the event
that any of such representations or warranties was not true and complete in
all material respects when given.
19-6 -Power of Attorney. In connection with all powers of attorney included in
this Agreement, each Borrower hereby grants unto the Agent (acting through any
of its officers) full power to do any and all things necessary or appropriate in
connection with the exercise of such powers as fully and effectually as that
Borrower might or could do, hereby ratifying all that said attorney shall do or
cause to be done by virtue of this Agreement. No power of attorney set forth in
this Agreement shall be affected by any disability or incapacity suffered by any
Borrower and each shall survive the same. All powers conferred upon the Agent by
this Agreement, being coupled with an interest, shall be irrevocable until this
Agreement is terminated by a written instrument executed by a duly authorized
officer of the Agent.
19-7 -Application of Proceeds. The proceeds of any collection, sale, or
disposition of the Collateral, or of any other payments received hereunder,
shall be applied towards the Liabilities in such order and manner as the Agent
determines in its sole discretion, consistent, however, with Sections 13:13-6
and 13:13-7 and any other applicable provisions of this Agreement. The Borrowers
shall remain liable for any deficiency remaining following such application.
19-8 -Increased Costs. If, after the date hereof, the adoption of or any change
in any Requirement of Law, or of the interpretation or application thereof by
any court or by any governmental or other authority or entity charged with the
administration thereof, whether or not having the force of law, which:
(a) subjects any Revolving Credit Lender to any taxes or changes the
basis of taxation, or increases any existing taxes, on payments of
principal, interest or other amounts payable by any Borrower to the Agent
or any Revolving Credit Lender under this Agreement (except for taxes on
the Agent or any Revolving Credit Lender based on net income or capital
imposed by the jurisdictions in which the principal or lending offices of
the Agent or that Revolving Credit Lender are located);
(b) imposes, modifies or deems applicable any reserve, cash margin,
special deposit or similar requirements against assets held by, or deposits
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in or for the account of or loans by or any other acquisition of funds by
the relevant lending office of any Revolving Credit Lender;
(c) . imposes on any Revolving Credit Lender any other condition with
respect to any Loan Document; or
(d) imposes on any Revolving Credit Lender a requirement to maintain
or allocate capital in relation to the Liabilities; and the result of any
of the foregoing, in such Revolving Credit Lender's reasonable opinion, is
to increase the cost to that Revolving Credit Lender of making or
maintaining any loan, advance or financial accommodation or to reduce the
income receivable by that Revolving Credit Lender in respect of any loan,
advance or financial accommodation by an amount which that Revolving Credit
Lender deems to be material, then upon written notice from the Agent, from
time to time, to the Lead Borrower (such notice to set out in reasonable
detail the facts giving rise to and a summary calculation of such increased
cost or reduced income), the Borrowers shall forthwith pay to the Agent,
for the benefit of the subject Revolving Credit Lender, upon receipt of
such notice, that amount which shall compensate the subject Revolving
Credit Lender for such additional cost or reduction in income.
19-9 -Costs and Expenses of the Agent .
(a) The Borrowers shall pay from time to time on demand all reasonable
costs, expenses, and disbursements (including reasonable attorneys' fees
and expenses) which are incurred by the Agent in connection with the
preparation, negotiation, execution, and delivery of this Agreement and of
any other Loan Documents, not exceeding, with respect to the Agent's
attorneys, the aggregate of $75,000.00 fees plus actual out of pocket
expenses incurred by such attorneys.
(b) The Borrowers shall pay from time to time on demand all other
reasonable costs, expenses, and disbursements (including reasonable
attorneys' fees and expenses) which may be incurred, after the execution of
this Agreement, in connection with or in respect to the credit facility
contemplated hereby or which otherwise are incurred with respect to the
Liabilities.
(c) The Borrowers shall pay from time to time on demand all reasonable
costs and expenses (including reasonable attorneys' fees and expenses)
incurred, following the occurrence of any Event of Default, by the
Revolving Credit Lenders to Lenders' Special Counsel.
(d) Each Borrower authorizes the Agent to pay all such fees and
expenses and in the Agent's discretion, to add such fees and expenses to
the Loan Account.
(e) The undertaking on the part of each Borrower in this Section
19:19-9 shall survive payment of the Liabilities and/or any termination,
release, or discharge executed by the Agent in favor of any Borrower, other
than a termination, release, or discharge which makes specific reference to
this Section 19:19-9.
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19-10 -Copies and Facsimiles. Each Loan Document and all documents and papers
which relates thereto which have been or may be hereinafter furnished the Agent
or any Revolving Credit Lender may be reproduced by that Revolving Credit Lender
or by the Agent by any photographic, microfilm, xerographic, digital imaging, or
other process, and such Person making such reproduction may destroy any document
so reproduced. Any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made in the
regular course of business). Any facsimile which bears proof of transmission
shall be binding on the party which or on whose behalf such transmission was
initiated and likewise shall be so admissible in evidence as if the original of
such facsimile had been delivered to the party which or on whose behalf such
transmission was received.
19-11 -Massachusetts Law. This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the law of The Commonwealth of Massachusetts.
19-12 -Consent to Jurisdiction.
(a) Each Borrower agrees that any legal action, proceeding, case, or
controversy against any Borrower with respect to any Loan Document may be
brought in the Superior Court of Suffolk County Massachusetts or in the
United States District Court, District of Massachusetts, sitting in Boston,
Massachusetts, as the Agent may elect in the Agent's sole discretion. By
execution and delivery of this Agreement, each Borrower, for itself and in
respect of its property, accepts, submits, and consents generally and
unconditionally, to the jurisdiction of the aforesaid courts.
(b) Each Borrower WAIVES personal service of any and all process upon
it, and irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by certified mail, postage prepaid, to the Lead Borrower at
the Lead Borrower's address for notices as specified herein, such service
to become effective five (5) Business Days after such mailing.
(c) Each Borrower WAIVES any objection based on forum non conveniens
and any objection to venue of any action or proceeding instituted under any
of the Loan Documents.
(d) Nothing herein shall affect the right of the Agent to bring legal
actions or proceedings in any other competent jurisdiction.
(e) Each Borrower agrees that any action commenced by any Borrower
asserting any claim arising under or in connection with this Agreement or
any other Loan Document shall be brought solely in the Superior Court of
Suffolk County Massachusetts or in the United States District Court,
District of Massachusetts, sitting in Boston, Massachusetts, and that such
Courts shall have exclusive jurisdiction with respect to any such action.
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19-13 -Indemnification. Each Borrower shall indemnify, defend, and hold the
Agent and each Revolving Credit Lender and any of their respective employees,
officers, or agents (each, an "Indemnified Person") harmless of and from any
claim brought or threatened against any Indemnified Person by any Borrower, any
guarantor or endorser of the Liabilities, or any other Person (as well as from
reasonable attorneys' fees, expenses, and disbursements in connection therewith)
on account of the relationship of the Borrowers or of any other guarantor or
endorser of the Liabilities, including all costs, expenses, liabilities, and
damages as may be suffered by any Indemnified Person in connection with (x) the
Collateral; (y) the occurrence of any Event of Default; or (z) the exercise of
any rights or remedies under any of the Loan Documents (each of claims which may
be defended, compromised, settled, or pursued by the Indemnified Person with
counsel of the Lender's selection, but at the expense of the Borrowers) other
than any claim as to which a final determination is made in a judicial
proceeding (in which the Agent and any other Indemnified Person has had an
opportunity to be heard), which determination includes a specific finding that
the Indemnified Person seeking indemnification had acted in a grossly negligent
manner or in actual bad faith or in violation of this Agreement or any other
Loan Document. This indemnification shall survive payment of the Liabilities
and/or any termination, release, or discharge executed by the Agent in favor of
the Borrowers, other than a termination, release, or discharge duly executed on
behalf of the Agent which makes specific reference to this Section 19:19-13.
19-14 -Rules of Construction. The following rules of construction shall be
applied in the interpretation, construction, and enforcement of this Agreement
and of the other Loan Documents:
(a) Unless otherwise specifically provided for herein, interest and
any fee or charge which is stated as a per annum percentage shall be
calculated based on a 360 day year and actual days elapsed.
(b) Any term used herein to describe Collateral or a Person, which
term is defined in either (or both) the UCC as in effect on the date when
this Agreement was executed by the Borrowers or in UCC9'99, shall be given
the meaning which is the more encompassing of the two definitions.
(c) Words in the singular include the plural and words in the plural
include the singular.
(d) Cross references to Sections in this Agreement begin with the
Article in which that Section appears, followed by a colon, and then the
Section to which reference is made. (For example, a reference to "Section
5:5-6" is to Section 5-6, which appears in Article 5 of this Agreement).
(e) Titles, headings (indicated by being underlined or shown in SMALL
CAPITALS) and any Table of Contents are solely for convenience of
105
reference; do not constitute a part of the instrument in which included;
and do not affect such instrument's meaning, construction, or effect.
(f) The words "includes" and "including" are not limiting.
(g) Text which follows the words "including, without limitation" (or
similar words) is illustrative and not limitational.
(h) Text which is shown in italics (except for parenthesized
italicized text), shown in bold, shown IN ALL CAPITAL LETTERS, or in any
combination of the foregoing, shall be deemed to be conspicuous.
(i) The words "may not" are prohibitive and not permissive.
(j) Any reference to a Person's "knowledge" (or words of similar
import) are to such Person's knowledge assuming that such Person has
undertaken reasonable and diligent investigation with respect to the
subject of such "knowledge" (whether or not such investigation has actually
been undertaken).
(k) Terms which are defined in one section of any Loan Document are
used with such definition throughout the instrument in which so defined.
(l) The symbol "$" refers to United States Dollars.
(m) Unless limited by reference to a particular Section or provision,
any reference to "herein", "hereof", or "within" is to the entire Loan
Document in which such reference is made.
(n) References to "this Agreement" or to any other Loan Document is to
the subject instrument as amended to the date on which application of such
reference is being made.
(o) Except as otherwise specifically provided, all references to time
are to Boston time.
(p) In the determination of any notice, grace, or other period of time
prescribed or allowed hereunder:
(i) Unless otherwise provided (I) the day of the act, event, or
default from which the designated period of time begins to run shall
not be included and the last day of the period so computed shall be
included unless such last day is not a Business Day, in which event
the last day of the relevant period shall be the then next Business
Day and (II) the period so computed shall end at 5:00 PM on the
relevant Business Day.
(ii) The word "from" means "from and including".
(iii) The words "to" and "until" each mean "to, but excluding".
(iv) The word "through" means "to and including".
(q) The Loan Documents shall be construed and interpreted in a
harmonious manner and in keeping with the intentions set forth in Section
19:19-15 hereof, provided, however, in the event of any inconsistency
between the provisions of this Agreement and any other Loan Document, the
provisions of this Agreement shall govern and control.
106
19-15 -Intent. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) The scope of all Collateral Interests created by the Borrower to
secure the Liabilities be broadly construed in favor of the Agent and that
they cover all assets of the Borrower.
(c) All Collateral Interests created in favor of the Agent at any time
and from time to time by any the secure all Liabilities, whether now
existing or contemplated or hereafter arising.
(d) Unless otherwise explicitly provided herein, the Agent's consent
to any action of the Borrower which is prohibited unless such consent is
given may be given or refused by the Agent in its sole discretion, subject
to the terms of Section 2:2-18 hereof.
19-16 -Participations: Each Revolving Credit Lender may sell participations to
one or more financial institutions (each, a "Participant") in that Revolving
Credit Lender's interests herein provided that no such participation shall
include any provision which accords that Participant with any rights, vis a vis
the Agent, with respect to any requirement herein for approval by a requisite
number or proportion of the Revolving Credit Lenders. No such sale of a
participation shall relieve a Revolving Credit Lender from that Revolving Credit
Lender's obligations hereunder nor obligate the Agent to any Person other than a
Revolving Credit Lender.
19-17 -Right of Set-Off. Any and all deposits or other sums at any time credited
by or due to the Borrower from the Agent or any Revolving Credit Lender or any
Participant or from any Affiliate of any of the foregoing, and any cash,
securities, instruments or other property of the Borrower in the possession of
any of the foregoing, whether for safekeeping or otherwise (regardless of the
reason such Person had received the same) shall at all times following the
occurrence of an Event of Default constitute security for all Liabilities and
for any and all obligations of the Borrower to the Agent and such Revolving
Credit Lender or any Participant or such Affiliate and may be applied or set off
against the Liabilities and against such obligations whether or not other
collateral is then available to the Agent or that Revolving Credit Lender.
19-18 -Pledges To Federal Reserve Banks: Nothing included in this Agreement
shall prevent or limit any Revolving Credit Lender, to the extent that such
Revolving Credit Lender is subject to any of the twelve Federal Reserve Banks
organized under ss.4 of the Federal Reserve Act (12 U.S.C. ss.341) from pledging
all or any portion of that Lender's interest and rights under this Agreement,
provided, however, neither such pledge nor the enforcement thereof shall release
the pledging Revolving Credit Lender from any of its obligations hereunder or
under any of the Loan Documents.
107
19-19 -Maximum Interest Rate. Regardless of any provision of any Loan Document,
neither the Agent nor any Revolving Credit Lender shall be entitled to contract
for, charge, receive, collect, or apply as interest on any Liability, any amount
in excess of the maximum rate imposed by Applicable Law. Any payment which is
made which, if treated as interest on a Liability would result in such
interest's exceeding such maximum rate shall be held, to the extent of such
excess, as additional collateral for the Liabilities as if such excess were
"Collateral."
19-20 -Execution in Counterparts. This Agreement and other Loan Documents may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same instrument.
19-21 -Waivers.
(a) The Borrower (and all guarantors, endorsers, and sureties of the
Liabilities) make each of the waivers included in Section 19:19-21(b),
below, knowingly, voluntarily, and intentionally, and understands that
Agent and each Revolving Credit Lender, in establishing the facilities
contemplated hereby and in providing loans and other financial
accommodations to or for the account of the Borrower as provided herein,
whether not or in the future, is relying on such waivers.
(b) THE BORROWER, AND EACH SUCH GUARANTOR, ENDORSER, AND SURETY
RESPECTIVELY WAIVES THE FOLLOWING:
(i) Except as otherwise specifically required hereby or by any
other Loan Document, notice of non-payment, demand, presentment,
protest and all forms of demand and notice, both with respect to the
Liabilities and the Collateral.
(ii) Except as otherwise specifically required hereby, the right
to notice and/or hearing prior to the Agent's exercising of the
Agent's rights upon default.
(iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY
IN WHICH THE AGENT OR ANY REVOLVING CREDIT LENDER IS OR BECOMES A
PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE
AGENT OR ANY REVOLVING CREDIT LENDER OR IN WHICH THE AGENT OR ANY
REVOLVING CREDIT LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR
CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF, ANY RELATIONSHIP
AMONGST OR BETWEEN THE BORROWER OR ANY OTHER PERSON AND THE AGENT AND
EACH REVOLVING CREDIT LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN
ANY TRIAL OF ANY SUCH CASE OR CONTROVERSY).
(iv) The benefits or availability of any stay, limitation,
108
hindrance, delay, or restriction (including, without limitation, any
automatic stay which otherwise might be imposed pursuant to Section
362 of the Bankruptcy Code) with respect to any action which the Agent
may or may become entitled to take hereunder.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
109
(v) Any claim to consequential, special, or punitive damages.
PHAR-MOR, INC.
("lead borrower")
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
("borrowers")
PHAR-MOR, INC.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHAR-MOR OF FLORIDA, INC.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHAR-MOR OF OHIO, INC.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHAR-MOR OF VIRGINIA, INC.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
110
PHAR-MOR OF WISCONSIN, INC.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHAR-MOR OF DELAWARE, INC.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHAR-MOR, INC. LLC
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHARMHOUSE CORP.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
FLEET RETAIL FINANCE INC.
("AGENT")
By_________________________________
Print Name:________________________________
Title:________________________________
111
The "Revolving Credit Lenders"
FLEET RETAIL FINANCE INC.
By_________________________________
Print Name:________________________________
Title:________________________________
XXXXXX FINANCIAL, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
FOOTHILL CAPITAL CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
GMAC COMMERCIAL CREDIT LLC
By_________________________________
Print Name:________________________________
Title:________________________________
LASALLE BUSINESS CREDIT, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
601804.8
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