1
CONFORMED COPY
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CREDIT AGREEMENT
dated as of
September 26, 1997
among
HECHINGER INVESTMENT COMPANY OF DELAWARE, INC.,
as Borrower,
CENTERS HOLDINGS, INC.,
BSQ ACQUISITION, INC.,
BSQ TRANSFEREE CORP.,
HECHINGER COMPANY,
HECHINGER STORES COMPANY,
HECHINGER STORES EAST COAST COMPANY,
The LENDERS Party Hereto,
THE CHASE MANHATTAN BANK,
as Administrative Agent, Collateral Agent, Issuing Bank and Swingline Lender,
BANKAMERICA BUSINESS CREDIT, INC.,
as Documentation Agent and Borrowing Base Audit Agent
and
CITICORP USA, INC.,
as Syndication Agent
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CHASE SECURITIES INC.,
as Arranger
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
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SECTION 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Classification of Loans and
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 1.03. Terms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 1.04. Accounting Terms; GAAP . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE II
The Credits
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SECTION 2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.02. Loans and Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.03. Requests for Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.04. Swingline Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.05. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.06. Funding of Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.07. Interest Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.08. Termination and Reduction of Commitments . . . . . . . . . . . . . . . . 37
SECTION 2.09. Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . . . . . . 37
SECTION 2.10. Prepayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 2.11. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 2.12. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 2.13. Alternate Rate of Interest . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 2.14. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 2.15. Break Funding Payments . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 2.16. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of
Setoffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 2.18. Mitigation Obligations; Replacement
of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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Contents, p.2
ARTICLE III
Representations and Warranties
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SECTION 3.01. Organization; Powers . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 3.02. Authorization; Enforceability . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 3.03. Governmental Approvals; No Conflicts . . . . . . . . . . . . . . . . . . 49
SECTION 3.04. Financial Condition; No Material Adverse Change . . . . . . . . . . . . . 49
SECTION 3.05. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 3.06. Litigation and Environmental Matters . . . . . . . . . . . . . . . . . . 51
SECTION 3.07. Compliance with Laws and Agreements . . . . . . . . . . . . . . . . . . . 51
SECTION 3.08. Investment and Holding Company Status . . . . . . . . . . . . . . . . . . 52
SECTION 3.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 3.10. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 3.11. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 3.12. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 3.13. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 3.14. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 3.15. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 3.16. Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 3.17. Federal Reserve Regulations . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE IV
Conditions
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SECTION 4.01. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.02 Second Credit Event Date . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 4.03. Each Credit Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE V
Affirmative Covenants
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SECTION 5.01. Financial Statements and Other Information . . . . . . . . . . . . . . . 62
SECTION 5.02. Notices of Material Events . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 5.03. Information Regarding Collateral . . . . . . . . . . . . . . . . . . . . 64
SECTION 5.04. Existence; Conduct of Business . . . . . . . . . . . . . . . . . . . . . 65
SECTION 5.05. Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 5.06. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 5.07. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 5.08. Casualty and Condemnation . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 5.09. Books and Records; Inspection and Audit Rights . . . . . . . . . . . . . 67
SECTION 5.10. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 5.11. Use of Proceeds and Letters of Credit . . . . . . . . . . . . . . . . . . 67
SECTION 5.12. Additional Borrower Subsidiaries . . . . . . . . . . . . . . . . . . . . 68
SECTION 5.13. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
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Contents, p.3
SECTION 5.14 Cash Management Procedures . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 5.15. Completion of Transactions . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE VI
Negative Covenants
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SECTION 6.01. Indebtedness; Certain Equity Securities . . . . . . . . . . . . . . . . . 69
SECTION 6.02. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 6.03. Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.05. Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 6.06. Hedging Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 6.07. Restricted Payments; Certain Payments
of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 6.08. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 6.09. Restrictive Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 6.10. Amendment of Material Documents . . . . . . . . . . . . . . . . . . . . . 78
SECTION 6.11. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 6.12. Minimum Consolidated EBITDA . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 6.13. Additional Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE VII
Events of Default . . . . . . . . . . . . . . . . . . . . . . . 69
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ARTICLE VIII
The Administrative Agent, the Collateral Agent, the Borrowing Base
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Audit Agent, the Documentation Agent and the Syndication Agent . . . . . . . . . . . . 82
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ARTICLE IX
Miscellaneous
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SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 9.02. Waivers; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 9.03. Expenses; Indemnity; Damage Waiver . . . . . . . . . . . . . . . . . . . . 87
SECTION 9.04. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 9.05. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 9.06. Counterparts; Integration; Effectiveness . . . . . . . . . . . . . . . . . 91
SECTION 9.07. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 9.08. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 9.10. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
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Contents, p.4
SECTION 9.11. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 9.12. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 9.13. Interest Rate Limitation . . . . . . . . . . . . . . . . . . . . . . . . . 94
SCHEDULES:
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Schedule 1.01(a) -- Acquired BSQ Newco Assets
Schedule 1.01(b) -- Acquired Hechinger Assets
Schedule 2.01 -- Commitments
Schedule 3.03(c) -- Defaults
Schedule 3.04(c) -- Material Adverse Change (Hechinger and Hechinger Entities)
Schedule 3.04(f) -- Material Adverse Change (Builders Square)
Schedule 3.05 -- Properties
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.03(e) -- Real and Personal Property (BSQ Newco)
Schedule 6.03(f) -- Real and Personal Property (Hechinger)
Schedule 6.03(g) -- Real and Personal Property (Hechinger Stores)
Schedule 6.03(h) -- Real and Personal Property (Hechinger East Coast)
Schedule 6.04 -- Investments
Schedule 6.05 -- Asset Sales
Schedule 6.08 -- Affiliate Transactions
Schedule 6.09 -- Existing Restrictions
EXHIBITS:
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Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Opinion of Counsel for the Transaction Parties
Exhibit C -- Form of Opinion of New York Counsel for the Transaction Parties
Exhibit D -- Form of Parent Guarantee Agreement
Exhibit E -- Form of Subsidiary Guarantee Agreement
Exhibit F -- Form of Indemnity, Subrogation and
Contribution Agreement
Exhibit G -- Form of Pledge Agreement
Exhibit H -- Form of Security Agreement
Exhibit I -- Form of Borrowing Base Certificate
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CREDIT AGREEMENT dated as of September 26,
1997, among HECHINGER INVESTMENT COMPANY OF DELAWARE,
INC., as Borrower, CENTERS HOLDINGS, INC., BSQ
ACQUISITION, INC., BSQ TRANSFEREE CORP., HECHINGER
COMPANY, HECHINGER STORES COMPANY, HECHINGER STORES
EAST COAST COMPANY, the LENDERS party hereto, THE
CHASE MANHATTAN BANK, as Administrative Agent,
Collateral Agent, Issuing Bank and Swingline Lender,
BANKAMERICA BUSINESS CREDIT, INC., as Documentation
Agent and Borrowing Base Audit Agent, and CITICORP
USA, INC., as Syndication Agent.
In connection with the Acquisitions (such term and each other
capitalized term used but not defined in this introductory statement having the
meanings assigned to such terms in Article I), the Borrower will acquire (a) on
the Effective Date, the Acquired BSQ Newco Assets from BSQ Newco in exchange
for (i) the payment by the Borrower to BSQ Newco of $243,000,000 in cash, (ii)
the assumption of the existing Indebtedness of BSQ Newco and (iii) the issuance
by the Borrower to BSQ Newco of the BSQ Newco Note and (b) on the Second Credit
Event Date, the Acquired Hechinger Assets in exchange for (i) the assumption of
existing Indebtedness of Hechinger Stores and Hechinger East Coast, (ii) the
assumption by the Borrower of reimbursement obligations in respect of Existing
Letters of Credit issued under the Hechinger Stores Credit Agreement, (iii) the
satisfaction of certain intercompany Indebtedness of Hechinger Stores and
Hechinger East Coast to the Borrower and (iv) the issuance by the Borrower to
Hechinger East Coast of the Hechinger/East Coast Note.
The Borrower has requested (a) the Lenders to extend credit in
the form of Loans during the Revolving Availability Period in an aggregate
principal amount not in excess of the lesser at any time of (i) $600,000,000
and (ii) the Borrowing Base then in effect, (b) the Issuing Bank to issue
Letters of Credit during the LC Availability Period in an aggregate face amount
at any time outstanding not in excess of $125,000,000 and (c) the Swingline
Lender to extend credit in the form of Swingline Loans during the Revolving
Availability Period in an aggregate principal amount not in excess of
$25,000,000.
The proceeds of the Loans will be used on the Effective Date,
(a) to pay the cash consideration to be paid in connection with the BSQ Newco
Asset Acquisition and (b) to pay related fees and expenses. BSQ Newco and
Hechinger Stores will use the cash proceeds received in connection with the BSQ
Newco Asset Acquisition to repay all amounts outstanding under the BSQ Newco
Credit Agreement and the Hechinger Stores Credit Agreement, respectively. The
proceeds of the Loans from and after the Effective Date and the Letters of
Credit are also to be used for general corporate purposes of the Borrower and
the Borrower Subsidiaries.
The Lenders and the Swingline Lender are willing to extend
such credit to the Borrower and the Issuing Bank is willing to issue Letters of
Credit for the
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account of the Borrower on the terms and subject to the conditions set forth
herein. Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Account" shall mean any right to payment for goods sold or
leased or for services rendered, whether or not earned by performance.
"Account Debtor" shall mean, with respect to any Account, the
obligor with respect to such Account.
"Acquired BSQ Newco Assets" means the assets of BSQ Newco
described on Schedule 1.01(a) that are acquired by the Borrower on the
Effective Date.
"Acquired Hechinger Assets" means the assets of the Hechinger
Entities described on Schedule 1.01(b) that are acquired by the Borrower on the
Second Credit Event Date.
"Acquisitions" means, collectively, the BSQ Newco Asset
Acquisition and the Hechinger Asset Acquisition.
"Adjusted LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Chase, in its capacity as
administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"Agents" has the meaning assigned to such term in Article
VIII.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base
CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate
due to a change in the Prime Rate,
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the Base CD Rate or the Federal Funds Effective Rate shall be effective from
and including the effective date of such change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day with respect to any ABR
Loan or any Eurodollar Loan, as the case may be, the applicable rate per annum
set forth below under the caption "ABR Spread" or "Eurodollar Spread", as the
case may be, based upon the Interest Coverage Ratio as of the most recent
determination date, provided that at no time during the 12-month period
immediately following the Effective Date shall the Applicable Rate be less than
the applicable rate per annum set forth below in Category 1:
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ABR Eurodollar
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Interest Coverage Ratio: Spread Spread
------------------------ ------ ------
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Category 1
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Less than 2.50 to 1.00 .50% 2.00%
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Category 2
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Greater than or equal to 2.50 to 1.00 but less .25% 1.75%
than 3.00 to 1.00
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Category 3
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Greater than or equal to 3.00 to 1.00 .00% 1.50%
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For purposes of the foregoing, (a) the Interest Coverage Ratio
shall be determined as of the end of each fiscal quarter of Holdings's fiscal
year based upon its consolidated financial statements delivered pursuant to
Section 5.01(a) or (b) and (b) each change in the Applicable Rate resulting
from a change in the Interest Coverage Ratio shall be effective during the
period commencing on and including the third day after the date of delivery to
the Administrative Agent of such consolidated financial statements indicating
such change and ending on the date immediately preceding the effective date of
the next such change, provided that the Interest Coverage Ratio shall be deemed
to be in Category 1 (i) at any time that an Event of Default has occurred and
is continuing or (ii) if the Transaction Parties fail to deliver the
consolidated financial statements required to be delivered by it pursuant to
Section 5.01(a) or (b), during the period from the expiration of the time for
delivery thereof until such consolidated financial statements are delivered.
"Assessment Rate" means, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States, provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
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"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative
Agent.
"BABC" means BankAmerica Business Credit, Inc., a Delaware
corporation.
"Base CD Rate" means the sum of (a) the Three-Month Secondary
CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrower" means Hechinger Investment Company of Delaware,
Inc., a Delaware corporation and a direct wholly owned subsidiary of Hechinger
Stores.
"Borrower Subsidiary" means any subsidiary of the Borrower.
"Borrowing" means (a) Loans of the same Class and Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans,
as to which a single Interest Period is in effect or (b) a Swingline Loan.
"Borrowing Base" means, at any time, an amount equal to 65% of
Eligible Inventory Minus Reserves minus the sum of (a) Gift Certificate
Liability and (b) Special Order Deposit Liability. The Borrowing Base shall be
calculated monthly in accordance with Section 5.01(g). The Borrowing Base at
any time in effect shall be determined at such time in the Borrowing Base Audit
Agent's reasonable judgment by reference to the Borrowing Base Certificate most
recently delivered hereunder, it being understood that the information
contained in such Borrowing Base Certificate shall not be conclusive in
calculating the Borrowing Base and, after consultation with the Borrower, the
Collateral Agent shall be entitled to adjust the amounts and other criteria
contained therein to the extent that the Borrowing Base Audit Agent believes in
its reasonable judgment that such adjustment is appropriate to cause the
Borrowing Base to reflect the standards set forth in the definition of the term
"Eligible Inventory".
"Borrowing Base Audit Agent" means BABC, in its capacity as
borrowing base audit agent under this Agreement.
"Borrowing Base Certificate" has the meaning assigned to such
term in Section 5.01(g).
"Borrowing Request" means a request by the Borrower for a
Borrowing in accordance with Section 2.03.
"BSQ Acqco" means BSQ Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of Holdings.
"BSQ Acqco/Holdings Note" means the promissory note issued on
September 25, 1997, by BSQ Acqco to Holdings in the principal amount of
$8,000,000.
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5
"BSQ Newco/Builders Square Note" means the promissory note
issued on September 25, 1997, by BSQ Newco to Builders Square in the principal
amount of $10,700,000.
"BSQ Newco" means BSQ Transferee Corp., a Delaware corporation
and a wholly owned subsidiary of BSQ Acqco.
"BSQ Newco Asset Acquisition" means the acquisition by the
Borrower on the Effective Date of the Acquired BSQ Newco Assets in exchange for
(a) the payment by the Borrower to BSQ Newco of $243,000,000 in cash, (b) the
assumption of the existing Indebtedness of BSQ Newco and (c) the issuance by
the Borrower to BSQ Newco of the BSQ Newco Note.
"BSQ Newco Credit Agreement" means the credit agreement dated
as of September 25, 1997, among BSQ Newco, Holdings, BSQ Acqco, the lenders
party thereto, Chase, as administrative agent and collateral agent, BABC, as
documentation agent and borrowing base audit agent, and Citicorp USA, as
syndication agent.
"BSQ Newco Note" means the promissory note issued on the
Effective Date by the Borrower to BSQ Newco in the principal amount of $0 in
connection with the BSQ Newco Asset Acquisition.
"Builders Square" means Builders Square, Inc., a Delaware
corporation.
"Builders Square Purchase Agreement" means the Purchase and
Sale Agreement dated as of July 17, 1997, among BSQ Acqco, Kmart and Builders
Square.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed, provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Expenditures" means, for any period, (a) the
additions to property, plant and equipment and other capital expenditures of
the Holdings Group that are (or would be) set forth in a consolidated statement
of cash flows of the Holdings Group for such period prepared in accordance with
GAAP and (b) Capital Lease Obligations incurred by the Holdings Group during
such period; provided, however, the term "Capital Expenditures" shall not
include (i) any such expenditure made with (or in the amount of) the proceeds
of insurance, condemnation awards (or payment in lieu thereof) or indemnity
payments received from third parties for purposes of replacing or repairing the
assets in respect of which such proceeds, awards or payments were received, so
long as such expenditures are made within 18 months of the occurrence of the
damage to or loss of the assets being repaired or replaced and (ii) any such
expenditures made during such period for the acquisition of real estate (and
fixtures relating to such real estate) through a tax-free exchange pursuant to
Section 1031 of the Internal Revenue Code.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance
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sheet of such Person under GAAP, and the amount of such obligations shall be
the capitalized amount thereof determined in accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq.
"Change in Control" means, at any time, (a) the failure by GEI
II to own, directly or indirectly, beneficially or of record, shares
representing in excess of 50% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of Holdings; (b) the
failure of LG&P (or any Affiliate thereof) to act as the sole general partner
of GEI II; (c) occupation of a majority of the seats (other than vacant seats)
on the board of directors of Holdings by Persons who were neither (i) nominated
by the board of directors of Holdings nor (ii) appointed by directors so
nominated; (d) the acquisition of direct or indirect Control of Holdings by any
Person or group other than LG&P (or another limited partnership fund for which
LG&P or any Affiliate thereof acts as the sole general partner) provided that
such Control by LG&P may be subject to the rights of Builders Square under the
Securityholders Agreement dated September 25, 1997, by and among GEI II,
Builders Square and Holdings; (e) failure by Holdings to own directly or
indirectly 100% of the outstanding capital stock of BSQ Acqco free and clear of
all Liens (other than Liens under the Loan Documents); (f) failure by BSQ Acqco
to own directly or indirectly 100% of the outstanding stock of BSQ Newco and
Hechinger free and clear of all Liens (other than Liens under the Loan
Documents); (g) failure by Hechinger to own directly or indirectly 100% of the
outstanding capital stock of Hechinger Stores free and clear of all Liens
(other than Liens under the Loan Documents); (h) failure by Hechinger Stores to
own directly or indirectly 100% of the outstanding capital stock of the
Borrower free and clear of all Liens (other than Liens under the Loan
Documents); or (i) the occurrence of any change of control (or similar event,
however denominated) with respect to any Transaction Party under any indenture
or agreement in respect of Indebtedness with respect to which any member of the
Holdings Group is an obligor.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
the Issuing Bank (or, for purposes of Section 2.14(b), by any lending office of
such Lender or by such Lender's or the Issuing Bank's holding company, if any)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.
"Chase" means The Chase Manhattan Bank, a New York banking
corporation.
"Citicorp USA" means Citicorp USA, Inc., a Delaware
corporation.
"Class", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
Revolving Loans.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
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"Collateral" means any and all "Collateral", as defined in any
applicable Security Document.
"Collateral Agent" means Chase, in its capacity as collateral
agent under the Security Documents.
"Company Owned Life Insurance Program" means (a) the
Confederation Life Insurance Company whole life insurance policies (as assigned
to Pacific Mutual Life Insurance Company) naming Hechinger as beneficiary and
certain employees of Hechinger as insureds and (b) the General American Life
Insurance Company whole life insurance policies naming Hechinger as beneficiary
and certain employees of Hechinger as insureds.
"Commercial Letter of Credit" means any Letter of Credit
issued for the purpose of providing the primary payment mechanism in connection
with the purchase of any materials, goods or services by the Borrower or any
Borrower Subsidiary in the ordinary course of business of the Borrower or such
Borrower Subsidiary.
"Consolidated EBITDA" means, for any period, Consolidated Net
Income for such period, plus, without duplication and to the extent deducted
from revenues in determining Consolidated Net Income, the sum of (a) the
aggregate amount of Consolidated Interest Expense for such period, (b) the
aggregate amount of letter of credit fees paid during such period, (c) the
aggregate amount of income tax expense for such period, (d) all amounts
attributable to depreciation and amortization (including the amortization of
the write-up of assets effected in connection with the Transactions) for such
period and (e) all extraordinary and non-cash charges (including the amount of
any deduction to net income as a result of any grant to, or repurchase from,
directors, officers or employees of Holdings, BSQ Newco, the Borrower or any
Borrower Subsidiary, of stock, stock equivalents or stock options of Holdings,
and all non-cash losses) during such period and (f) any non-recurring costs
specified on Schedule 6.13, and minus, without duplication and to the extent
added to revenues in determining Consolidated Net Income for such period, all
extraordinary and non-cash gains during such period, all as determined on a
consolidated basis with respect to the Holdings Group in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the
interest expense, both expensed and capitalized (including amortization of debt
issuance costs, original issue discount, interest paid in kind and the interest
component in respect of Capital Lease Obligations), accrued or paid by the
Holdings Group during such period, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means, for any period, net income or
loss of the Holdings Group for such period determined on a consolidated basis
in accordance with GAAP, provided that there shall be excluded (a) the income
of any Person in which any other Person (other than any member of the Holdings
Group or any director holding qualifying shares in compliance with applicable
law) has a joint interest, except to the extent of the amount of dividends or
other distributions actually paid to any member of the Holdings Group by such
Person during such period and (b) the income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated
with any member of the Holdings Group or the date that Person's assets are
acquired by any member of the Holdings Group.
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"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. The terms "Controlling" and "Controlled" have meanings correlative
thereto.
"Cost Complement" means, at any time, the percentage that the
Inventory Value of all Inventory purchased by the Borrower from the beginning
of the fiscal year of Holdings in which such determination is made through the
end of the fiscal month of Holdings most recently ended represents of the total
original selling price (exclusive of markdowns) of such Inventory.
"Default" means any event or condition that constitutes an
Event of Default or that upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings
and the environmental matters disclosed in Schedule 3.06.
"Discontinued Inventory and Aged Goods Reserve" means, at any
time, the sum of (a) with respect to Inventory recorded on the Borrower's SMO
Report, (i) an amount equal to the value of all such Inventory purchased prior
to August 20, 1994, plus (ii) an amount equal to 25% of Eligible Inventory
purchased on or after August 20, 1994, that has been designated as
"discontinued" or that will be removed from the Borrower's current merchandise
assortment by the Borrower on a basis consistent with the current and
historical accounting practice of the Borrower and of Hechinger under the
perpetual weighted average cost ledger system associated with such SMO Report
and (b) with respect to inventory recorded on the Borrower's retail stock
ledger system, an amount equal to 25% of Eligible Inventory that has been
designated as "discontinued" or that will be removed from the Borrower's
current merchandise assortment by the Borrower on a basis consistent with the
current and historical accounting practice of the Borrower and of Builders
Square under such retail stock ledger system.
"Documentation Agent" means BABC, in its capacity as
documentation agent for the Lenders.
"dollars" or "$" refers to lawful money of the United States
of America.
"Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.02).
"Eligible Inventory Minus Reserves" means, at any time, (a)
Eligible Inventory at such time minus (b) the sum of (i) the Shrink Reserve at
such time, (ii) Discontinued Inventory and Aged Goods Reserve at such time and
(iii) any additional reserves deemed necessary at such time by the Borrowing
Base Audit Agent based upon the results of periodic audits or appraisals of the
Inventory, provided that such reserves are consistent with the customary
practices of lenders in similar transactions.
"Eligible Inventory" means, at any time, an amount equal to
the aggregate Inventory Value at such time of all Inventory of the Borrower
that consists of finished goods available for sale to customers and is not
ineligible for inclusion in the
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calculation of the Borrowing Base pursuant to any of clauses (a) through (k)
below or otherwise deemed by the Borrowing Base Audit Agent in good faith to be
ineligible for inclusion in the calculation of the Borrowing Base. Without
limiting the foregoing, in order for Inventory to qualify as Eligible
Inventory, no person other than the Borrower shall have any direct or indirect
ownership interest or title to such Inventory. Standards of eligibility may be
fixed from time to time solely by the Borrowing Base Audit Agent in the
exercise of its reasonable judgment. Unless otherwise from time to time
approved in writing by the Borrowing Base Audit Agent, Inventory shall be
deemed not to constitute Eligible Inventory if:
(a) such Inventory is not owned solely by the Borrower, or is
leased or on consignment or the Borrower does not have good and valid
title thereto;
(b) such Inventory (including any portion thereof in transit
from vendors) is not located at property that is owned or leased by
the Borrower and is therefore not in the possession or under the
control of the Borrower (including timber reload facilities,
flow-through centers or publicly held warehouses) unless a landlord
waiver, satisfactory to the Borrowing Base Audit Agent, is in effect
with respect to such property;
(c) such Inventory is in transit from property that is owned
or leased by the Borrower (or a flow-through center, a return center
or a distribution center) to another property that is owned or leased
by the Borrower (or a flow through center, a return center or a
distribution center);
(d) such Inventory (exclusive of Inventory that has been
designated as "discontinued" or that will be removed from the
Borrower's current merchandise assortment pursuant to the standards
described in "Discontinued Inventory and Aged Goods Reserve")
represents (i) goods damaged, defective or otherwise unmerchantable,
(ii) goods that do not conform in all material respects to the
representations and warranties contained in this Agreement or any of
the Security Documents, (iii) goods that were returned or rejected by
the Borrower's customers or (iv) goods to be returned to the vendor;
(e) such Inventory is located at any return center used by
the Borrower;
(f) such Inventory is subject to a layaway purchase by any
customer;
(g) such Inventory (i) is not located in the United States of
America (excluding territories and possessions thereof) or (ii) is
located in Puerto Rico;
(h) such Inventory is not subject to a perfected
first-priority security interest in favor of the Collateral Agent for
the benefit of the Secured Parties;
(i) such Inventory consists of perishable items, including
live plants but excluding bulbs, seeds and artificial plants; and
(j) such Inventory is located at stores at which the Borrower
is conducting a going-out-of-business or similar sale.
"Environmental Laws" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements
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issued, promulgated or entered into by or with any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, handling, treatment, storage, disposal, Release or threatened
Release of any Hazardous Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, natural resource damage, costs
of environmental remediation, administrative oversight costs, fines, penalties
or indemnities), of any member of the Holdings Group directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of
any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
release or threatened release of any Hazardous Materials into the environment
or (e) any contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrower or
any ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in
Article VII.
"Excluded Taxes" means, with respect to the Agents, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or
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measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.18(b)), any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.16(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to
Section 2.16(a).
"Existing Credit Agreements" means, collectively, the BSQ
Newco Credit Agreement and the Hechinger Stores Credit Agreement.
"Existing Hechinger Public Debt" means, collectively, (a) the
9.45% Senior Debentures Due 2012 of Hechinger in an aggregate principal amount
of $100,000,000, issued under the Indenture dated as of October 1, 1992,
between Hechinger and First Union National Bank of North Carolina, as trustee,
(b) the 6.95% Senior Notes Due 2003 of Hechinger in an aggregate principal
amount of $100,000,000, issued under the Indenture dated as of October 1, 1992,
between Hechinger and First Union National Bank of North Carolina, as trustee,
and (c) the 5.5% Convertible Subordinated Debentures Due 2012 of Hechinger in
an aggregate principal amount of $132,000,000, issued under the Indenture dated
as of March 15, 1987, between Hechinger and First Union National Bank of North
Carolina, as trustee.
"Existing Letters of Credit" means all the letters of credit
that (a) were issued under the Existing Credit Agreements and (b) are
outstanding on the Effective Date.
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Financial Officer" means, with respect to any Transaction
Party, the chief financial officer or treasurer of such Transaction Party.
"Financing Transactions" means the execution, delivery and
performance by each Loan Party of the Loan Documents to which it is to be a
party, the borrowing of Loans, the use of the proceeds thereof and the issuance
of Letters of Credit hereunder.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this
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definition, the United States of America, each State thereof and the District
of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized
under the laws of a jurisdiction other than the United States of America or any
State thereof or the District of Columbia.
"Fronting Fee" has the meaning assigned to such term in
Section 2.11(b).
"GAAP" means generally accepted accounting principles in the
United States of America.
"GEI II" means Green Equity Investors II, L.P., an investment
fund controlled by LG&P.
"Gift Certificate Liability" means, at any time, the aggregate
face value at such time of outstanding gift certificates of the Borrower
entitling the holder thereof to use all or a portion of the certificate to pay
all or a portion of the purchase price for any Inventory.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation, provided that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business.
"Guarantee Agreements" means, collectively, the Parent
Guarantee Agreement and the Subsidiary Guarantee Agreement.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law,
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including any material listed as a hazardous substance under Section 101(14) of
CERCLA.
"Hechinger" means Hechinger Company, a Delaware corporation
and a wholly owned subsidiary of BSQ Acqco.
"Hechinger Acqco" means Hechinger Acquisition, Inc., a
Delaware corporation and a wholly owned subsidiary of BSQ Acqco, which merged
with and into Hechinger pursuant to the Hechinger Merger on the "Effective
Date" (as such term is defined in the Hechinger Stores Credit Agreement), with
Hechinger as the surviving corporation.
"Hechinger Asset Acquisition" means the acquisition by the
Borrower on the Second Credit Event Date of the Acquired Hechinger Assets in
exchange for (i) the assumption of existing Indebtedness of Hechinger Stores
and Hechinger East Coast, (ii) the assumption by the Borrower of reimbursement
obligations in respect of Existing Letters of Credit issued under the Hechinger
Stores Credit Agreement, (iii) the satisfaction of certain intercompany
Indebtedness of Hechinger Stores and Hechinger East Coast to the Borrower in
the principal amounts of $150,000,000 and $2,500,000, respectively, and (iv)
the issuance by the Borrower to Hechinger East Coast of the Hechinger East
Coast Note.
"Hechinger East Coast" means Hechinger Stores East Coast
Company, a Delaware corporation and a wholly owned subsidiary of Hechinger
Stores.
"Hechinger/East Coast Note" means the promissory note issued
on September 29, 1997, by the Borrower to Hechinger East Coast in the principal
amount of $47,500,000.
"Hechinger Entities" means Hechinger Stores and Hechinger East
Coast.
"Hechinger Merger Agreement" means the Agreement and Plan of
Merger dated as of July 17, 1997, among Hechinger Acqco, BSQ Acqco and
Hechinger.
"Hechinger Stores" means Hechinger Stores Company, a Delaware
corporation and a wholly owned subsidiary of Hechinger.
"Hechinger Stores Credit Agreement" means the credit agreement
dated as of September 25, 1997, among Hechinger Stores, Holdings, BSQ Acqco,
Hechinger, Hechinger East Coast, the lenders party thereto, Chase, as
administrative agent and collateral agent, BABC, as documentation agent and
borrowing base audit agent, and Citicorp USA, as syndication agent.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price
hedging arrangement.
"Holdings" means Centers Holdings, Inc., a Delaware
corporation.
"Holdings Group" means, collectively, Holdings and the
Subsidiaries, including BSQ Acqco, BSQ Newco, Hechinger, Hechinger Stores and
the Borrower.
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"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits
or advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity, except to the
extent the terms of such Indebtedness provide that such Person is not liable
therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnity, Subrogation and Contribution Agreement" means the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit F, among the Borrower, the Subsidiary Loan Parties and the Agents.
"Information Memorandum" means the Confidential Information
Memorandum dated August 1997, relating to the Borrower and the Transactions.
"Interest Coverage Ratio" means, for any period, the ratio of
Consolidated EBITDA for such period to Consolidated Interest Expense for such
period.
"Interest Election Request" means a request by the Borrower to
convert or continue a Borrowing in accordance with Section 2.07.
"Interest Payment Date" means (a) with respect to any ABR Loan
(other than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the
case of a Eurodollar Borrowing with an Interest Period of more than three
months' duration, each day prior to the last day of such Interest Period that
occurs at intervals of three months' duration after the first day of such
Interest Period, and (c) with respect to any Swingline Loan, the day that such
Loan is required to be repaid.
"Interest Period" means, with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on
the numerically corresponding day in the calendar month that is one, two, three
or six months thereafter, as the Borrower may elect, provided that (a) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in
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the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (b) any Interest Period that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall
be the date on which such Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Borrowing.
"Inventory" has the meaning assigned to such term in the
Security Agreement.
"Inventory Value" means, at any time, (a) with respect to
Inventory recorded on the Borrower's SMO Report, the recorded inventory value
of such Inventory on such Report at such time and (b) with respect to Inventory
recorded on the Borrower's retail stock ledger system, the recorded "cost" of
such Inventory on such system at such time.
"Issuing Bank" means Chase, in its capacity as the issuer of
Letters of Credit hereunder, and its successors in such capacity as provided in
Section 2.05(i). The Issuing Bank may, in its discretion, arrange for one or
more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which
case the term "Issuing Bank" shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.
"Kmart" means Kmart Corporation, a Michigan corporation.
"LC Availability Period" means the period from and including
the Effective Date to but excluding the earlier of (a) the date that is five
Business Days prior to the Maturity Date and (b) the date of termination of the
Revolving Commitments.
"LC Disbursement" means a payment made by the Issuing Bank
pursuant to a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by
or on behalf of the Borrower at such time. The LC Exposure of any Lender at
any time shall be its Applicable Percentage of the total LC Exposure at such
time.
"Lenders" means the Persons listed on Schedule 2.01 and any
other Person that shall have become a party hereto pursuant to an Assignment
and Acceptance, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Acceptance. Unless the context otherwise
requires, the term "Lenders" includes the Swingline Lender.
"Letter of Credit" means any letter of credit issued or deemed
to have been issued pursuant to this Agreement, including each Existing Letter
of Credit.
"LG&P" means Xxxxxxx Xxxxx & Partners, L.P., a Delaware
limited partnership.
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"LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, the rate appearing on Page 3750 of the Telerate
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the "LIBO Rate"
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities.
"Loan Documents" means this Agreement, the Letters of Credit,
the Guarantee Agreements, the Indemnity, Subrogation and Contribution Agreement
and the Security Documents.
"Loan Parties" means the Transaction Parties and the
Subsidiary Loan Parties.
"Loans" means the loans made by the Lenders to the Borrower
pursuant to this Agreement.
"Management Agreement" means the Management Services Agreement
dated September 25, 1997, between LG&P, the Borrower and the Subsidiaries.
"Margin Stock" has the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, property, assets, prospects or condition,
financial or otherwise, of Holdings, the Borrower and the Subsidiaries taken as
a whole or (b) the validity or enforceability of this Agreement or any of the
other Loan Documents or any of the material rights or remedies of the
Administrative Agent, the Collateral Agent or the Lenders hereunder or
thereunder.
"Material Indebtedness" means Indebtedness (other than the
Loans and Letters of Credit), or obligations in respect of one or more Hedging
Agreements, of any one or more of Holdings, the Borrower and the Subsidiaries
in an aggregate principal amount exceeding $5,000,000. For purposes of
determining the amount of Material Indebtedness at any time, the "principal
amount" of the obligations of Holdings, the Borrower or any Subsidiary in
respect of any Hedging Agreement at such
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time shall be the maximum aggregate amount (giving effect to any netting
agreements) that Holdings, the Borrower or such Subsidiary would be required to
pay if such Hedging Agreement were terminated at such time.
"Maturity Date" means September 26, 2002.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Obligations" has the meaning assigned to such term in the
Security Agreement.
"Other Taxes" means any and all current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"Parent Guarantee Agreement" means the Guarantee Agreement,
substantially in the form of Exhibit D, made by the Transaction Parties (other
than the Borrower) and each of the Subsidiaries of Hechinger listed on Schedule
I thereto in favor of the Agents for the benefit of the Secured Parties.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate in the form of
Annex 1 to the Security Agreement or any other form approved by the Collateral
Agent.
"Permitted Acquisition" means any acquisition of assets from,
or shares or other equity interests in, any Person if (a) immediately after
giving effect thereto, no Default or Event of Default shall have occurred and
be continuing or would result therefrom, (b) such acquisition shall not have
been preceded by an unsolicited tender offer for such Person by the Borrower or
any of its Affiliates, (c) all transactions related thereto shall be
consummated in accordance with applicable laws, (d) in the case of any
acquisition of shares or other equity interests in any Person, such acquisition
is an acquisition of 100% of the shares or other equity interests of such
Person (or is an acquisition of at least 90% of the outstanding shares of each
class of the stock of such Person, provided that such person shall be merged
with the acquiror pursuant to Section 253 of the Delaware General Corporation
Law (or an analogous short-form merger provision of another state of the United
States) within 30 days of such acquisition), (e) all actions required to be
taken, if any, with respect to any acquired or newly formed Subsidiary under
subsection 5.12 shall have been taken, (f) such assets, shares or other equity
interests pertain to a line of business related to the businesses of the
Borrower and its Subsidiaries as of the Effective Date, (g) after giving effect
to such acquisition, the Borrower shall be in compliance, on a pro forma basis,
with all the covenants set forth in this Agreement and (h) neither the Borrower
nor any of its subsidiaries shall assume or otherwise become liable for any
Indebtedness in connection with such acquisition (except for Indebtedness
permitted by Section 6.01).
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"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.05;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not
overdue by more than 60 days or are being contested in compliance with
Section 5.05;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business
of the Borrower or any Borrower Subsidiary,
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations
are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of
acquisition thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date
of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the United
States of America or any State thereof that has a combined capital and
surplus and undivided profits of not less than $500,000,000; and
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above
(without regard to the
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limitation on maturity contained in such clause) and entered into with
a financial institution satisfying the criteria described in clause
(c) above.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower
or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pledge Agreement" means the Pledge Agreement, substantially
in the form of Exhibit G, among the Transaction Parties, the other Subsidiaries
party thereto and the Collateral Agent for the benefit of the Secured Parties.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by Chase as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as
being effective.
"Receivables Purchase Agreements" means (a) the Business
Revolving Charge Program Agreement dated April 3, 1992, as amended, by and
among Hechinger, Home Quarters Warehouse, Inc. and General Electric Capital
Corporation and (b) the GE Capital Program Agreement, dated April 12, 1996, by
and between General Electric Capital Corporation and Builders Square.
"Register" has the meaning set forth in Section 9.04(c).
"Regulation G" means Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" means Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" means Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Release" has the meaning set forth in Section 101(22) of
CERCLA.
"Required Lenders" means, at any time, Lenders having Total
Exposures and unused Revolving Commitments representing more than 50% of the
sum of the Total Exposures and unused Revolving Commitments at such time.
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of any Transaction Party or any Subsidiary, or any
payment (whether in cash,
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securities or other property), including any sinking fund or similar deposit,
on account of the purchase, redemption, retirement, acquisition, cancelation or
termination of any such shares of capital stock of a member of any Transaction
Party or any Subsidiary or any option, warrant or other right to acquire any
such shares of capital stock of any Transaction Party or any Subsidiary.
"Revolving Availability Period" means the period from and
including the Effective Date to but excluding the earlier of the Maturity Date
and the date of termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans and to acquire participations
in Letters of Credit and Swingline Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Total Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Revolving Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable (and the initial aggregate amount of the
Lenders' Revolving Commitments is $600,000,000); provided, however, that until
such time as all loans outstanding under, and all other amounts due in respect
of, the Existing Credit Agreements shall have been paid in full and the
commitments under the Existing Credit Agreements shall have been permanently
terminated, each Lender's Revolving Commitment shall be equal to such Lender's
ratable share (based on the respective Revolving Commitments set forth on
Schedule 2.01) of the amount that is equal to (a) $600,000,000 minus (b) the
aggregate commitments then in effect under the Existing Credit Agreements.
"Revolving Loan" means a Loan made pursuant to Section 2.01.
"S&P" means Standard & Poor's.
"Second Credit Event Date" means the date on which the
conditions specified in Section 4.02 are satisfied (or waived in accordance
with Section 9.02).
"Secured Parties" has the meaning assigned to such term in the
Security Agreement.
"Security Agreement" means the Security Agreement,
substantially in the form of Exhibit H, among the Transaction Parties, the
other Subsidiary Loan Parties and the Collateral Agent for the benefit of the
Secured Parties.
"Security Documents" means the Security Agreement, the Pledge
Agreement and each other security agreement or other instrument or document
executed and delivered pursuant to Section 5.12 or 5.13 to secure any of the
Obligations.
"Shrink" means Inventory identified by the Borrower as lost,
misplaced or stolen Inventory.
"Shrink Reserve" means, at any time, (a) with respect to
Inventory recorded on the Borrower's SMO Report, an amount equal to accruals
for Shrink
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recorded on such SMO Report at such time, which accruals have been determined
on a basis consistent with the current and historical accounting practice of
the Borrower and of Hechinger under the perpetual weighted average cost ledger
system associated with such SMO Report of accruing for Shrink as a percentage
of Inventory Value (which percentage will equal the percentage that Shrink
represents of total Inventory Value in connection with the results of the most
recent six-month physical inventory conducted with respect to such Inventory)
and (b) with respect to Inventory recorded on the Borrower's retail stock
ledger system, an amount equal to the excess, if any, at such time of (i) an
amount equal to the product of (A) the average percentage of such Inventory
that was identified as Shrink (expressed as a percentage of total merchandise
sales recorded on such retail stock ledger system for the relevant period) in
connection with the then two most recent year-end physical inventories
conducted with respect to such Inventory, and (B) the product of (1) the total
merchandise sales recorded on such stock ledger system for the period
commencing at the beginning of the fiscal year of Holdings in which such
determination is made and ending at the end of the fiscal month of Holdings
most recently ended and (2) the Cost Complement at such time over (ii) accruals
for Shrink established by the Borrower at such time on a basis consistent with
the current and historical accounting practice of the Borrower and Builders
Square under such retail stock ledger system in respect of Shrink.
"SMO Report" means the Statement of Merchandising Operations
Report issued in connection with the Borrower's perpetual weighted average cost
ledger system.
"Special Order Deposit Liability" means, at any time, the sum
of (a) with respect to Inventory recorded on the Borrower's retail stock ledger
system, the aggregate amount of deposits made on special order merchandise as
recorded on such retail stock ledger system at such time and (b) with respect
to Inventory recorded on the Borrower's SMO Report, the excess at such time of
(i) the aggregate amount of deposits recorded on such SMO Report with respect
to special order merchandise over (ii) the corresponding decrease recorded in
Eligible Inventory.
"Standby Letter of Credit" means any Letter of Credit other
than a Commercial Letter of Credit.
"Statutory Reserve Rate" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Administrative Agent is
subject (a) with respect to the Base CD Rate, for new negotiable nonpersonal
time deposits in dollars of over $100,000 with maturities approximately equal
to three months and (b) with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
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"subsidiary" means, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries
of the parent.
"Subsidiary" means any subsidiary of Holdings.
"Subsidiary Guarantee Agreement" means the Guarantee
Agreement, substantially in the form of Exhibit E, made by the Borrower
Subsidiaries in favor of the Agents for the benefit of the Secured Parties.
"Subsidiary Loan Party" means any Subsidiary that is not a
Foreign Subsidiary.
"Swingline Exposure" means, at any time, the aggregate
principal amount of all Swingline Loans outstanding at such time. The
Swingline Exposure of any Lender at any time shall be its Applicable Percentage
of the total Swingline Exposure at such time.
"Swingline Lender" means Chase, in its capacity as lender of
Swingline Loans hereunder.
"Swingline Loan" means a Loan made pursuant to Section 2.04.
"Syndication Agent" means Citicorp USA, in its capacity as
syndication agent for the Lenders hereunder.
"Taxes" means any and all current or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
"Three-Month Secondary CD Rate" means, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next
preceding Business Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate will, under the
current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day) or, if such rate is not
so reported on such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately 10:00 a.m., New
York City time, on such day (or, if such day is not a Business Day, on the next
preceding Business Day) by the Administrative Agent from three negotiable
certificate of deposit dealers of recognized standing selected by it.
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"Total Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans and its LC Exposure and Swingline Exposure at such time.
"Transaction Agreements" means, collectively, the Builders
Square Purchase Agreement and the Hechinger Merger Agreement.
"Transaction Parties" means Holdings, BSQ Acqco, BSQ Newco,
Hechinger, Hechinger Stores, Hechinger East Coast and the Borrower.
"Transactions" means the Acquisitions and the Financing
Transactions.
"Type", when used in reference to any Loan or Borrowing,
refers to whether the rate of interest on such Loan, or on the Loans comprising
such Borrowing, is determined by reference to the Adjusted LIBO Rate or the
Alternate Base Rate.
"Warrant" means the warrant delivered to Builders Square to
acquire 210,000 shares of the Common Stock, par value $.01 per share, of
Holdings pursuant to the Builders Square Purchase Agreement.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Class
(e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class
and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be
classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type
(e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar
Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any Person shall
be construed to include such Person's successors and assigns, (c) the words
"herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words "asset" and "property" shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
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SECTION 1.04. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time, provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and
conditions set forth herein, each Lender agrees to make Revolving Loans to the
Borrower from time to time during the Revolving Availability Period in an
aggregate principal amount that will not result in such Lender's Total Exposure
exceeding the lesser of (a) such Lender's Revolving Commitment and (b) such
Lender's Applicable Percentage of the Borrowing Base in effect at such time.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Loan (other
than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans
of the same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder, provided that the Commitments of the Lenders are
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.
(b) Subject to Section 2.13, each Revolving Borrowing shall
be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith. Each Swingline Loan shall be an ABR Loan.
Each Lender at its option may make any Eurodollar Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Loan, provided that
any exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $5,000,000. At the time that
each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $1,000,000 and not less than $5,000,000, provided
that an ABR Borrowing may be in an aggregate amount that is equal to the entire
unused balance of the total Revolving Commitments or that is required to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e). Each Swingline Loan shall be in an amount that is
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an integral multiple of $100,000 and not less than $1,000,000. Borrowings of
more than one Type and Class may be outstanding at the same time, provided that
there shall not at any time be more than a total of 12 Eurodollar Borrowings
outstanding.
(d) Notwithstanding any other provision of this Agreement,
the Borrower shall not be entitled to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.
SECTION 2.03. Requests for Borrowings. To request a
Revolving Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00
a.m., New York City time, one Business Day before the date of the proposed
Borrowing, provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., New York City time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) the aggregate amount of such Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) subject to the second sentence of Section 2.02(b),
whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.06.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Swingline Loans. (a) Subject to the terms and
conditions set forth herein, the Swingline Lender agrees to make Swingline
Loans to the Borrower from time to time during the Revolving Availability
Period, in an aggregate principal amount at any time outstanding that will not
result in (i) the aggregate principal amount of outstanding Swingline Loans
exceeding $25,000,000 or (ii) the sum of the Total Exposures exceeding the
lesser of (A) the total Revolving
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Commitments and (B) the Borrowing Base in effect at such time, provided that
the Swingline Lender shall not be required to make a Swingline Loan to
refinance an outstanding Swingline Loan. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Swingline Loans.
(b) To request a Swingline Loan, the Borrower shall notify
the Administrative Agent of such request by telephone (confirmed by telecopy),
not later than 12:00 noon, New York City time, on the day of a proposed
Swingline Loan. Each such notice shall be irrevocable and shall specify the
requested date (which shall be a Business Day) and amount of the requested
Swingline Loan. The Administrative Agent will promptly advise the Swingline
Lender of any such notice received from the Borrower. The Swingline Lender
shall make each Swingline Loan available to the Borrower by means of a credit
to the general deposit account of the Borrower with the Swingline Lender (or,
in the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e), by remittance to the Issuing Bank)
by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.
(c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Lenders to acquire participations on such Business Day
in all or a portion of the Swingline Loans outstanding. Such notice shall
specify the aggregate amount of Swingline Loans in which Lenders will
participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Lender, specifying in such notice such
Lender's Applicable Percentage of such Swingline Loan or Loans. Each Lender
hereby absolutely and unconditionally agrees, upon receipt of notice as
provided above, to pay to the Administrative Agent, for the account of the
Swingline Lender, such Lender's Applicable Percentage of such Swingline Loan or
Loans. Each Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever. Each
Lender shall comply with its obligation under this paragraph by wire transfer
of immediately available funds, in the same manner as provided in Section 2.06
with respect to Loans made by such Lender (and Section 2.06 shall apply,
mutatis mutandis, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to the Swingline Lender the amounts so
received by it from the Lenders. The Administrative Agent shall notify the
Borrower of any participations in any Swingline Loan acquired pursuant to this
paragraph, and thereafter payments in respect of such Swingline Loan shall be
made to the Administrative Agent and not to the Swingline Lender. Any amounts
received by the Swingline Lender from the Borrower (or other party on behalf of
the Borrower) in respect of a Swingline Loan after receipt by the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Lenders that shall have made their payments pursuant to this paragraph and
to the Swingline Lender, as their interests may appear. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in the payment thereof.
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SECTION 2.05. Letters of Credit. (a) General. Subject to
the terms and conditions set forth herein, (i) each of the Existing Letters of
Credit shall, upon the initial funding of Loans on the Effective Date and
without any further action on the part of the Issuing Bank or any other Person,
be deemed for all purposes to have been issued by the Issuing Bank on the
Effective Date as a Letter of Credit hereunder and (ii) the Borrower may
request the issuance of additional Letters of Credit for its own account, in a
form reasonably acceptable to the Administrative Agent and the Issuing Bank, at
any time and from time to time during the LC Availability Period. In the event
of any inconsistency between the terms and conditions of this Agreement and the
terms and conditions of any form of letter of credit application or other
agreement submitted by the Borrower to, or entered into by the Borrower with,
the Issuing Bank relating to any Letter of Credit, the terms and conditions of
this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions. To request the issuance of a Letter of Credit (or the
amendment, renewal or extension of an outstanding Letter of Credit), the
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance
of the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
Issuing Bank, the Borrower also shall submit a letter of credit application on
the Issuing Bank's standard form in connection with any request for a Letter of
Credit. A Letter of Credit shall be issued, amended, renewed or extended only
if (and upon issuance, amendment, renewal or extension of each Letter of Credit
the Borrower shall be deemed to represent and warrant that), after giving
effect to such issuance, amendment, renewal or extension (i) the LC Exposure
shall not exceed $125,000,000 and (ii) the aggregate Total Exposures shall not
exceed the lesser of (A) the aggregate Revolving Commitments and (B) the
Borrowing Base in effect at such time.
(c) Expiration Date. Each Letter of Credit shall expire at
or prior to the close of business on the earlier of (i) the date one year after
the date of the issuance of such Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and
(ii) the date that is five Business Days prior to the Maturity Date, provided
that each Letter of Credit may, upon the request of the Borrower, include a
provision whereby such Letter of Credit shall be renewed automatically for
additional consecutive periods of 12 months or less (but not beyond the date
that is five Business Days prior to the Maturity Date) unless the Issuing Bank
notifies the beneficiary thereof at least 30 days prior to the then-applicable
expiration date that such Letter of Credit will not be renewed.
(d) Participations. By the issuance (or, in the case of the
Existing Letters of Credit, deemed issuance) of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of
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Credit equal to such Lender's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, for the account of the Issuing Bank,
such Lender's Applicable Percentage of each LC Disbursement made by the Issuing
Bank and not reimbursed by the Borrower on the date due as provided in
paragraph (e) of this Section, or of any reimbursement payment required to be
refunded to the Borrower for any reason. Each Lender acknowledges and agrees
that its obligation to acquire participations pursuant to this paragraph in
respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a
Default or reduction or termination of the Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 12:00 noon, New York City time, on the date
that such LC Disbursement is made, if the Borrower shall have received notice
of such LC Disbursement prior to 10:00 a.m., New York City time, on such date,
or, if such notice has not been received by the Borrower prior to such time on
such date, then not later than 12:00 noon, New York City time, on (i) the
Business Day that the Borrower receives such notice, if such notice is received
prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the
Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of
receipt, provided that the Borrower may, subject to the conditions to borrowing
set forth herein, request in accordance with Section 2.03 or 2.04 that such
payment be financed with an ABR Revolving Borrowing or Swingline Loan in an
equivalent amount and, to the extent so financed, the Borrower's obligation to
make such payment shall be discharged and replaced by the resulting ABR
Revolving Borrowing or Swingline Loan. If the Borrower fails to make such
payment when due, the Administrative Agent shall notify each Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender's Applicable Percentage thereof. Promptly following
receipt of such notice, each Lender shall pay to the Administrative Agent its
Applicable Percentage of the payment then due from the Borrower, in the same
manner as provided in Section 2.06 with respect to Loans made by such Lender
(and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of
the Lenders), and the Administrative Agent shall promptly pay to the Issuing
Bank the amounts so received by it from the Lenders. Promptly following
receipt by the Administrative Agent of any payment from the Borrower pursuant
to this paragraph, the Administrative Agent shall distribute such payment to
the Issuing Bank or, to the extent that Lenders have made payments pursuant to
this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Lender
pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan
as contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to
reimburse LC Disbursements as provided in paragraph (e) of this Section shall
be absolute,
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unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower's obligations
hereunder. None of the Administrative Agent, the Lenders, the Issuing Bank or
any of their Related Parties shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of
Credit or any payment or failure to make any payment thereunder (irrespective
of any of the circumstances referred to in the preceding sentence), or any
error, omission, interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank, provided that the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or wilful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised
care in each such determination. In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to
documents presented that appear on their face to be in compliance with the
terms of a Letter of Credit, the Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The Issuing Bank
shall promptly notify the Administrative Agent and the Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether the Issuing Bank
has made or will make an LC Disbursement thereunder, provided that any failure
to give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse the Issuing Bank and the Lenders with respect to any
such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans,
provided that, if the Borrower fails to
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reimburse such LC Disbursement when due pursuant to paragraph (e) of this
Section, then Section 2.12(c) shall apply. Interest accrued pursuant to this
paragraph shall be for the account of the Issuing Bank, except that interest
accrued on and after the date of payment by any Lender pursuant to paragraph
(e) of this Section to reimburse the Issuing Bank shall be for the account of
such Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced at any time by written agreement among the Borrower, the
Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank.
The Administrative Agent shall notify the Lenders of any such replacement of
the Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.11(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to the
term "Issuing Bank" shall be deemed to refer to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require. After the replacement of an Issuing Bank hereunder,
the replaced Issuing Bank shall remain a party hereto and shall continue to
have all the rights and obligations of an Issuing Bank under this Agreement
with respect to Letters of Credit issued by it prior to such replacement, but
shall not be required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall
occur and be continuing, on the Business Day that the Borrower receives notice
from the Administrative Agent or the Required Lenders (or, if the maturity of
the Loans has been accelerated, Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Collateral Agent, in the name of the Collateral Agent and for the benefit of
the Lenders, an amount in cash equal to 105% of the LC Exposure as of such date
plus any accrued and unpaid interest thereon, provided that the obligation to
deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other
notice of any kind, upon the occurrence of any Event of Default with respect to
the Borrower described in clause (h) or (i) of Article VII. Each such deposit
shall be held by the Collateral Agent as collateral for the payment and
performance of the obligations of the Borrower under this Agreement. The
Collateral Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest
earned on the investment of such deposits, which investments shall be made at
the option and sole discretion of the Collateral Agent at the request of the
Borrower and at the Borrower's risk and expense, such deposits shall not bear
interest. Interest or profits, if any, on such investments shall accumulate in
such account. Moneys in such account shall be applied by the Collateral Agent
to reimburse the Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated
(but subject to the consent of Lenders with LC Exposure representing greater
than 50% of the total LC Exposure), be applied to satisfy other obligations of
the Borrower under this Agreement. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event
of Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrower within three Business Days after all Events of Default
have been cured or waived.
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SECTION 2.06. Funding of Borrowings. (a) Each Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders, provided that Swingline Loans shall be made
as provided in Section 2.04. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in
like funds, to an account of the Borrower maintained with the Administrative
Agent in New York City and designated by the Borrower in the applicable
Borrowing Request, provided that ABR Revolving Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be
remitted by the Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received
notice from a Lender prior to the proposed date of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's share
of such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this
Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.
SECTION 2.07. Interest Elections. (a) Each Revolving
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section. The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing. This Section shall not apply
to Swingline Borrowings, which may not be converted or continued.
(b) To make an election pursuant to this Section, the
Borrower shall notify the Administrative Agent of such election by telephone by
the time that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Revolving Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of
a written Interest Election Request in a form approved by the Administrative
Agent and signed by the Borrower.
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(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be
specified pursuant to clauses (iii) and (iv) below shall be specified
for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of
the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing and the Administrative
Agent, at the request of the Required Lenders, so notifies the Borrower, then,
so long as an Event of Default is continuing (i) no outstanding Borrowing may
be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid,
each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of
the Interest Period applicable thereto.
SECTION 2.08. Termination and Reduction of Commitments. (a)
Unless previously terminated, the Revolving Commitments shall terminate on the
Maturity Date.
(b) The Borrower may at any time terminate, or from time to
time reduce, the Revolving Commitments, provided that (i) each reduction of the
Revolving Commitments shall be in an amount that is an integral multiple of
$1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not
terminate or reduce the Revolving Commitments if and to the extent that, after
giving effect to any concurrent prepayment of the Revolving Loans in accordance
with Section 2.10, the sum of the Total Exposures would exceed the total
Revolving Commitments.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least
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three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable, provided that a notice of termination of
the Revolving Commitments delivered by the Borrower may state that such notice
is conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments of any Class shall
be permanent. Each reduction of the Revolving Commitments shall be made
ratably among the Lenders in accordance with their respective Revolving
Commitments.
SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Maturity Date and (ii) to the Swingline
Lender the then unpaid principal amount of each Swingline Loan on the earlier
of the Maturity Date and the first date after such Swingline Loan is made that
is the 15th or last day of a calendar month and is at least two Business Days
after such Swingline Loan is made, provided that on each date that a Revolving
Borrowing is made, the Borrower shall repay all Swingline Loans then
outstanding.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein, provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it
be evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and
its registered assigns).
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SECTION 2.10. Prepayment of Loans. (a) The Borrower shall
have the right at any time and from time to time to prepay any Borrowing in
whole or in part, subject to the requirements of this Section.
(b) In the event of any termination of all the Revolving
Commitments, the Borrower shall repay or prepay all outstanding Revolving
Borrowings and all outstanding Swingline Loans on the date of such termination.
In the event of any partial reduction of the Revolving Commitments, then (i) at
or prior to the effective date of such reduction or termination, the
Administrative Agent shall notify the Borrower and the Lenders of the aggregate
Total Exposure after giving effect thereto and (ii) if the aggregate Total
Exposure would exceed the aggregate Revolving Commitments after giving effect
to such reduction or termination, then the Borrower shall, on the date of such
reduction or termination, prepay Revolving Borrowings or Swingline Loans (or a
combination thereof) in an amount sufficient to eliminate such excess.
(c) If on any date the aggregate Total Exposure exceeds the
Borrowing Base in effect on such date, the Borrower shall on such date apply an
amount equal to such excess, first, to prepay the then-outstanding Revolving
Borrowings (if any) and Swingline Loans (if any) and, second, to the extent of
any remaining excess (after the prepayment of Revolving Borrowings and
Swingline Loans), to cash-collateralize outstanding Letters of Credit by
depositing, in an account with the Collateral Agent, in the name of the
Collateral Agent and for the benefit of the Lenders, an amount in cash equal to
such remaining excess. The provisions of the second, third, fourth and fifth
sentences of Section 2.05(j) shall be applicable to any amounts so deposited.
(d) Prior to any optional or mandatory prepayment of
Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to
be prepaid and shall specify such selection in the notice of such prepayment
pursuant to paragraph (e) of this Section, provided that each prepayment of
Borrowings shall be applied to prepay ABR Borrowings before any other
Borrowings.
(e) The Borrower shall notify the Administrative Agent (and,
in the case of prepayment of a Swingline Loan, the Swingline Lender) by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case
of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York
City time, three Business Days before the date of prepayment, (ii) in the case
of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City
time, one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 12:00 noon, New York City time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment, provided that, if a
notice of optional prepayment is given in connection with a conditional notice
of termination of the Revolving Commitments as contemplated by Section 2.08,
then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.08. Promptly following receipt of any
such notice (other than a notice relating solely to Swingline Loans), the
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.02, except as necessary to apply fully the required amount of a
mandatory prepayment. Each prepayment of a Borrowing shall be applied
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ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.12.
SECTION 2.11. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the rate of .50% per annum on the average daily unused amount
of the Revolving Commitment of such Lender during the period from and including
the date of this Agreement to but excluding the date on which such Commitment
terminates. Accrued commitment fees shall be payable in arrears on the last day
of March, June, September and December of each year and on the date on which
the Revolving Commitments terminate, commencing on the first such date to occur
after the date hereof. All commitment fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of
computing commitment fees with respect to Revolving Commitments, a Revolving
Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline
Exposure of such Lender shall be disregarded for such purpose).
(b) The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at a rate equal to (i)
in the case of the portion of such Lender's LC Exposure that is attributable to
Standby Letters of Credit, the excess of (A) the same Applicable Rate as
interest on Eurodollar Revolving Loans on the average daily amount of such
portion of such Lender's LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) over (B) the Fronting Fee, in
each case during the period from and including the date of this Agreement to
but excluding the later of the date on which such Lender's Revolving Commitment
terminates and the date on which such Lender ceases to have any such LC
Exposure, and (ii) in the case of the portion of such Lender's LC Exposure that
is attributable to Commercial Letters of Credit, the excess of (A) one-half of
the same Applicable Rate as interest on Eurodollar Revolving Loans on the
average daily amount of such portion of such Lender's LC Exposure (excluding
any portion thereof attributable to unreimbursed LC Disbursements) over (B) the
Fronting Fee, in each case during the period from and including the date of
this Agreement to but excluding the later of the date on which such Lender's
Revolving Commitment terminates and the date on which such Lender ceases to
have any such LC Exposure. The Borrower also agrees to pay to the Issuing Bank
a fronting fee (the "Fronting Fee"), which shall accrue at the rate of 1/4 of
1% per annum on the average daily amount of the LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the
period from and including the date of this Agreement to but excluding the later
of the date of termination of the Revolving Commitments and the date on which
there ceases to be any LC Exposure, as well as the Issuing Bank's standard fees
with respect to the issuance, amendment, renewal or extension of any Letter of
Credit or processing of drawings thereunder. Participation fees and fronting
fees accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date,
provided that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand. All participation fees and fronting fees shall be
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computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates
due, in immediately available funds, to the Administrative Agent (or to the
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of commitment fees and participation fees, to the Lenders entitled thereto.
Fees paid shall not be refundable under any circumstances.
SECTION 2.12. Interest. (a) The Loans comprising each ABR
Borrowing (including each Swingline Loan) shall bear interest at the Alternate
Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration
or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate (including margin) otherwise applicable to such Loan
as provided in the preceding paragraphs of this Section or (ii) in the case of
any other amount, 2% plus the rate (including margin) applicable to ABR
Revolving Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and, in the case of Revolving
Loans, upon termination of the Revolving Commitments, provided that (A)
interest accrued pursuant to paragraph (c) of this Section shall be payable on
demand, (B) in the event of any repayment or prepayment of any Loan (other than
a prepayment of an ABR Revolving Loan prior to the end of the Revolving
Availability Period), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and (C) in
the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of
a year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate or Adjusted LIBO Rate shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.13. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
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(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the Adjusted LIBO Rate
for such Interest Period; or
(b) the Administrative Agent is advised by the Required
Lenders that the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.14. Increased Costs. (a) If any Change in Law
shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender or any Holding
Company of any Lender (except any such reserve requirement reflected
in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit
or to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.
(b) If any Lender or the Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's or the Issuing Bank's capital or
on the capital of such Lender's or the Issuing Bank's holding company, if any,
as a consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by, such Lender, or the Letters of Credit issued by the
Issuing Bank, to a level below that which such Lender or the Issuing Bank or
such Lender's or the Issuing Bank's holding company could have achieved but for
such Change in Law (taking into consideration such Lender's or the Issuing
Bank's policies and the policies of such Lender's or the Issuing Bank's holding
company with respect to capital adequacy), then from time to time the Borrower
will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender's or the Issuing Bank's holding company for any such reduction
suffered.
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(c) A certificate of a Lender or the Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as the case may be, as specified in paragraph (a)
or (b) of this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing
Bank to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender's or the Issuing Bank's right to demand such
compensation, provided that the Borrower shall not be required to compensate a
Lender or the Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 90 days prior to the date that such Lender or the
Issuing Bank, as the case may be, notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender's or the
Issuing Bank's intention to claim compensation therefor, and provided further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 90-day period referred to above shall be extended to
include the period of retroactive effect thereof.
SECTION 2.15. Break Funding Payments. In the event of (a)
the payment of any principal of any Eurodollar Loan other than on the last day
of an Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.10(e) and is revoked in accordance therewith), or (d) the
assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.18, then, in any such event, the Borrower shall compensate each
Lender for the loss, cost and expense attributable to such event. In the case
of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed
to include an amount determined by such Lender to be the excess, if any, of (i)
the amount of interest that would have accrued on the principal amount of such
Loan had such event not occurred, at the Adjusted LIBO Rate that would have
been applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest that would
accrue on such principal amount for such period at the interest rate that such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the Eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
SECTION 2.16. Taxes. (a) Any and all payments by or on
account of any obligation of the Borrower hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes, provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable
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to additional sums payable under this Section) the Administrative Agent, Lender
or Issuing Bank (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent,
each Lender and the Issuing Bank, within 10 days after written demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on
or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender shall deliver to the Borrower and the
Administrative Agent two copies of either United States Internal Revenue
Service Form 1001 or Form 4224, or, in the case of a Foreign Lender's claiming
exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest", a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such Foreign Lender
delivers a Form W-8, a certificate representing that such Foreign Lender is not
a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Borrower and is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Foreign Lender claiming complete exemption from or
reduced rate of, U.S. Federal withholding tax on payments by the Borrower under
this Agreement and the other Loan Documents. Such forms shall be delivered by
each Foreign Lender on or before the date it becomes a party to this Agreement
(or, in the case of a Transferee that is a participation holder on or before
the date such participation holder becomes a Transferee hereunder) and on or
before the date, if any, such Foreign Lender changes its applicable lending
office by designating a different lending office (a "New Lending Office"). In
addition, each Foreign Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Foreign
Lender. Notwithstanding any other provision of this Section 2.16(e), a Foreign
Lender shall not be required to deliver any form pursuant to this 2.16(e) that
such Foreign Lender is not legally able to deliver.
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(f) The Borrower shall not be required to indemnify any
Foreign Lender or to pay any additional amounts to any Foreign Lender in
respect of U.S. Federal withholding tax pursuant to paragraph (a) or (c) above
to the extent that the obligation to pay such additional amounts would not have
arisen but for a failure by such Foreign Lender to comply with the provisions
of paragraph (e) above. Should a Lender become subject to Taxes because of its
failure to deliver a form required hereunder, Borrower shall, at Lender's
expense, take such steps as such Lender shall reasonably request to assist such
Lender to recover such Taxes.
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing
of Setoffs. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest,
fees or reimbursement of LC Disbursements, or of amounts payable under Section
2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon, New York City time, on
the date when due, in immediately available funds, without setoff or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to the Administrative Agent at its offices at 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, except payments to be made directly to the
Issuing Bank or Swingline Lender as expressly provided herein and except that
payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly
to the Persons entitled thereto and payments pursuant to other Loan Documents
shall be made to the Persons specified therein. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any
payment under any Loan Document shall be due on a day that is not a Business
Day, the date for payment shall be extended to the next succeeding Business
Day, and, in the case of any payment accruing interest, interest thereon shall
be payable for the period of such extension. All payments under each Loan
Document shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such funds
shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal and unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans or participations in LC Disbursements or
Swingline Loans resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Revolving Loans and participations in
LC Disbursements and Swingline Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the
Revolving Loans and participations in LC Disbursements and Swingline Loans of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Revolving Loans and
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participations in LC Disbursements and Swingline Loans, provided that (i) if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and
the purchase price restored to the extent of such recovery, without interest,
and (ii) the provisions of this paragraph shall not be construed to apply to
any payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than
to the Borrower or any Borrower Subsidiary or Affiliate thereof (as to which
the provisions of this paragraph shall apply). The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or the Issuing Bank, as the case may be, the amount due. In such
event, if the Borrower has not in fact made such payment, then each of the
Lenders or the Issuing Bank, as the case may be, severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to
be made by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.17(d) or
9.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are
fully paid.
SECTION 2.18. Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.14, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.16, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in
the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The
Borrower hereby agrees to pay all reasonable and documented costs and expenses
incurred by any Lender in connection with any such designation or assignment;
provided, however, that the Borrower shall not be liable for such costs and
expenses of a Lender requesting compensation if (i) such Lender becomes a party
to
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this Agreement on a date after the Effective Date and (ii) the relevant Change
in Law occurs on a date prior to the date such Lender becomes a party hereto.
(b) If any Lender requests compensation under Section 2.14,
or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section
2.16, or if any Lender defaults in its obligation to fund Loans hereunder, then
the Borrower may, at its sole expense and effort, upon notice to such Lender
and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment), provided that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent, the Issuing Bank and Swingline Lender, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Revolving Loans and
participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under Section
2.14 or payments required to be made pursuant to Section 2.16, such assignment
will result in a reduction in such compensation or payments. A Lender shall
not be required to make any such assignment and delegation if, prior thereto,
as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to
apply.
ARTICLE III
Representations and Warranties
Each Transaction Party represents and warrants to the Lenders
that:
SECTION 3.01. Organization; Powers. Each member of the
Holdings Group is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The
Transactions to be entered into by each Loan Party are within such Loan Party's
corporate powers and have been duly authorized by all necessary corporate and,
if required, stockholder action. This Agreement has been duly executed and
delivered by each Loan Party that is a party hereto and constitutes, and each
other Loan Document to which any Loan Party is to be a party, when executed and
delivered by such Loan Party, will constitute, a legal, valid and binding
obligation of such Loan Party (as the case may be), enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
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SECTION 3.03. Governmental Approvals; No Conflicts. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect and except filings
necessary to perfect Liens created under the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of any member of the Holdings Group or any order of
any Governmental Authority, (c) except as set forth in Schedule 3.03(c), will
not violate or result in a default under any indenture, agreement or other
instrument binding upon any member of the Holdings Group or its assets, or give
rise to a right thereunder to require any payment to be made by any member of
the Holdings Group, and (d) will not result in the creation or imposition of
any Lien on any asset of any member of the Holdings Group, except Liens created
under the Loan Documents.
SECTION 3.04. Financial Condition; No Material Adverse
Change. (a) Hechinger has heretofore furnished to the Lenders its consolidated
balance sheet and statements of income, stockholders' equity and cash flows (i)
as of and for each of the fiscal years in the three year period ended February
1, 1997, reported on by Ernst & Young LLP, independent public accountants, and
(ii) as of and for the two fiscal quarters and the portion of the fiscal year
ended August 2, 1997, certified by its chief financial officer. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of Hechinger and its consolidated
subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to year-end audit adjustments and the absence of footnotes in the case
of the statements referred to in clause (ii) above.
(b) Hechinger has heretofore furnished to the Lenders its pro
forma consolidated balance sheet as of the Effective Date, prepared giving
effect to the Transactions as if the Transactions had occurred on such date.
Such pro forma consolidated balance sheet (i) was prepared in good faith based
on the same assumptions used to prepare the pro forma financial statements
included in the Information Memorandum (which assumptions were, at the time of
preparation of the Information Memorandum, and are, as of the date hereof,
believed by Hechinger, Holdings and the Borrower to be reasonable), (ii) was
based on the best information available to Hechinger, Holdings and the Borrower
after due inquiry at the date thereof, (iii) accurately reflects all
adjustments necessary to give effect to the Transactions (except for any
adjustments that are required by purchase accounting) and (iv) presents fairly,
in all material respects, the pro forma financial position of Hechinger and its
consolidated subsidiaries as of the Effective Date, as if the Transactions had
occurred on such date (except for any adjustments that are required by purchase
accounting).
(c) Except as disclosed in Schedule 3.04(c), since February
1, 1997, there has been no material adverse change in the business, assets,
operations, material agreements, prospects or condition, financial or
otherwise, of Hechinger and the Hechinger Entities, taken as a whole.
(d) The Borrower has heretofore furnished to the Lenders
Builders Square's unaudited balance sheet and statements of income,
stockholders' equity and cash flows (i) as of and for each of the fiscal years
in the three year period ended January 26, 1997, and (ii) as of and for the two
fiscal quarters and the portion of the fiscal year ended July 26, 1997. Such
financial statements present fairly, in all
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material respects, the financial position and results of operations and cash
flows of Builders Square as of such dates and for such periods in accordance
with GAAP, subject to year-end audit adjustments.
(e) The Borrower has heretofore furnished to the Lenders
Builders Square's pro forma consolidated balance sheet as of the Effective
Date, prepared giving effect to the Transactions as if the Transactions had
occurred on such date. Such pro forma consolidated balance sheet (i) was
prepared in good faith based on the same assumptions used to prepare the pro
forma financial statements included in the Information Memorandum (which
assumptions were, at the time of preparation of the Information Memorandum, and
are, as of the date hereof, believed by Holdings and the Borrower to be
reasonable), (ii) was based on the best information available to Builders
Square, Holdings and the Borrower after due inquiry at the date thereof, (iii)
accurately reflects all adjustments necessary to give effect to the
Transactions (except for any adjustments that are required by purchase
accounting) and (iv) presents fairly, in all material respects, the pro forma
financial position of Builders Square as of the Effective Date, as if the
Transactions had occurred on such date (except for any adjustments that are
required by purchase accounting).
(f) Except as disclosed in Schedule 3.04(f), since January
26, 1997, there has been no material adverse change in the business, assets,
operations, material agreements, prospects or condition, financial or
otherwise, of Builders Square.
(g) Except as disclosed in the financial statements referred
to above or the notes thereto or in the Information Memorandum and except for
the Disclosed Matters, after giving effect to the Transactions, no member of
the Holdings Group has, as of the Effective Date, any material contingent
liabilities, unusual long-term commitments or unrealized losses.
SECTION 3.05. Properties. (a) Except as disclosed in
Schedule 3.05, each member of the Holdings Group has good title to, or valid
leasehold interests in, all its real and personal property material to its
business, except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each member of the Holdings Group owns, or is licensed to
use, all trademarks, trade names, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Holdings Group
does not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
(c) Schedule 3.05 sets forth the address of each real
property that is owned or leased by the Holdings Group as of the Effective Date
after giving effect to the Transactions.
SECTION 3.06. Litigation and Environmental Matters. (a)
There are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of any Transaction
Party, threatened against or affecting any member of the Holdings Group (i) as
to which there is a reasonable possibility of an adverse determination and
that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect
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(other than the Disclosed Matters) or (ii) that involve any of the Loan
Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect
to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, no member of the
Holdings Group (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no
change in the status of the Disclosed Matters that, individually or in the
aggregate, has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each
member of the Holdings Group is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. No
member of the Holdings Group is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each member of the Holdings Group has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which member, as applicable, has set aside on
its books adequate reserves or (b) to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such
ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse Effect. The present
value of all accumulated benefit obligations under each Plan (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $500,000 the fair market value of
the assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No. 87) did not, as of
the date of the most recent financial statements reflecting such amounts,
exceed by more than $1,000,000 the fair market value of the assets of all such
underfunded Plans.
SECTION 3.11. Disclosure. The Transaction Parties have
disclosed to the Lenders all agreements, instruments and corporate or other
restrictions to which any
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member of the Holdings Group is subject, and all other matters known to any of
them, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. Neither the Information Memorandum nor
any of the other reports, financial statements, certificates or other
information furnished by or on behalf of any Loan Party to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, provided that, with respect to projected financial
information, the members of the Holdings Group represent only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.
SECTION 3.12. Subsidiaries. Holdings does not have any
subsidiaries other than the Borrower and the other Subsidiaries. Schedule 3.12
sets forth the name of, and the ownership interest of Holdings in, each
Subsidiary of Holdings and identifies each Subsidiary that is a Subsidiary Loan
Party, in each case as of the Effective Date.
SECTION 3.13. Insurance. Schedule 3.13 sets forth a
description of all insurance maintained by or on behalf of Holdings and the
Subsidiaries as of the Effective Date. As of the Effective Date, all premiums
in respect of such insurance that are due and payable have been paid.
SECTION 3.14. Labor Matters. As of the Effective Date, there
are no strikes, lockouts or slowdowns against any pending or, to the knowledge
of the Transaction Parties, threatened. The hours worked by and payments made
to employees of the Holdings Group have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters. All payments due from any member of the Holdings
Group, or for which any claim may be made against any member of the Holdings
Group, on account of wages and employee health and welfare insurance and other
benefits, have been paid or accrued as a liability on the books of such member.
The consummation of the Transactions will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any member of the Holdings Group is
bound.
SECTION 3.15. Solvency. Immediately after the consummation
of the Transactions to occur on each of the Effective Date and the Second
Credit Event Date and immediately following the making of each Loan made on
each of the Effective Date and the Second Credit Event Date and after giving
effect to the application of the proceeds of such Loans, (a) the fair value of
the assets of each Transaction Party on a consolidated basis with its
subsidiaries, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Transaction Party on a consolidated basis with its
subsidiaries will be greater than the amount that will be required to pay the
probable liability of its debts and other liabilities, subordinated, contingent
or otherwise, as such debts and other liabilities become absolute and matured;
(c) each Transaction Party on a consolidated basis with its subsidiaries will
be able to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and (d)
each Transaction Party on a consolidated basis with its subsidiaries will not
have unreasonably small capital with which to conduct the business in which it
is engaged as
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such business is now conducted and is proposed to be conducted following the
Effective Date.
SECTION 3.16. Security Documents. (a) The Pledge Agreement
is effective to create in favor of the Collateral Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Collateral (as defined in the Pledge Agreement) and, when the
Collateral is delivered to the Collateral Agent, the Pledge Agreement shall
constitute a fully perfected first priority Lien on, and security interest in,
all right, title and interest of the pledgor thereunder in such Collateral, in
each case prior and superior in right to any other person.
(b) The Security Agreement is effective to create in favor of
the Collateral Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral (as defined in the
Security Agreement) and, when financing statements in appropriate form are
filed in the offices specified on Schedule 6 to the Perfection Certificate, the
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereunder in such
Collateral (other than the Intellectual Property (as defined in the Security
Agreement), in each case prior and superior in right to any other person, other
than with respect to Liens expressly permitted by Section 6.02.
(c) When the Security Agreement is filed in the United States
Patent and Trademark Office and the United States Copyright Office, the
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in the
Intellectual Property (as defined in the Security Agreement) in which a
security interest may be perfected by filing, recording or registering a
security agreement, financing statement or analogous document in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, in each case prior and superior in right to any other person (it
being understood that subsequent recordings in the United States Patent and
Trademark Office and the United States Copyright Office may be necessary to
perfect a lien on registered trademarks, trademark applications and copyrights
acquired by the Loan Parties after the date hereof).
SECTION 3.17. Federal Reserve Regulations. (a) No member of
the Holdings Group is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of
Credit will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to buy or carry Margin Stock or to extend
credit to others for the purpose of buying or carrying Margin Stock or to
refund indebtedness originally incurred for such purpose or (ii) for any
purpose that entails a violation of, or that is inconsistent with, the
provisions of the Regulations of the Board, including Regulation G, U or X.
(c) Less than 25% of the assets of Holdings Group on a
consolidated basis consist of Margin Stock.
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ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders
to make the initial Loans and of the Issuing Bank to issue the initial Letters
of Credit hereunder shall not become effective until the date on which each of
the following conditions is satisfied (or waived in accordance with Section
9.02):
(a) The Agents (or their counsel) shall have received from
each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the
Agents (which may include telecopy transmission of a signed signature
page of this Agreement) that such party has signed a counterpart of
this Agreement.
(b) The Agents shall have received a favorable written
opinion (addressed to each Agent and the Lenders and dated the
Effective Date) of each of (i) Irell & Xxxxxxx LLP, counsel for the
Transaction Parties, substantially in the form of Exhibit B and (ii)
Kramer, Levin, Naftalis & Xxxxxxx, New York counsel for the
Transaction Parties, substantially in the form of Exhibit C, and, in
the case of each such opinion required by this paragraph, covering
such other matters relating to the Loan Parties, the Loan Documents or
the Transactions as the Required Lenders shall reasonably request.
The Transaction Parties hereby request such counsel to deliver such
opinions.
(c) The Agents shall have received such documents and
certificates as the Agents or their counsel may reasonably request
relating to the organization, existence and good standing of each Loan
Party, the authorization of the Transactions and any other legal
matters relating to the Loan Parties, the Loan Documents or the
Transactions, all in form and substance satisfactory to the Agents and
their counsel.
(d) The Agents shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.03.
(e) The Agents shall have received all fees and other amounts
due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all reasonable and
documented out-of-pocket expenses required to be reimbursed or paid by
any Loan Party hereunder or under any other Loan Document.
(f) The Agents shall have received counterparts of the Pledge
Agreement signed on behalf of the Borrower and each other Loan Party,
together with stock certificates representing all the outstanding
shares of capital stock of each member of the Holdings Group owned by
or on behalf of any Loan Party as of the Effective Date after giving
effect to the Transactions (except that stock certificates
representing shares of common stock of a Foreign Subsidiary may be
limited to 65% of the outstanding shares of common stock of such
Foreign Subsidiary), promissory notes evidencing all intercompany
Indebtedness owed to any Loan Party by any member of the Holdings
Group as
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of the Effective Date after giving effect to the Transactions and
stock powers and instruments of transfer, endorsed in blank, with
respect to such stock certificates and promissory notes.
(g) The Agents shall have received counterparts of the
Security Agreement signed on behalf of the Transaction Parties and
each other Loan Party, together with the following:
(i) 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 Liens intended to be created
under the Security Agreement; and
(ii) a completed Perfection Certificate dated the
Effective Date and signed by an executive officer or Financial
Officer of the Borrower, together with all attachments
contemplated thereby, including the results of a search of the
Uniform Commercial Code (or equivalent) filings made with
respect to the Loan Parties in the jurisdictions contemplated
by the Perfection Certificate and copies of the financing
statements (or similar documents) disclosed by such search and
evidence reasonably satisfactory to the Agents that the Liens
indicated by such financing statements (or similar documents)
are permitted by Section 6.02 or have been released.
(h) The Agents shall have received (i) counterparts of the
Guarantee Agreements signed on behalf of each party thereto other than
the Agents and (ii) counterparts of the Indemnity, Subrogation and
Contribution Agreement signed on behalf of the Borrower and each
Subsidiary Loan Party.
(i) The Agents shall have received evidence satisfactory to
them that the insurance required by Section 5.07 is in effect.
(j) The Lenders shall have received copies of, and shall be
reasonably satisfied with the results of, all environmental reports
prepared during the three- year period immediately preceding the
Effective Date with respect to any Environmental Liabilities that may
be attributable to such properties or operations acquired in
connection with the Acquisitions.
(k) The Lenders shall be reasonably satisfied with (i) the
Transaction Agreements and any waivers or amendments thereto, (ii) the
corporate and capital structure of the Loan Parties after giving
effect to the Transactions and (iii) all legal, tax and accounting
matters relating to the Transactions.
(l) The Lenders shall be reasonably satisfied as to the
amount and nature of any Environmental Liabilities and any employee
health and safety exposures to which the Holdings Group may be
subject, and the plans of Holdings and the Borrower with respect
thereto, after giving effect to the Transactions and the consummation
of the other transactions contemplated hereby.
(m) All loans outstanding under, and all other amounts due in
respect of, the BSQ Newco Credit Agreement shall have been paid in
full; the
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commitments under the BSQ Newco Credit Agreement shall have been
permanently terminated; all obligations under the BSQ Newco Credit
Agreement and the security interests relating thereto shall have been
discharged; and the Agents shall have received reasonably satisfactory
evidence of such repayment, termination and discharge.
(n) After giving effect to the Transactions and the other
transactions contemplated hereby, other than those transactions
contemplated by Section 4.02(b) and (c), the Holdings Group shall have
outstanding no indebtedness or preferred stock other than (i)
Indebtedness created under the Loan Documents, (ii) the Existing
Hechinger Public Debt, (iii) the BSQ Acqco/ Holdings Note, (iv) the
BSQ Newco/Builders Square Note, (v) the BSQ Newco Note and (vi)
Indebtedness set forth on Schedule 6.01. The terms and conditions of
all indebtedness that will remain outstanding after the Effective Date
shall be satisfactory in all respects to the Lenders.
(o) The Lenders shall be satisfied with the sufficiency of
amounts available under this Agreement to meet the ongoing working
capital requirements of the Borrower and the Borrower Subsidiaries
following the Transactions and the consummation of the other
transactions contemplated hereby.
(p) All consents and approvals required to be obtained from
any Governmental Authority or other Person in connection with the
Acquisitions and the other Transactions shall have been obtained, all
applicable waiting periods and appeal periods shall have expired, in
each case without the imposition of any burdensome conditions and
there shall be no action by any Governmental Authority, actual or
threatened, that has a reasonable likelihood of restraining,
preventing or imposing burdensome conditions on the Transactions or
the other transactions contemplated hereby. The BSQ Newco Asset
Acquisition shall have been, or substantially simultaneously with the
initial funding of Loans on the Effective Date shall be, consummated
in accordance with the Transaction Agreements and applicable law,
without any amendment to or waiver of any material terms or conditions
of the Transaction Agreements not approved by the Lenders. The Agents
shall have received copies of the Transaction Agreements and all
certificates, opinions and other documents delivered thereunder,
certified by a Financial Officer of Holdings as complete and correct.
(q) The Lenders shall have received a pro forma consolidated
balance sheet of Holdings as of the date hereof, reflecting all pro
forma adjustments as if the Transactions had been consummated on such
date (except for any adjustments that are required by purchase
accounting), and such pro forma consolidated balance sheet shall be
consistent in all material respects with the forecasts and other
information previously provided to the Lenders. The aggregate amount
of fees and expenses (including underwriting discounts and
commissions) payable or otherwise borne by the Holdings Group in
connection with the Transactions shall not exceed $30,000,000.
(r) The Agents shall have received a solvency letter, in form
and substance reasonably satisfactory to the Lenders, from Valuation
Research, with respect to the solvency of (i) BSQ Newco as of the
"Effective Date", as
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such term is defined in the BSQ Newco Credit Agreement, (ii) Hechinger
and its subsidiaries on a consolidated basis as of the "Effective
Date", as such term is defined in the Hechinger Stores Credit
Agreement, (iii) the Borrower and the Borrower Subsidiaries on a
consolidated basis as of the Effective Date and (iv) Holdings and the
Subsidiaries on a consolidated basis on each of (A) the "Effective
Date", as such term is defined in the BSQ Newco Credit Agreement, (B)
the "Effective Date", as such term is defined in the Hechinger Stores
Credit Agreement and (C) the Effective Date.
(s) The Agents shall have received a Borrowing Base
Certificate dated the Effective Date, relating to the fiscal month of
Holdings ended in August, 1997, and executed by a Financial Officer of
the Borrower.
(t) The Lenders shall be satisfied that, after giving effect
to the Transactions, substantially all the inventory, accounts
receivable and equipment of Builders Square and Hechinger and their
respective subsidiaries will be held by the Borrower and the Borrower
Subsidiaries.
(u) The Lenders shall have received audits, in form and
substance satisfactory to the Agents, from Alco Capital Group Inc.,
the Administrative Agent's asset-based evaluation group, and the
Collateral Agent, in each case of the accounts receivable and
inventory of the Borrower and the Borrower Subsidiaries after giving
effect to the Transactions.
(v) The Lenders shall be satisfied with the management of
Holdings, the Borrower and the other Subsidiaries.
(w) The BSQ Newco Asset Acquisition and the Financing
Transactions, other than the financing transactions contemplated by
Section 4.02, shall have been consummated or shall be consummated
simultaneously with the initial borrowing hereunder in accordance with
applicable law, the applicable Transaction Agreements and the related
agreements and documentation.
(x) After giving effect to the Transactions, (a) Holdings
will indirectly own all the outstanding capital stock of the Borrower,
(b) GEI II and management will own 100% of the outstanding capital
stock of Holdings and (c) Builders Square will hold the Warrant.
(y) The Lenders shall be satisfied with the capitalization,
structure and equity ownership of Holdings and the Borrower.
(z) The Borrower shall have submitted a list to the Agents of
its fixtures and equipment for a desktop appraisal evaluation by Alco
Capital Group Inc.
(aa) The consummation of the Transactions and the other
transactions contemplated hereby shall not (a) violate any applicable
law, statute, rule or regulation or (b) conflict with, or result in a
default or event of default under, any material agreement of any
member of the Holdings Group (including the Existing Hechinger Public
Indebtedness), and the Lenders shall have received one or more legal
opinions to such effect, satisfactory to the Agents, from counsel to
the Transaction Parties satisfactory to the Agents.
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(ab) All requisite material governmental authorities and
third parties shall have approved or consented to the Transactions and
the other transactions contemplated hereby to the extent required, all
applicable appeal periods shall have expired and there shall be no
governmental or judicial action, actual or threatened, that could
reasonably be expected to restrain, prevent or impose burdensome
conditions on the Transactions or the other transactions contemplated
hereby.
(ac) There shall be no litigation or administrative
proceeding that could reasonably be expected to have a Material
Adverse Effect or to adversely affect the ability of the parties to
consummate the Transactions.
(ad) The Lenders shall be reasonably satisfied in all
respects with the tax position and the contingent tax and other
liabilities of Holdings, its Affiliates and the Subsidiaries, and with
any tax sharing arrangements of Holdings, its Affiliates and the
Subsidiaries, in each case after giving effect to Transactions, and
with the plans of Holdings with respect thereto.
(ae) The Lenders shall have received financial projections
for Holdings Group on a consolidated basis for fiscal years 1997
through 2003, in each case, in form and substance reasonably
satisfactory to the Agents.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on
September 26, 1997 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Second Credit Event Date. The obligations of
the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
hereunder subsequent to the initial funding of the Loans on the Effective Date
are subject to the satisfaction of the following conditions:
(a) The Agents shall have received a certificate, dated the
Second Credit Event Date and signed by the President, a Vice President
or a Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.03.
(b) All loans outstanding under, and all other amounts due in
respect of, the Hechinger Stores Credit Agreement shall have been paid
in full; the commitments under the Hechinger Stores Credit Agreement
shall have been permanently terminated; all obligations under the
Hechinger Stores Credit Agreement shall have been discharged; and the
Agents shall have received reasonably satisfactory evidence of such
repayment, termination and discharge.
(c) After giving effect to the Transactions and the other
transactions contemplated hereby, the Holdings Group shall have
outstanding no indebtedness or preferred stock other than (i)
Indebtedness created under the Loan Documents, (ii) the Existing
Hechinger Public Debt, (iii) the BSQ Acqco/ Holdings Note, (iv) the
BSQ Newco/Builders Square Note, (v) the BSQ Newco
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Note, (vi) the Hechinger/East Coast Note and (vii) Indebtedness set
forth on Schedule 6.01. The terms and conditions of all indebtedness
that will remain outstanding after the Effective Date shall be
satisfactory in all respects to the Lenders.
(d) The Hechinger Asset Acquisition shall have been
consummated in accordance with the Transaction Agreements and
applicable law, without any amendment to or waiver of any material
terms or conditions of the Transaction Agreements not approved by the
Lenders.
(e) There shall be no litigation or administrative proceeding
that would reasonably be expected to have a Material Adverse Effect or
to adversely affect the ability of the parties to consummate the
Transactions.
(f) The Agents shall have received a Borrowing Base
Certificate dated the Second Credit Event Date, relating to the fiscal
month of Holdings ended in August, 1997, and executed by a Financial
Officer of the Borrower.
The Administrative Agent shall notify the Borrower and the Lenders of the
Second Credit Event Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
the Issuing Bank to issue Letters of Credit hereunder subsequent to the
Effective Date shall not become effective unless each of the foregoing
conditions is satisfied (or waived pursuant to Section 9.02) at or prior to
3:00 p.m., New York City time, on October 3, 1997 (and, in the event such
conditions are not so satisfied or waived, the Commitments shall terminate at
such time).
SECTION 4.03. Each Credit Event. The obligation of each
Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank
to issue, amend, renew or extend any Letter of Credit, is subject to the
satisfaction of the following conditions:
(a) The representations and warranties of each Loan Party set
forth in the Loan Documents shall be true and correct in all material
respects on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, as though made on and as of such date, other than any such
representations or warranties that by their terms refer to a date
other than the date of such Borrowing, issuance, amendment, renewal or
extension, in which case such representations and warranties shall be
true and correct as of such other date.
(b) At the time of and immediately after giving effect to
such Borrowing or the issuance, amendment, renewal or extension of
such Letter of Credit, as applicable, no Default shall have occurred
and be continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter
of Credit shall be deemed to constitute a representation and warranty by each
Transaction Party on the date thereof as to the matters specified in paragraphs
(a) and (b) of this Section.
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ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall
have been paid in full and all Letters of Credit shall have expired or
terminated and all LC Disbursements shall have been reimbursed, each
Transaction Party covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information.
The Transaction Parties will furnish to each Agent and each Lender:
(a) commencing with the fiscal year of Holdings ending October
3, 1998, within 90 days after the end of each fiscal year of Holdings,
its consolidated and consolidating balance sheet and related
statements of operations, stockholders' equity and cash flows as of
the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all audited
(in the case of such consolidated statements) and reported on by
independent public accountants of recognized national standing
(without a "going concern" or like qualification or exception and
without any qualification or exception as to the scope of such audit)
to the effect that such consolidated financial statements present
fairly in all material respects the financial condition and results of
operations of Holdings and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
(b) (a) commencing with the fiscal year of Holdings ending
October 3, 1998, within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of Holdings, its
consolidated and consolidating balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and
for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous fiscal year, all certified by
one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of Holdings
and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end
audit adjustments, purchase accounting adjustments and the absence of
footnotes;
(c) (a) commencing with the fiscal year of Holdings ending
October 3, 1998, within 30 days (or 45 days in the case of the first
two fiscal quarters following the Effective Date) after the end of
each of the first two fiscal months of each fiscal quarter of
Holdings, its consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and
for such fiscal month and the then elapsed portion of the fiscal year,
all certified by one of its Financial Officers as presenting in all
material respects the financial condition and results of operations of
Holdings and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end
audit adjustments, purchase accounting adjustments and the absence of
footnotes;
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(d) concurrently with any delivery of financial statements
under clause (a) or (b) above, a certificate of a Financial Officer of
Holdings (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Section
6.11 and Section 6.12 and (iii) stating whether any change in GAAP or
in the application thereof has occurred since the date of Holdings's
audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;
(e) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the
extent required by accounting rules or guidelines);
(f) within 30 days following the commencement of each fiscal
year of Holdings, a detailed consolidated budget for such fiscal year
(including a projected consolidated balance sheet and related
statements of projected operations and cash flow as of the end of and
for such fiscal year) and, promptly when available, any significant
revisions of such budget;
(g) within 20 days after the end of each fiscal month a
certificate in the form of Exhibit I (a "Borrowing Base Certificate")
showing the Borrowing Base as of the close of business on the last day
of such fiscal month, each such Certificate to be certified as
complete and correct on behalf of the Borrower by a Financial Officer
of the Borrower;
(h) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other
materials filed by any member of the Holdings Group with the
Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or with
any national securities exchange, as the case may be;
(i) promptly upon receipt thereof, copies of all reports
submitted to the Borrower by independent certified public accountants
in connection with each annual, interim or special audit of the books
of the Borrower or any of its Subsidiaries made by such accountants,
including any management letter commenting on the Borrower's internal
controls submitted by such accountants to management in connection
with their annual audit; and
(j) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of any member of the Holdings Group, or compliance with the
terms of any Loan Document, as the Agents or any Lender may reasonably
request.
SECTION 5.02. Notices of Material Events. The Transaction
Parties will furnish to each Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
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(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting any member of the Holdings Group or any Affiliate
thereof that, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in a Material Adverse Effect; and
(d) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of Holdings and the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
SECTION 5.03. Information Regarding Collateral. (a) The
Transaction Parties will furnish to the Agents prompt written notice of any
change (i) in any Loan Party's corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of any Loan Party's chief executive office,
its principal place of business, any office in which it maintains books or
records relating to Collateral owned by it or any office or facility at which
Collateral owned by it is located (including the establishment of any such new
office or facility), (iii) in any Loan Party's identity or corporate structure
or (iv) in any Loan Party's Federal Taxpayer Identification Number. The
Transaction Parties agree not to effect or permit any change referred to in the
preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the Agents to
continue at all times following such change to have a valid, legal and
perfected security interest in all the Collateral. The Transaction Parties
also agree promptly to notify the Agents if any material portion of the
Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clause (a) of
Section 5.01, Holdings shall deliver to the Agents a certificate of a Financial
Officer of Holdings setting forth the information required pursuant to Section
2 of the Perfection Certificate or confirming that there has been no change in
such information since the date of the Perfection Certificate delivered on the
Effective Date or the date of the most recent certificate delivered pursuant to
this Section.
SECTION 5.04. Existence; Conduct of Business. Each
Transaction Party will, and will cause each of the Subsidiaries to, do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its business, provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION 5.05. Payment of Obligations. Each Transaction Party
will, and will cause each of the Subsidiaries to, pay its Indebtedness and
other obligations, including Tax liabilities, before the same shall become
delinquent or in default, except
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where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) such Transaction Party or such Subsidiary has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP, (c) such contest effectively suspends collection of the contested
obligation and the enforcement of any Lien securing such obligation and (d) the
failure to make payment pending such contest could not reasonably be expected
to result in a Material Adverse Effect.
SECTION 5.06. Maintenance of Properties. Each Transaction
Party will, and will cause each of the Subsidiaries to, keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
SECTION 5.07. Insurance. (a) Each Transaction Party shall
(i) maintain insurance with financially sound and reputable insurers with an
A.M. Best rating of A- or better (or, to the extent consistent with prudent
business practice, a program of self-insurance approved by the Administrative
Agent) on such of its property and in at least such amounts and against at
least such risks as is customary with companies in the same or similar
businesses operating in the same or similar locations, including public
liability insurance against claims for personal injury or death occurring upon,
in or about or in connection with the use of any properties owned, occupied or
controlled by it (including the insurance required pursuant to the Security
Documents); (ii) maintain such other insurance as may be required by law; and
(iii) furnish to the Administrative Agent, upon written request, full
information as to the insurance carried.
(b) Fire and extended coverage policies maintained with
respect to any Collateral shall be endorsed or otherwise amended to include (i)
a non-contributing mortgage clause (regarding improvements to real property)
and lenders' loss payable clause (regarding personal property), in form and
substance satisfactory to the Administrative Agent, which endorsements or
amendments shall provide that, from and after the Effective Date, if the
insurer shall have received written notice from the Administrative Agent or the
Borrowing Base Audit Agent of the occurrence of an Event of Default, the
insurer shall pay all proceeds otherwise payable to the Borrower or the other
Loan Parties under the policies directly to the Administrative Agent or the
Collateral Agent, (ii) a provision to the effect that none of the Borrower, the
Administrative Agent or any other party shall be a coinsurer and (iii) such
other provisions as the Administrative Agent may reasonably require from time
to time to protect the interests of the Lenders. Commercial general liability
policies shall be endorsed to name the Administrative Agent as an additional
insured. Business interruption policies shall name the Administrative Agent as
a loss payee and shall be endorsed or amended to include (i) a provision that,
from and after the Effective Date, if the insurer shall have received written
notice from the Administrative Agent or the Collateral Agent of the occurrence
of an Event of Default, the insurer shall pay all proceeds otherwise payable to
the Borrower or the other Loan Parties under the policies directly to the
Administrative Agent or the Collateral Agent, (ii) a provision to the effect
that none of the Borrower, the Administrative Agent or any other party shall be
a co-insurer and (iii) such other provisions as the Administrative Agent may
reasonably require from time to time to protect the interests of the Lenders.
Each such policy referred to in this paragraph also shall provide that it shall
not be canceled, modified or not renewed (i) by reason of nonpayment of premium
except upon not less than 10 days' prior written notice thereof by the insurer
to the Administrative Agent (giving the Administrative Agent the right to cure
defaults in the payment of premiums) or
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(ii) for any other reason except upon not less than 30 days' prior written
notice thereof by the insurer to the Administrative Agent. The Borrower shall
deliver to the Administrative Agent, prior to the cancelation, modification or
nonrenewal of any such policy of insurance, a copy of a renewal or replacement
policy (or other evidence of renewal of a policy previously delivered to the
Administrative Agent) together with evidence satisfactory to the Administrative
Agent of payment of the premium therefor.
SECTION 5.08. Casualty and Condemnation. Each Transaction
Party will furnish to the Agents and the Lenders prompt written notice of any
casualty or other insured damage to any material portion of any Collateral or
the commencement of any action or proceeding for the taking of any material
portion of the Collateral or any part thereof or interest therein under power
of eminent domain or by condemnation or similar proceeding.
SECTION 5.09. Books and Records; Inspection and Audit Rights.
(a) Each Transaction Party will, and will cause each of the Subsidiaries to,
keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. Each Transaction Party will, and will cause each of the
Subsidiaries to, permit any representatives designated by any Agent or any
Lender, upon reasonable prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested.
(b) Each Transaction Party will, and will cause each of the
Subsidiaries to, from time to time upon the request of the Borrowing Base Audit
Agent or the Required Lenders through the Administrative Agent, permit the
Borrowing Base Audit Agent or the Lenders or professionals (including
investment bankers, consultants, accountants, lawyers and appraisers) retained
by the Borrowing Base Audit Agent, the Administrative Agent or the Lenders to
conduct evaluations and appraisals of (i) the Borrower's practices in the
computation of the Borrowing Base and (ii) the assets included in the Borrowing
Base (it being understood and agreed to that the Borrowing Base Audit Agent
will conduct such evaluations and appraisals each quarter during the fiscal
year of Holdings ending October 3, 1998, and thereafter, provided, however,
that if (i) no Default or Event of Default has occurred or is continuing and
(ii) the Borrowing Base exceeds the aggregate Total Exposures by at least
$150,000,000 at all times during any fiscal year of Holdings (a "Specified
Fiscal Year") following the fiscal year of Holdings ended October 3, 1998, such
evaluations and appraisals shall be conducted semiannually during such
Specified Fiscal Year), and pay the reasonable and documented fees and expenses
of the Borrowing Base Audit Agent, the Lenders or such professionals with
respect to such quarterly or semi-annual appraisals, respectively.
(c) Each Transaction Party will, and will cause each of the
Subsidiaries to, in connection with any evaluation and appraisal relating to
the computation of the Borrowing Base, maintain such additional reserves (for
purposes of computing the Borrowing Base) in respect of Eligible Inventory and
make such other adjustments to its parameters for including Eligible Inventory
in the Borrowing Base as the Borrowing Base Audit Agent or the Required Lenders
through the Administrative Agent shall require based upon the results of such
evaluation and appraisal.
SECTION 5.10. Compliance with Laws. Each Transaction Party
will, and will cause each of the Subsidiaries to, comply with all laws, rules,
regulations and
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orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.11. Use of Proceeds and Letters of Credit. The
proceeds of Revolving Loans on the Effective Date will be used only for the
payment of (a) amounts payable under the Transaction Agreements as
consideration for the Acquisitions and (b) fees and expenses payable in
connection with the Transactions. The proceeds of the Revolving Loans (other
than Revolving Loans referred to in the immediately preceding sentence) and
Swingline Loans will be used only for general corporate purposes. No part of
the proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations G, U and X. Letters of Credit will be issued only for
general corporate purposes.
SECTION 5.12. Additional Borrower Subsidiaries. If any
additional Borrower Subsidiary is formed or acquired after the Effective Date,
Holdings and the Borrower will notify the Agents and the Lenders thereof and
(a) if such Borrower Subsidiary is a Subsidiary Loan Party, Holdings and the
Borrower will cause such Borrower Subsidiary to become a party to the
Subsidiary Guarantee Agreement, the Indemnity, Subrogation and Contribution
Agreement and each applicable Security Document in the manner provided therein
within three Business Days after such Borrower Subsidiary is formed or acquired
and promptly take such actions to create and perfect Liens on such Borrower
Subsidiary's assets to secure the Obligations as any Agent or the Required
Lenders shall reasonably request and (b) if any shares of capital stock or
Indebtedness of such Borrower Subsidiary are owned by or on behalf of any Loan
Party, Holdings and the Borrower will cause such shares and promissory notes
evidencing such Indebtedness to be pledged pursuant to the Pledge Agreement
within three Business Days after such Borrower Subsidiary is formed or acquired
(except that, if such Borrower Subsidiary is a Foreign Subsidiary, shares of
common stock of such Borrower Subsidiary to be pledged pursuant to the Pledge
Agreement may be limited to 65% of the outstanding shares of common stock of
such Borrower Subsidiary).
SECTION 5.13. Further Assurances. (a) Each Transaction Party
will, and will cause each Subsidiary Loan Party to, execute any and all further
documents, financing statements, agreements and instruments, and take all such
further actions (including the filing and recording of financing statements and
other documents), that may be required under any applicable law, or which any
Agent or the Required Lenders may reasonably request, to effectuate the
transactions contemplated by the Loan Documents or to grant, preserve, protect
or perfect the Liens created or intended to be created by the Security
Documents or the validity or priority of any such Lien, all at the expense of
the Loan Parties. The Transaction Parties also agree to provide to the Agents,
from time to time upon request, evidence reasonably satisfactory to the Agents
as to the perfection and priority of the Liens created or intended to be
created by the Security Documents.
(b) If any material assets (other than real property and
personal property that is not of the type encumbered or to be encumbered by the
Lien of the Security Agreement on the Effective Date) are acquired by the
Holdings Group or any Subsidiary Loan Party after the Effective Date (other
than assets constituting Collateral under the Security Agreement that become
subject to the Lien of the Security Agreement upon acquisition thereof), the
Transaction Parties will notify the Agents and
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the Lenders thereof, and, if requested by any Agent or the Required Lenders,
the Transaction Parties will cause such assets to be subjected to a Lien
securing the Obligations and will take, and cause the Subsidiary Loan Parties
to take, such actions as shall be necessary or reasonably requested by any
Agent to grant and perfect such Liens, including actions described in paragraph
(a) of this Section, all at the expense of the Loan Parties.
SECTION 5.14. Cash Management Procedures. As promptly as
practicable, the Holdings Group will establish (i) the cash management
procedures set forth in the Security Agreement (in no event later than 30 days
after the Effective Date) and (ii) the lockbox arrangements set forth in the
Security Agreement (in no event later than 90 days after the Effective Date).
SECTION 5.15. Completion of Transactions. The Transaction
Parties will complete the Acquisitions no later than October 3, 1997.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, each Transaction Party covenants and
agrees with the Lenders that:
SECTION 6.01. Indebtedness; Certain Equity Securities. (a)
The Transaction Parties will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
thereof or result in an earlier maturity date or decreased weighted
average life thereof, provided that the material terms of such
extensions, renewals and replacements are at least as favorable to the
Lenders as those of such Indebtedness;
(iii) Indebtedness of (a) any Loan Party that is not a Foreign
Subsidiary to any other Loan Party that is not a Foreign Subsidiary
(other than the Borrower or the Borrower Subsidiaries) and (b) the
Borrower to any Borrower Subsidiary and of any Borrower Subsidiary to
the Borrower or any other Borrower Subsidiary, provided that
Indebtedness of any Borrower Subsidiary that is not a Loan Party to
the Borrower or any Subsidiary Loan Party shall be subject to Section
6.04;
(iv) Guarantees by any Subsidiary Loan Party of Indebtedness
of any Borrower Subsidiary and by any Borrower Subsidiary of
Indebtedness of the Borrower or any other such Borrower Subsidiary,
provided that Guarantees by the Borrower or any Subsidiary Loan Party
of Indebtedness of any Borrower Subsidiary that is not a Loan Party
shall be subject to Section 6.04;
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(v) Indebtedness of the Borrower, Hechinger, Hechinger East
Coast, BSQ Newco, Hechinger Stores or any Borrower Subsidiary incurred
to finance the acquisition, construction or improvement of any fixed
or capital assets, including Capital Lease Obligations and any
Indebtedness assumed in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the
acquisition thereof, and extensions, renewals and replacements of any
such Indebtedness that do not increase the outstanding principal
amount thereof or result in an earlier maturity date or decreased
weighted average life thereof, provided that (A) such Indebtedness is
incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement and (B) the aggregate
principal amount of Indebtedness permitted by this clause (v) shall
not exceed $15,000,000 at any time outstanding;
(vi) Indebtedness of any Person that becomes a Borrower
Subsidiary after the date hereof, provided that (A) such Indebtedness
exists at the time such Person becomes a Borrower Subsidiary and is
not created in contemplation of or in connection with such Person
becoming a Borrower Subsidiary and (B) the aggregate principal amount
of Indebtedness permitted by this clause (vi) shall not exceed
$5,000,000 at any time outstanding;
(vii) the BSQ Newco Note, BSQ Acqco/Holdings Note and BSQ
Newco/Builders Square Note;
(viii) Indebtedness under Hedging Agreements entered into in
accordance with Section 6.06;
(ix) Indebtedness incurred or assumed by Borrower in
connection with the Hechinger Asset Acquisition, including the
assumption by the Borrower of the reimbursement obligations in respect
of Existing Letters of Credit under the Hechinger Stores Credit
Facility and certain existing Indebtedness of Hechinger Stores and
Hechinger East Coast;
(x) Indebtedness incurred in connection with the Receivables
Purchase Agreements;
(xi) Indebtedness incurred in connection with the Company
Owned Life Insurance Program, provided that the aggregate principal
amount of Indebtedness permitted by this clause (xi) shall not exceed
$45,000,000 at any time outstanding;
(xii) the Existing Hechinger Public Indebtedness; and
(xiii) other unsecured Indebtedness in an aggregate principal
amount not exceeding $10,000,000 at any time outstanding, provided
that the aggregate principal amount of Indebtedness of the Borrower
Subsidiaries permitted by this clause (xiii) shall not exceed
$2,000,000 at any time outstanding.
(b) Subject to the provisions of Section 6.07, none of the
Transaction Parties will, nor will they permit any Subsidiary to, issue any
preferred stock (except for preferred stock (i) all dividends in respect of
which are to be paid (and all other payments in respect of which are to be
made) in additional shares of such preferred
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stock, in lieu of cash, until the date that is at least 360 days following the
Maturity Date, (ii) that is not subject to redemption other than redemption at
the option of the Transaction Party issuing such preferred stock and (iii) all
payments in respect of which are expressly subordinated to the Obligations) or
be or become liable in respect of any obligation (contingent or otherwise) to
purchase, redeem, retire, acquire or make any other payment in respect of (i)
any shares of capital stock of any member of the Holdings Group or (ii) any
option, warrant or other right to acquire any such shares of capital stock.
SECTION 6.02. Liens. The Transaction Parties will not, and
will not permit any Subsidiary to, create, incur, assume or permit to exist any
Lien on any property or asset now owned or hereafter acquired by it, or assign
or sell any income or revenues (including accounts receivable) or rights in
respect of any thereof, except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of any Loan Party
existing on the date hereof and set forth in Schedule 6.02, provided
that (i) such Lien shall not apply to any other property or asset of
any Loan Party and (ii) such Lien shall secure only those obligations
that it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal
amount thereof;
(d) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Borrower Subsidiary or
existing on any property or asset of any Person that becomes a
Borrower Subsidiary after the date hereof prior to the time such
Person becomes a Borrower Subsidiary, provided that (i) such Lien is
not created in contemplation of or in connection with such acquisition
or such Person becoming a Borrower Subsidiary, as the case may be,
(ii) such Lien shall not apply to any other property or assets of the
Borrower or any Borrower Subsidiary and (iii) such Lien shall secure
only those obligations that it secures on the date of such acquisition
or the date such Person becomes a Borrower Subsidiary, as the case may
be and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;
(e) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower, Hechinger, Hechinger East Coast, BSQ Newco,
Hechinger Stores or any Borrower Subsidiary, provided that (i) such
security interests secure Indebtedness permitted by clause (v) of
Section 6.01(a), (ii) such security interests and the Indebtedness
secured thereby are incurred prior to or within 90 days after such
acquisition or the completion of such construction or improvement,
(iii) the Indebtedness secured thereby does not exceed 100% of the
cost of acquiring, constructing or improving such fixed or capital
assets and (iv) such security interests shall not apply to any other
property or assets of the Borrower, Hechinger, Hechinger East Coast,
BSQ Newco, Hechinger Stores or any Borrower Subsidiary;
(f) the Warrant;
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(g) leases and subleases on real property of any of the
Transaction Parties or any Subsidiary, provided that either (i) such
lease or sublease is entered into in the ordinary course of such
Person's business or (ii) such real property is not being used by such
Person in the ordinary course of its business or is being used in a
manner not inconsistent with the granting of such lease or sublease;
(h) Liens on account receivables created in connection with
the Receivables Purchase Agreements;
(i) Liens created in connection with the loans under the
Company Owned Life Insurance Program;
(j) until the Second Credit Event Date, Liens created in
connection with letters of credit issued under the Hechinger Stores
Credit Agreement; and
(k) Liens listed on Schedule 6.02.
SECTION 6.03. Fundamental Changes. (a) The Transaction
Parties will not and will not permit any Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any
Subsidiary may merge into any Subsidiary Loan Party in a transaction in which
the surviving entity is a Subsidiary Loan Party, (iii) any Subsidiary that is
not a Loan Party may merge into any Subsidiary that is not a Loan Party and
(iv) any Borrower Subsidiary may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to the Lenders,
provided that any such merger involving a Person that is not a wholly owned
Subsidiary immediately prior to such merger shall not be permitted unless also
permitted by Section 6.04.
(b) The Borrower will not, and will not permit any of the
Borrower Subsidiaries to, engage to any material extent in any business other
than businesses of the type conducted by the Borrower and such Borrower
Subsidiaries on the date of execution of this Agreement and businesses
reasonably related thereto.
(c) Holdings will not, and will not permit any of the
Subsidiaries to, engage in any business or activity other than the ownership of
all the outstanding shares of capital stock of BSQ Acqco and activities
incidental thereto. Holdings will not own or acquire any assets (other than
shares of capital stock of BSQ Acqco, the BSQ Acqco/Holdings Note, cash and
Permitted Investments) or incur any liabilities (other than liabilities under
the Loan Documents, liabilities imposed by law, including tax liabilities, and
other liabilities incidental to its existence and permitted business and
activities, including intercompany Indebtedness permitted under Section
6.01(a)(iii).
(d) BSQ Acqco will not engage in any business or activity
other than the ownership of all the outstanding shares of capital stock of BSQ
Newco and Hechinger and activities incidental thereto. BSQ Acqco will not own
or acquire any assets (other than shares of capital stock of BSQ Newco and
Hechinger, cash and Permitted Investments) or incur any liabilities (other than
liabilities under the Loan Documents
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and the BSQ Acqco/Holdings Note, liabilities imposed by law, including tax
liabilities, and other liabilities incidental to its existence and permitted
business and activities, including intercompany indebtedness permitted under
Section 6.01(a)(iii).
(e) BSQ Newco will not engage in any business or activity
other than being the obligee under the BSQ Newco Note and the obligor under the
BSQ Newco/Builders Square Note and activities incidental thereto and the
ownership of the real and personal property set forth in Schedule 6.03(e) and
the activities incidental thereto. BSQ Newco will not own or acquire any
assets (other than the assets described in the first sentence hereof, cash and
Permitted Investments) or incur any liabilities (other than liabilities under
the Loan Documents and the BSQ Newco/Builders Square Note, liabilities imposed
by law, including tax liabilities, and other liabilities incidental to its
existence and permitted business and activities, including intercompany
indebtedness permitted under Section 6.01(a)(iii)).
(f) Hechinger will not engage in any business or activity
other than the ownership of all the outstanding shares of capital stock of
Hechinger Stores, being the obligee under the Existing Hechinger Public Debt
and activities incidental thereto and the ownership of the real and personal
property set forth in Schedule 6.03(f) and the activities incidental thereto.
Hechinger will not own or acquire any assets (other than the assets described
in the first sentence hereof, cash and Permitted Investments) or incur any
liabilities (other than liabilities under the Loan Documents, the Existing
Hechinger Public Debt, liabilities imposed by law, including tax liabilities,
and other liabilities incidental to its existence and permitted business and
activities, including intercompany indebtedness permitted under Section
6.01(a)(iii)).
(g) Prior to the Second Credit Event Date, Hechinger Stores
will not engage in any business other than businesses of the type conducted by
Hechinger Stores on the date of execution of this Agreement and businesses
reasonably related thereto. From and after the Second Credit Event Date,
Hechinger Stores will not engage in any business or activity other than the
ownership of all the outstanding shares of capital stock of the Borrower and
Hechinger East Coast and activities incidental thereto and the ownership of the
real and personal property set forth in Schedule 6.03(g) and the activities
incidental thereto. Hechinger Stores will not own or acquire any assets (other
than the assets described in the first sentence hereof, cash and Permitted
Investments) or incur any liabilities (other than liabilities under the Loan
Documents, liabilities imposed by law, including tax liabilities, and other
liabilities incidental to its existence and permitted business and activities
including intercompany indebtedness permitted under Section 6.01(a)(iii)).
(h) Prior to the Second Credit Event Date, Hechinger East
Coast will not engage in any business other than businesses of the type
conducted by Hechinger East Coast on the date of execution of this Agreement
and businesses reasonably related thereto. From and after the Second Credit
Event Date, Hechinger East Coast will not engage in any business or activity
other than activities incidental thereto and the ownership of the real and
personal property set forth in Schedule 6.03(h) and the activities incidental
thereto. Hechinger East Coast will not own or acquire any assets (other than
the assets described in the first sentence hereof, cash and Permitted
Investments) or incur any liabilities (other than liabilities under the Loan
Documents, liabilities imposed by law, including tax liabilities, and other
liabilities incidental to its existence and permitted business and activities,
including intercompany indebtedness permitted under Section 6.01(a)(iii)).
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SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Transaction Parties will not, and will not permit any of the
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger)
any capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person,
or purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person constituting a business unit,
except:
(a) the Acquisitions;
(b) Permitted Acquisitions, provided that the sum of (i) the
consideration paid in connection with all Permitted Acquisitions and
(ii) the consideration paid in connection with all acquisitions
pursuant to Section 6.04(c) shall not exceed $15,000,000 in the
aggregate during the term of this Agreement;
(c) the acquisition of shares or other equity interests in any
Person in transactions not constituting Permitted Acquisitions,
provided that (i) the criteria set forth in clauses (a), (b), (c),
(f), (g) and (h) of the definition of the term "Permitted Acquisition"
shall have been satisfied in connection with such acquisition, (ii)
the consideration paid in connection with all acquisitions pursuant to
this clause (c) shall not exceed $7,500,000 during the term of this
Agreement and (iii) the sum of (A) the consideration paid in
connection with all Permitted Acquisitions and (B) the consideration
paid in connection with all acquisitions pursuant to this clause (c)
shall not exceed $15,000,000 in the aggregate during the term of this
Agreement;
(d) Permitted Investments;
(e) investments existing on the date hereof and set forth on
Schedule 6.04, to the extent such investments would not be permitted
under any other clause of this Section;
(f) investments by the Transaction Parties in the capital
stock of the Subsidiaries, provided that (i) any such shares of
capital stock shall be pledged pursuant to the Pledge Agreement
(subject to the limitations applicable to common stock of a Foreign
Subsidiary referred to in Section 5.12) and (ii) the amount of
investments by the Transaction Parties in Subsidiaries that are not
Loan Parties shall not exceed $2,000,000 in the aggregate at any time
outstanding;
(g) loans or advances made by (i) any Loan Party that is not a
Foreign Subsidiary to any other Loan Party that is not a Foreign
Subsidiary (other than the Borrower or the Borrower Subsidiaries) and
(ii) the Transaction Parties to any Borrower Subsidiary and made by
any Borrower Subsidiary to the Borrower or any other Borrower
Subsidiary, provided that (i) any such loans and advances made by a
Loan Party shall be evidenced by a promissory note pledged pursuant to
the Pledge Agreement and (ii) the amount of all such loans and
advances by
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Loan Parties to Subsidiaries that are not Loan Parties shall not
exceed $2,000,000 in the aggregate at any time outstanding;
(h) Guarantees constituting Indebtedness permitted by Section
6.01, provided that the amount of Indebtedness that is (i) outstanding
with respect to Subsidiaries that are not Loan Parties and (ii)
Guaranteed by any Loan Party shall not exceed $2,000,000 in the
aggregate at any time outstanding;
(i) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes
with, customers and suppliers, in each case in the ordinary course of
business;
(j) Hedging Agreements permitted under Section 6.06;
(k) loans or advances to employees (i) for the purpose of
travel, entertainment or relocation in the ordinary course of business
in an aggregate amount not to exceed $2,000,000 at any time
outstanding and (ii) for the purpose of enabling such employees to buy
stock of Holdings in an aggregate amount not exceeding $3,000,000
during the term of this Agreement, provided that loans or advances
made under this sub-clause (ii) shall be collateralized by the stock
purchased with the proceeds of such loans or advances; and
(l) other investments in an aggregate amount not to exceed
$5,000,000 at any time outstanding.
SECTION 6.05. Asset Sales. The Transaction Parties will not,
and will not permit any of the Subsidiaries to, sell, transfer, lease or
otherwise dispose of any asset, including any capital stock, nor will the
Transaction Parties permit any of the Subsidiaries to issue any additional
shares of its capital stock or other ownership interest in such Subsidiary,
except:
(a) sales of inventory, used or surplus equipment and
Permitted Investments in the ordinary course of business;
(b) sales of inventory located at any store where the Borrower
is conducting a going-out-of-business or similar sale in connection
with the closing of such store;
(c) sales, transfers and dispositions to the Borrower or a
Borrower Subsidiary, provided that any such sales, transfers or
dispositions involving a Borrower Subsidiary that is not a Loan Party
shall be made in compliance with Section 6.09;
(d) sales of assets listed on Schedule 6.05;
(e) sales of real estate and fixtures relating to such real
estate; and
(f) sales of accounts receivables in connection with the
Receivables Purchase Agreements;
(g) sales, transfers and dispositions of assets (other than
capital stock of a Subsidiary) that are not permitted by any other
clause of this Section,
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provided that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon this clause (g)
shall not exceed $10,000,000 in the aggregate during the term of this
Agreement,
provided that all sales, transfers, leases and other dispositions permitted
hereby (other than sales, transfers and other disposition permitted under
clause (b) and (c)) shall be made for fair value and (other than sales,
transfers and other dispositions permitted under clause (c)) solely for cash
consideration.
SECTION 6.06. Hedging Agreements. The Transaction Parties
will not, and will not permit any of the Subsidiaries to, enter into any
Hedging Agreement, other than Hedging Agreements entered into in the ordinary
course of business to hedge or mitigate risks to which the Borrower or any
Borrower Subsidiary is exposed in the conduct of its business or the management
of its liabilities.
SECTION 6.07. Restricted Payments; Certain Payments of
Indebtedness. (a) The Transaction Parties will not, and will not permit any
Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, except (i) the Transaction Parties may
declare and pay dividends with respect to their capital stock payable solely in
additional shares of their common stock, (ii) the Borrower Subsidiaries may
declare and pay dividends ratably with respect to their capital stock and the
Subsidiaries other than the Borrower may declare and pay dividends ratably with
respect to their capital stock, (iii) the Borrower may make Restricted Payments
pursuant to and in accordance with stock option plans or other benefit plans
for management or employees of the Borrower and the Borrower Subsidiaries in an
amount not exceeding during any fiscal year of Holdings (A) $2,000,000 plus (B)
the amount by which (x) the product of $2,000,000 and the number of complete
fiscal years during the period from and after the Effective Date to but
excluding the date of such Restricted Payment exceeds (y) the amount of all
such Restricted Payments made during such fiscal years plus (C) the aggregate
cash consideration received by the Borrower during the period from and after
the Effective Date to but excluding the date of such Restricted Payment from
the sale or issuance of common stock to management or employees of the Borrower
to the extent such cash consideration was not previously taken into account in
connection with any Restricted Payment under this clause (iii), provided all
such Restricted Payments made under this clause (iii) shall not exceed
$8,000,000 in the aggregate plus any amounts permitted under sub-clause (iii)
(C) during the term of this Agreement, (iv) the Borrower and Hechinger Stores
may pay dividends or make loans to Hechinger to the extent necessary to enable
Hechinger to redeem or purchase any portion of the Existing Hechinger Public
Debt to the extent that the Borrower or Hechinger Stores would have been
permitted to redeem or repurchase such Existing Hechinger Public Debt pursuant
to clause (b)(iii) below and (v) any of the Transaction Parties or Subsidiaries
may pay dividends to enable payment of fees and other amounts owing under any
of the transactions specified in Schedule 6.08.
(b) The Transaction Parties will not, and will not permit any
Subsidiary to, make or agree to pay or make, directly or indirectly, any
payment or other distribution (whether in cash securities or other property) of
or in respect of principal of or interest on any Indebtedness, or any payment
or other distribution (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancelation or termination of any
Indebtedness, except:
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(i) payment of regularly scheduled interest and principal
payments as and when due in respect of any Indebtedness;
(ii) refinancings of Indebtedness to the extent permitted by
Section 6.01; and
(iii) after the Second Credit Event Date, redemptions or
repurchases of any portion of the Existing Hechinger Public Debt,
provided that (A) at the time of such redemption or repurchase and
after giving effect thereto, (1) no Default or Event of Default has
occurred and is continuing and (2) the Borrowing Base exceeds the
aggregate Total Exposures by at least $125,000,000 and (B) all such
redemptions or repurchases under this clause (iii) do not exceed in
the aggregate $200,000,000 during the term of this Agreement.
SECTION 6.08. Transactions with Affiliates. The Transaction
Parties will not, and will not permit any Subsidiary to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) transactions in the
ordinary course of business that do not involve Holdings and are at prices and
on terms and conditions not less favorable to the Borrower or such Subsidiary
than could be obtained on an arm's-length basis from unrelated third parties,
(b) transactions between or among the Subsidiary Loan Parties not involving any
other Affiliate, (c) payments by the Borrower and the Borrower Subsidiaries to
Holdings as common parent (and to any intermediate Subsidiary Loan Party that
is treated as a common parent) in respect of Taxes attributable to the Borrower
and the Borrower Subsidiaries, but not in excess of the amount in respect of
Taxes that the Borrower and the Borrower Subsidiaries would pay in a separate
company return, (d) any Restricted Payment permitted by Section 6.07, (e) any
transactions listed on Schedule 6.08, (f) the Holdings Group may pay fees
specified in the Management Agreement and (g) the acquisition by the Borrower
of the Acquired Hechinger Assets on the Second Credit Event Date as described
in the preliminary statements to this agreement.
SECTION 6.09. Restrictive Agreements. The Transaction
Parties will not and will not permit any Subsidiary to, directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Transaction Parties or any Subsidiary to create, incur or permit to exist any
Lien upon any of its property or assets or (b) the ability of any Subsidiary to
pay dividends or other distributions with respect to any shares of its capital
stock or to make or repay loans or advances to the Borrower or any other
Subsidiary or to Guarantee Indebtedness of the Borrower or any other
Subsidiary, provided that (i) the foregoing shall not apply to restrictions and
conditions imposed by law or by any Loan Document, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on
Schedule 6.09 (but shall apply to any extension or renewal of, or any amendment
or modification expanding the scope of, any such restriction or condition),
(iii) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale,
provided such restrictions and conditions apply only to the Subsidiary that is
to be sold and such sale is permitted hereunder, (iv) clause (a) of the
foregoing shall not apply to restrictions or conditions imposed by any
agreement relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness and
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(v) clause (a) of the foregoing shall not apply to customary provisions in
leases restricting the assignment or subleasing thereof.
SECTION 6.10. Amendment of Material Documents. The
Transaction Parties will not, and will not permit any Subsidiary to, amend,
modify or waive any of its rights under (a) its certificate of incorporation,
by-laws or other organizational documents, (b) the Management Agreement, (c)
the Builders Square Purchase Agreement, (d) the Hechinger Merger Agreement, (e)
the BSQ Newco Note, (f) the BSQ Acqco/Holdings Note, (g) the BSQ Newco/Builders
Square Note, (h) Existing Hechinger Public Debt, (i) the Hechinger/East Coast
Note or (j) the Receivables Agreements, in each case to the extent that such
amendment, modification or waiver would be adverse to the interests of the
Lenders.
SECTION 6.11. Capital Expenditures. The Transaction Parties
will not permit the aggregate amount of Capital Expenditures made by the
Borrower and the Borrower Subsidiaries in any fiscal year to exceed the amount
set forth below opposite such year:
Fiscal Year Amount
----------- ------
1997 $60,000,000
1998 $60,000,000
1999 $60,000,000
2000 $60,000,000
2001 $65,000,000
2002 $70,000,000
Notwithstanding anything to the contrary, no Transaction Party (other than the
Borrower) shall be permitted to make any Capital Expenditures, except for any
Capital Expenditures made by BSQ Newco, Hechinger, Hechinger Stores and
Hechinger East Coast pursuant to Section 6.03(e), (f), (g) and (h).
SECTION 6.12. Minimum Consolidated EBITDA. The Transaction
Parties will not permit Consolidated EBITDA (a) for the two-fiscal-quarter
period ending the Saturday closest to June 30, 1998 to be less than
$20,000,000, (b) for the three-fiscal-quarter period ending the Saturday
closest to September 30, 1998, to be less than $35,000,000, (c) for any
four-fiscal-quarter period ending during any period set forth below to be less
than the amount set forth below opposite such period:
Period Amount
------ ------
The Saturday closest to December 30, 1998
to the Saturday closest to June 30, 1999 $50,000,000
The Saturday closest to September 30, 1999
to the Saturday closest to June 30, 2000 $55,000,000
The Saturday closest to September 30, 2000
to the Saturday closest to June 30, 2001 $60,000,000
The Saturday closest to September 30, 2001
to the Saturday closest to June 30, 2002 $65,000,000
The Saturday closest to September 30, 2002
and thereafter $70,000,000
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SECTION 6.13. Additional Subsidiaries. The Transaction
Parties will not, and will not permit any Subsidiary to, create any additional
Subsidiary, unless such Subsidiary is a Borrower Subsidiary.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall
occur:
(a) the Borrower shall fail to pay any principal of any Loan
or any reimbursement obligation in respect of any LC Disbursement when
and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in
clause (a) of this Article) payable under this Agreement or any other
Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of three Business
Days;
(c) any representation or warranty made or deemed made by or
on behalf of any member of the Holdings Group in or in connection with
any Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with any Loan
Document or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;
(d) the Transaction Parties shall fail to observe or perform
any covenant, condition or agreement contained in Section 5.01(g),
5.02, 5.04 (with respect to the existence of the Transaction Parties),
5.11 or 5.15 or in Article VI, provided, however, if such failure
arises from a non-consensual Lien created without the knowledge of,
action by or consent of any Transaction Party in violation of Section
6.02, such failure shall not constitute an Event of Default unless
such failure shall remain unremedied for 10 days after knowledge
thereof by a member of senior management of Holdings or Borrower;
(e) any Loan Party shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document (other
than those specified in clause (a), (b) or (d) of this Article), and
such failure shall continue unremedied for a period of 30 days after
notice thereof from any Agent to the Borrower (which notice will be
given at the request of any Lender);
(f) any member of the Holdings Group shall fail to make any
payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall
become due and payable (after giving effect to the expiration of any
grace or cure period set forth therein);
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(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of any Material Indebtedness or
any trustee or agent on its or their behalf to cause any Material
Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity,
provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of any member of the
Holdings Group or its debts, or of a substantial part of its assets,
under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any member of the Holdings Group
or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be
entered;
(i) any member of the Holdings Group shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter
in effect, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in
clause (h) of this Article, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any member of the Holdings Group
or for a substantial part of its assets, (iv) file an answer admitting
the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors
or (vi) take any action for the purpose of effecting any of the
foregoing;
(j) any member of the Holdings Group shall become unable,
admit in writing its inability or fail generally to pay its debts as
they become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $5,000,000 shall be rendered against any
member of the Holdings Group or any combination thereof and the same
shall remain undischarged for a period of 30 consecutive days during
which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to attach or levy upon any
assets of any member of the Holdings Group to enforce any such
judgment;
(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in
liability of Holdings Group Subsidiaries in an aggregate amount
exceeding $5,000,000;
(m) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not
to be, a valid and
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perfected Lien on any Collateral, with the priority required by the
applicable Security Document, except (i) as a result of the sale or
other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents or (ii) as a result of the
Collateral Agent's failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it
under the Pledge Agreement; or
(n) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the
Transaction Parties described in clause (h) or (i) of this Article), and at any
time thereafter during the continuance of such event, the Administrative Agent
may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or
different times: (i) terminate the Commitments, and thereupon the Commitments
shall terminate immediately, and (ii) declare the Loans then out standing to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to the Transaction Parties described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent, the Collateral Agent,
the Documentation Agent, the Borrowing Base
Audit Agent and the Syndication Agent
Each of the Lenders and the Issuing Bank hereby (a)
irrevocably appoints Chase as the Administrative Agent and the Collateral
Agent, BABC as the Documentation Agent and the Borrowing Base Audit Agent and
Citicorp USA as the Syndication Agent (collectively, the "Agents") and (b)
authorizes each Agent to take such actions on its behalf and to exercise such
powers as are delegated to such Agent by the terms of the Loan Documents,
together with such actions and powers as are reasonably incidental thereto.
Each Agent hereunder shall have the same rights and powers in
its capacity as a Lender as any other Lender and may exercise the same as
though it were not an Agent, and such Agent and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
any Transaction Party or any Subsidiary or other Affiliate thereof as if it
were not an Agent hereunder.
The Agents shall not have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) no Agent shall be subject to any fiduciary or
other implied duties,
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regardless of whether a Default has occurred and is continuing, (b) no Agent
shall have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated by the Loan Documents that such Agent is required to exercise in
writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02), and (c) except as expressly set forth in the Loan Documents, no Agent
shall have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to any Transaction Party or any of the
Subsidiaries that is communicated to or obtained by such Agent or any of its
Affiliates in any capacity. No Agent shall be liable for any action taken or
not taken by it with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of such Agent's
own gross negligence or wilful misconduct. No Agent shall be deemed to have
knowledge of any Default unless and until written notice thereof is given to
such Agent by any Transaction Party or a Lender, and no Agent shall be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document
or (v) the satisfaction of any condition set forth in Article IV or elsewhere
in any Loan Document, other than to confirm receipt of items expressly required
to be delivered to such Agent.
Each Agent shall be entitled to rely upon, and shall not incur
any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. Each Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
Each Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by such
Agent. Each Agent and any such sub-agent may perform any and all its duties
and exercise its rights and powers through their respective Related Parties.
The exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of each Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as an Agent.
Subject to the appointment and acceptance of a successor to
the Administrative Agent as provided in this paragraph, the Administrative
Agent may resign at any time by notifying the Lenders, the Issuing Bank and the
Transaction Parties. Upon any such resignation, the Required Lenders shall
have the right, in consultation with the Transaction Parties, to appoint a
successor. If no successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders and
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the Issuing Bank, appoint a successor Administrative Agent that shall be a bank
with an office in New York, New York, or an Affiliate of any such bank. Upon
the acceptance of its appointment as Administrative Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed upon between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article
and Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Subject to the appointment and acceptance of a successor to
the Collateral Agent as provided in this paragraph, the Collateral Agent may
resign at any time by notifying the Lenders, the Issuing Bank and the
Transaction Parties. Upon any such resignation, the Required Lenders shall
have the right, in consultation with the Transaction Parties, to appoint a
successor. If no successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Collateral Agent gives notice of its resignation, then the retiring
Collateral Agent may, on behalf of the Lenders and the Issuing Bank, appoint a
successor Collateral Agent that shall be a bank or an Affiliate of a bank.
Upon the acceptance of its appointment as Collateral Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Collateral Agent
shall be the same as those payable to its predecessor unless otherwise agreed
upon between the Borrower and such successor. After the Collateral Agent's
resignation hereunder, the provisions of this Article and Section 9.03 shall
continue in effect for the benefit of such retiring Collateral Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Collateral Agent.
Subject to the appointment and acceptance of a successor to
the Borrowing Base Audit Agent as provided in this paragraph, the Borrowing
Base Audit Agent may resign at any time by notifying the Lenders, the Issuing
Bank and the Transaction Parties. Upon any such resignation, the Required
Lenders shall have the right, in consultation with the Transaction Parties, to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Borrowing Base Audit Agent gives notice of its resignation, then
the retiring Borrowing Base Audit Agent may, on behalf of the Lenders and the
Issuing Bank, appoint a successor Borrowing Base Audit Agent that shall be a
bank or an Affiliate of a bank. Upon the acceptance of its appointment as
Borrowing Base Audit Agent hereunder by a successor, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Borrowing Base Audit Agent, and the retiring Borrowing Base
Audit Agent shall be discharged from its duties and obligations hereunder. The
fees payable by the Borrower to a successor Borrowing Base Audit Agent shall be
the same as those payable to its predecessor unless otherwise agreed upon
between the Borrower and such successor. After the Borrowing Base Audit
Agent's resignation hereunder, the provisions of this Article and Section 9.03
shall continue in effect for the benefit of such retiring Borrowing Base Audit
Agent, its sub-agents and their respective Related
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Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Borrowing Base Audit Agent.
Each Lender acknowledges that it has, independently and
without reliance upon any Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the either Agent or any other
Lender and based on such documents and information as it shall from time to
time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and
other communications expressly permitted to be given by telephone, all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to any Transaction Party, to it at Hechinger Investment
Company of Delaware, Inc., 0000 XxXxxxxxx Xxxxx, Xxxxx, XX 00000,
Attention of Xxxx X. Xxxxx, Xx. Vice President, Treasurer and
Secretary, (Telecopy No. (000) 000-0000) with a copy to Centers
Holdings, Inc., 00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000, Xxx Xxxxxxx, XX
00000, Attention of Xxxxxxx X. Annick (Telecopy No. (000) 000-0000);
(b) if to the Administrative Agent or the Collateral Agent, to
The Chase Manhattan Bank, Loan and Agency Services Group, One Chase
Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of
Xxxxx Xxxx (Telecopy No. (000) 000-0000), with a copy to The Chase
Manhattan Bank, 000 Xxxx Xxxxxx, Xxx Xxxx 00000, Attention of Xxxx
Xxxxx (Telecopy No. (000) 000-0000);
(c) if to the Documentation Agent or the Borrowing Base Audit
Agent, to BankAmerica Business Credit, Inc., 00000 Xxx Xxxxx Xxxx, Xxx
Xxxxx, XX 00000, Attention of Xxxxxx Xxxxxxxxxx, Esq. (Telecopy No.
(000) 000-0000);
(d) if to the Syndication Agent, to the Citicorp USA, Inc. 000
Xxxxx Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000, Attention of Xxxxx
Xxxxxxxxx (Telecopy No. (000) 000-0000);
(e) if to the Issuing Bank, to The Chase Manhattan Bank, Loan
and Agency Services Group, One Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention of Xxxxx Xxxx (Telecopy No.(212)
552-7500) with a copy to The Chase Manhattan Bank, 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention of Xxxx Xxxxx (Telecopy No. (212)
270-4584);
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(f) if to the Swingline Lender, to The Chase Manhattan Bank,
Loan and Agency Services Group, Xxx Xxxxx Xxxxxxxxx, 0xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention of Xxxxx Xxxx (Telecopy No. (212)
552-7500) with a copy to The Chase Manhattan Bank, 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention of Xxxx Xxxxx (Telecopy No. (212)
270-4584); and
(g) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay
by the Administrative Agent, the Issuing Bank or any Lender in exercising any
right or power hereunder or under any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Agents, the Issuing Bank
and the Lenders hereunder and under the other Loan Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of any Loan Document or consent to any departure by any
Loan Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan
or issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Agents, any Lender or the Issuing Bank may
have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor
any provision hereof or thereof may be waived, amended or modified except, in
the case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Transaction Parties and the Required Lenders or, in the
case of any other Loan Document, pursuant to an agreement or agreements in
writing entered into by the Agents and the Loan Party or Loan Parties that are
parties thereto, in each case with the consent of the Required Lenders,
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount
of any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of the Revolving Commitment, without
the written consent of each Lender affected thereby, (iv) change Section
2.17(b) or (c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (v) change any of
the provisions of this Section or the definition of the term "Required Lenders"
or any other provision of any Loan Document specifying the number or percentage
of Lenders required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender, (vi) release any member of the Holdings Group or any Subsidiary
Loan Party from its Guarantee under the applicable
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Guarantee Agreement (except as expressly provided in such Guarantee Agreement),
or limit its liability in respect of such Guarantee, without the written
consent of each Lender, (vii) release all or any substantial part of the
Collateral from the Liens of the Security Documents, without the written
consent of each Lender or (viii) change the definition of the term "Borrowing
Base" without the written consent of Lenders having Total Exposures and unused
Revolving Commitments representing at least 67% of the sum of the Total
Exposures and unused Revolving Commitments at such time, and provided further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Agents, the Issuing Bank or the Swingline Lender without the
prior written consent of the Agents, the Issuing Bank or the Swingline Lender,
as the case may be.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The
Transaction Parties shall pay (i) all reasonable and documented out-of-pocket
expenses incurred by the Agents and their Affiliates, including the reasonable
and documented fees, charges and disbursements of counsel for the Agents, in
connection with the syndication of the credit facilities provided for herein,
the preparation and administration of the Loan Documents or any amendments,
modifications or waivers of the provisions thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable and documented out-of-pocket expenses incurred by the Issuing Bank
in connection with the issuance, amendment, renewal or extension of any Letter
of Credit or any demand for payment thereunder and (iii) all reasonable and
documented out-of-pocket expenses incurred by the Agents, the Issuing Bank or
any Lender, including the reasonable and documented fees, charges and
disbursements of any counsel for the Agents, the Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(b) The Transaction Parties shall, jointly and severally,
indemnify the Agents, the Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an "Indemnitee")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable and
documented fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of any Loan Document or
any other agreement or instrument contemplated hereby, the performance by the
parties to the Loan Documents of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under
a Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
currently or formerly owned or operated by any Transaction Party or any of the
Subsidiaries, or any Environmental Liability related in any way to any
Transaction Party or any of the Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory and regardless
of whether any Indemnitee is a party thereto, provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee or any Affiliate of such
Indemnitee (or of any
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officer, director, employee, advisor or agent of such Indemnitee or any such
Indemnitee's Affiliates).
(c) To the extent that any Loan Party fails to pay any amount
required to be paid by it to the Agents, the Issuing Bank or the Swingline
Lender under paragraph (a) or (b) of this Section, each Lender severally agrees
to pay to the Agents, the Issuing Bank or the Swingline Lender, as the case may
be, such Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Agents, the Issuing Bank or the Swingline Lender in its capacity as
such. For purposes hereof, a Lender's "pro rata share" shall be determined
based upon its share of the sum of the Total Exposures and unused Revolving
Commitments at the time.
(d) To the extent permitted by applicable law, no Transaction
Party shall assert, and each hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or Letter of Credit or the use
of the proceeds thereof.
(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby (including
any Affiliate of the Issuing Bank that issues any Letter of Credit), except
that no Transaction Party may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
such attempted assignment or transfer without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Agents, the Issuing
Bank and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it), provided that
(i) except in the case of an assignment to a Lender or an Affiliate of a
Lender, each of the Borrower and the Agents, the Issuing Bank and the Swingline
Lender must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld), (ii) except in the case of an assignment
to a Lender or an Affiliate of a Lender or an assignment of the entire
remaining amount of the assigning Lender's Revolving Commitment or Loans, the
amount of the Revolving Commitment or Loans of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $5,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement, (iv) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and
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recordation fee of $3,500, (v) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire and (vi) no
Lender may assign any portion of its Revolving Commitment at any time prior to
the Effective Date unless, simultaneously with such assignment, such Lender is
also assigning a ratable portion of its revolving commitment under the BSQ
Newco Credit Agreement and the Hechinger Stores Credit Agreement, and provided
further that any consent of the Borrower otherwise required under this
paragraph shall not be required if an Event of Default under clause (h) or (i)
of Article VII has occurred and is continuing. Subject to acceptance and
recording thereof pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this paragraph shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans and LC Disbursements owing to,
each Lender pursuant to the terms hereof from time to time (the "Register").
The entries in the Register shall be conclusive, and the Transaction Parties,
the Administrative Agent, the Issuing Bank and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary. The Register shall be available for inspection by the Borrower,
the Issuing Bank and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Agents, the Issuing Bank or the Swingline Lender, sell participations to one or
more banks or other entities (a "Participant") in all or a portion of such
Lender's rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it), provided that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Transaction Parties, the Agents,
the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide
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that such Lender shall retain the sole right to enforce the Loan Documents and
to approve any amendment, modification or waiver of any provision of the Loan
Documents, provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.17(c) as though it were a
Lender.
(f) A Participant shall not be entitled to receive any
greater payment under Section 2.14 or 2.16 than the applicable Lender would
have been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.16 unless (i) the Borrower is notified of the participation sold to
such Participant and such Participant agrees, for the benefit of the Borrower,
to comply with Section 2.16(e) as though it were a Lender and (ii) such
Participant is eligible for exemption from the withholding tax referred to
therein, following compliance with Section 2.16(e).
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest, provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that the Agents, the
Issuing Bank or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Document and any separate
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letter agreements with respect to fees payable to the Agents constitute the
entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by the Agents
and when the Administrative Agent shall have received counterparts hereof that,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
obligations at any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrower against any of and all the obligations of the
Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured. The rights of
each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service
of Process. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) Each Transaction Party hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or any other Loan Document
shall affect any right that the Agents, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Loan Document against any Transaction Party or their properties in
the courts of any jurisdiction.
(c) Each Transaction Party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or
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hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other Loan Document in any court
referred to in paragraph (b) of this Section other than a court referred to in
the last sentence of such paragraph (b) that is not referred to elsewhere in
such paragraph (b). Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement or any other Loan Document will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Agents, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement, (g) with the consent
of the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Agents, the Issuing Bank or any Lender on a nonconfidential
basis from a source other than the Holdings. For the purposes of this Section,
the term "Information" means all information received from the Holdings Group
relating to the or its business, other than any such information that is
available to the Agents, the Issuing Bank or any Lender on a nonconfidential
basis prior to disclosure by
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the Holdings Group, provided that, in the case of information received from the
Holdings Group after the date hereof, such information is clearly identified at
the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts that are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") that may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Effective Rate to
the date of repayment, shall have been received by such Lender.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
HECHINGER INVESTMENT COMPANY
OF DELAWARE, INC., as Borrower,
by
\s\Xxxx Xxxxx
----------------------------------------------
Name: Xxxx Xxxxx
Title: Senior Vice President
CENTER HOLDINGS, INC.,
by
\s\Xxxxxxx X. Annick
----------------------------------------------
Name: Xxxxxxx X. Annick
Title: Vice President
BSQ ACQUISITION, INC.,
by
\s\Xxxxxxx X .Annick
----------------------------------------------
Name: Xxxxxxx X. Annick
Title: Vice President
BSQ TRANSFEREE CORP.,
by
\s\Xxxxxxx X .Annick
----------------------------------------------
Name: Xxxxxxx X. Annick
Title: Vice President
HECHINGER COMPANY,
by
\s\Xxxx Xxxxx
----------------------------------------------
Name: Xxxx Xxxxx
Title: Senior Vice President
HECHINGER STORES COMPANY,
by
\s\Xxxx Xxxxx
----------------------------------------------
Name: Xxxx Xxxxx
Title: Senior Vice President
90
85
HECHINGER STORES EAST COAST COMPANY,
by
\s\Xxxx Xxxxx
----------------------------------------------
Name: Xxxx Xxxxx
Title: Senior Vice President
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent and
Collateral Agent,
by
\s\Xxxxxxx Xxxxx
----------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
BANKAMERICA BUSINESS CREDIT, INC.,
individually and as Documentation Agent and
as Borrowing Base Audit Agent
by
\s\Xxxxx Xxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
CITICORP USA, INC., individually and as
Syndication Agent,
by
\s\Xxxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Attorney-in-Fact
THE CIT GROUP/BUSINESS CREDIT INC.,
by
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
91
86
WELL FARGO BANK, NATIONAL ASSOCIATION,
by
/s/ Xxxxx X. Xxxx
----------------------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
BANKBOSTON, N.A.,
by
/s/ Xxxx Xxxxxxx, Xx.
--------------------------------------------------
Name: Xxxx Xxxxxxx, Xx.
Title: Vice President
XXXXXX FINANCIAL CORP.,
by
/s/ Xxxxxx Xxxxxx
---------------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
CONGRESS FINANCIAL CORPORATION (WESTERN),
by
/s/ Xxxxx Xxxxxx
-------------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President
BTM CAPITAL CORP.,
by
/s/ Xxxxxxx X. Xxxx
--------------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Senior Vice President
92
87
DRESDNER BANK NEW YORK AND
GRAND CAYMAN BRANCHES,
by
/s/ Xxxx Xxxxxxx /s/ B. Sacin
----------------------------------------------
Name: Xxxx X. Xxxxxxx/Xxxxxxxx Sacin
Title: Assistant Vice President/Assistant
Treasurer
SANWA BUSINESS CREDIT CORP.,
by
/s/ Xxxxx Skaula
----------------------------------------------------
Name: Xxxxx Skaula
Title:
AT&T COMMERCIAL FINANCE CORPORATION,
by
/s/ Xxxx Xxxxxxxxx
--------------------------------------------------
Name: Xxxx Xxxxxxxxx
Title: A.V.P.
XXX XXXXXX AMERICAN CAPITAL PRIME RATE INCOME TRUST,
by
/s/ Xxxxxxx Xxxxxxx
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior V.P. & Director
FLEET CAPITAL,
by
/s/ Xxxxxx Xxxxx
--------------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President & Portfolio
Manager
93
88
TRANSAMERICA BUSINESS CREDIT CORP.,
by
/s/ Xxxx Xxxxx
--------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
MELLON BANK, N.A.,
by
/s/ Xxxxxx Xxxxxx
--------------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
LASALLE BUSINESS CREDIT, INC.,
by
/s/ Xxxxxxx Xxxxxxxx
-----------------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: V.P.
PNC BUSINESS CREDIT,
by
/s/ Xxxx Peak
--------------------------------------------------
Name: Xxxx Peak
Title: Vice President
BNY FINANCIAL CORPORATION,
by
/s/ Xxx Xxxxxxx
--------------------------------------------------
Name: Xxx Xxxxxxx
Title: Senior V.P.
94
89
IBJ XXXXXXXX BUSINESS CREDIT CORPORATION,
by
/s/ Xxxxxx Xxxxx
-------------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
NATIONAL CITY COMMERCIAL FINANCE, INC.,
by
/s/ Xxxxxx X. Xxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxx
Title:
SIGNET BANK,
by
/s/ Xxxx Xxxxx
--------------------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
DEUTSCHE FINANCIAL SERVICES,
by
/s/ Xxxx Xxxxxx
--------------------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
95
90
NATIONAL BANK OF CANADA, a
Canadian Chartered Bank,
by
/s/ Xxxxxx Xxxxxxxxx
--------------------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Assistant Vice President
by
/s/ Xxxxxxx X. Xxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
96
EXHIBIT D
PARENT GUARANTEE AGREEMENT dated as of September 26, 1997,
among CENTERS HOLDINGS, INC., a Delaware corporation
("Holdings"), BSQ ACQUISITION, INC., a Delaware corporation
("BSQ Acqco"), BSQ TRANSFEREE CORP., a Delaware corporation
("BSQ Newco"), HECHINGER COMPANY, a Delaware corporation
("Hechinger"), HECHINGER STORES COMPANY, a Delaware corporation
("Hechinger Stores"), HECHINGER STORES EAST COAST COMPANY, a
Delaware corporation ("Hechinger Stores East Coast"), each
other Subsidiary of Holdings listed on Schedule I hereto (each
such other Subsidiary, individually, a Subsidiary Guarantor
and, collectively, the "Subsidiary Guarantors"; Holdings, BSQ
Acqco, BSQ Newco, Hechinger and the Subsidiary Guarantors are
referred to collectively herein as, the "Guarantors"), THE
CHASE MANHATTAN BANK, a New York banking corporation, as
administrative agent (the "Administrative Agent") and as
collateral agent (the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred to below),
BANKAMERICA BUSINESS CREDIT, INC., a Delaware corporation, as
documentation agent (the "Documentation Agent") and as
borrowing base audit agent (the "Borrowing Base Audit Agent")
for the Secured Parties, and CITICORP USA, INC., a Delaware
corporation, as syndication agent (the "Syndication Agent" and,
together with the Administrative Agent, the Collateral Agent,
the Documentation Agent and the Borrowing Base Audit Agent, the
"Agents") for the Secured Parties.
Reference is made to the Credit Agreement dated as of September 26, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among HECHINGER INVESTMENT COMPANY OF DELAWARE, INC., a Delaware
corporation (the "Borrower"), the Guarantors, the lenders from time to time
party thereto (the "Lenders"), The Chase Manhattan Bank, as issuing bank (in
such capacity, the "Issuing Bank"), as Administrative Agent and as swingline
lender, and the Agents. Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. As the direct and indirect owners of all the issued and
outstanding capital stock of the Borrower (or, in the case of BSQ Newco and
Hechinger Stores East Coast, as a wholly owned subsidiary of an indirect owner
of all such stock), each Guarantor acknowledges that it will derive substantial
benefit from the making of Loans by the Lenders and the issuance of Letters of
Credit by the Issuing Bank. The obligations of the Lenders to make Loans and of
the Issuing Bank to issue Letters of Credit are conditioned on, among other
things, the execution and delivery by the Guarantors of a Parent Guarantee
Agreement in the form hereof. As consideration therefor and in order to induce
the Lenders to make Loans and the Issuing Bank to issue Letters of Credit, each
Guarantor is willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally guarantees (the
"Guarantee"), jointly with the other Guarantors and severally, as a primary
obligor and not merely as a surety, (a) the due and punctual payment by the
Borrower of (i) the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether such interest is
allowed or
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2
allowable as a claim in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral, and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether such monetary
obligations are allowed or allowable as a claim in such proceeding), of the
Borrower to the Secured Parties under the Credit Agreement and the other Loan
Documents, (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Borrower under or pursuant to the Credit
Agreement and the other Loan Documents and (c) the due and punctual payment and
performance of all the covenants, agreements, obligations and liabilities of
each Loan Party under or pursuant to this Agreement and the other Loan Documents
(all the monetary and other obligations described in the preceding clauses (a)
through (c) being collectively called the "Obligations"). Each Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon
the Guarantee notwithstanding any extension or renewal of any Obligation.
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of the Guarantee and notice of protest for nonpayment. To the fullest
extent permitted by applicable law, the obligations of each Guarantor hereunder
shall not be affected by (a) the failure of any Agent or any other Secured Party
to assert any claim or demand or to enforce or exercise any right or remedy
against the Borrower or any other guarantor of the Obligations under the
provisions of the Credit Agreement, any other Loan Document or otherwise,
(b) any rescission, waiver, amendment or modification of, or any release from
any of the terms or provisions of, this Agreement, any other Loan Document, any
Guarantee or any other agreement, including with respect to any other guarantor
of the Obligations under this Agreement, or (c) the failure to perfect any
security interest in, or the release of, any of the security held by or on
behalf of the Collateral Agent or any other Secured Party.
SECTION 3. Security. Each Guarantor authorizes the Collateral Agent and
each of the other Secured Parties to (a) take and hold security for the payment
of the Guarantee and the Obligations and exchange, enforce, waive and release
any such security, (b) apply such security and direct the order or manner of
sale thereof as they in their sole discretion may determine and (c) release or
substitute any one or more endorsees, other guarantors or other obligors.
SECTION 4. Guarantee of Payment. Each Guarantor further agrees that the
Guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of the Borrower or any
other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of
each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in
full in cash of the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be
subject to any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of any Agent or any other Secured Party to
assert any claim or demand or to enforce any remedy under the Credit Agreement,
any other Loan Document or any other agreement, by any waiver or modification of
any provision of any thereof, by any default, failure or delay, wilful or
otherwise, in the performance of the
98
3
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of any Guarantor or that would otherwise operate as
a discharge of any Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, each Guarantor waives any defense based on or arising out of
any defense of the Borrower or the unenforceability of the Obligations or any
part thereof from any cause, or the cessation from any cause of the liability of
the Borrower, other than the indefeasible payment in full in cash of all the
Obligations. The Collateral Agent and the other Secured Parties may, at their
election, foreclose on any security held by one or more of them by one or more
judicial or nonjudicial sales, accept an assignment of any such security in lieu
of foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with the Borrower or any other guarantor or exercise any other
right or remedy available to them against the Borrower or any other guarantor,
without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent that all the Obligations have been indefeasibly
paid in full in cash. Pursuant to applicable law, each Guarantor waives any
defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against
the Borrower or any other guarantor, as the case may be, or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Agents or any other
Secured Party has at law or in equity against any Guarantor by virtue hereof,
upon the failure of the Borrower or any other Loan Party to pay any Obligation
when and as the same shall become due, whether at maturity, by acceleration,
after notice of prepayment or otherwise, each Guarantor hereby promises to and
will forthwith pay, or cause to be paid, to the Collateral Agent or such other
Secured Party as designated thereby in cash the amount of such unpaid
Obligations. Upon payment by any Guarantor of any sums to the Collateral Agent
or any Secured Party as provided above, all rights of such Guarantor against the
Borrower arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full in cash of all the Obligations. In addition, any indebtedness of the
Borrower now or hereafter held by any Guarantor is hereby subordinated in right
of payment to the prior payment in full of the Obligations. If any amount shall
erroneously be paid to any Guarantor on account of (a) such subrogation,
contribution, reimbursement, indemnity or similar right or (b) any such
indebtedness of the Borrower, such amount shall be held in trust for the benefit
of the Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 8. Information. Each Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that such
Guarantor assumes and incurs hereunder, and agrees that none of the Agents or
the other Secured Parties will have any duty to advise any of the Guarantors of
information known to it or any of them regarding such circumstances or risks.
SECTION 9. Termination. The Guarantee (a) shall terminate when all the
Obligations have been indefeasibly paid in full and the Lenders have no further
commitment to lend under the Credit Agreement, the LC Exposure has been reduced
to zero and the Issuing Bank has no further obligation to issue Letters of
Credit under the Credit Agreement and (b) shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by any Secured Party
or any Guarantor upon the bankruptcy or reorganization of the Borrower, any
Guarantor or otherwise.
99
4
SECTION 10. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party, and all covenants,
promises and agreements by or on behalf of the Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
as to any Guarantor when a counterpart hereof executed on behalf of such
Guarantor shall have been delivered to the Collateral Agent, and a counterpart
hereof shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Guarantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Guarantor shall have the right
to assign its rights or obligations hereunder or any interest herein (and any
such attempted assignment shall be void).
SECTION 11. Waivers; Amendment. (a) No failure or delay of any Agent in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Agents hereunder and of the other
Secured Parties under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by any Guarantor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice or demand
on any Guarantor in any case shall entitle such Guarantor to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Guarantors with respect to which such waiver, amendment or modification
relates and each of the Agents, with the prior written consent of the Required
Lenders (except as otherwise provided in the Credit Agreement).
SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 13. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Guarantor shall be given to it in
care of the Borrower.
SECTION 14. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by the Guarantors herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Agents and the other Secured Parties and shall
survive the making by the Lenders of the Loans and the issuance of the Letters
of Credit by the Issuing Bank regardless of any investigation made by the
Secured Parties or on their behalf, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any other fee
or amount payable under this Agreement or any other Loan Document is outstanding
and unpaid or the LC Exposure does not equal zero and as long as the Commitments
have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid,
100
5
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 15. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 10. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 16. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
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6
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
CENTERS HOLDINGS, INC.,
by
----------------------------------------
Name:
Title:
BSQ ACQUISITION, INC.,
by
----------------------------------------
Name:
Title:
BSQ TRANSFEREE CORP.,
by
----------------------------------------
Name:
Title:
HECHINGER COMPANY,
by
----------------------------------------
Name:
Title:
HECHINGER STORES COMPANY,
by
----------------------------------------
Name:
Title:
HECHINGER STORES EAST COAST
COMPANY,
by
----------------------------------------
Name:
Title:
102
7
THE SUBSIDIARY GUARANTORS LISTED
ON SCHEDULE I HERETO,
by
----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent and as Collateral Agent,
by
----------------------------------------
Name:
Title:
BANKAMERICA BUSINESS CREDIT, INC.,
as Documentation Agent and as Borrrowing Base
Audit Agent,
by
----------------------------------------
Name:
Title:
CITICORP USA, INC., as Syndication Agent,
by
----------------------------------------
Name:
Title:
103
Schedule I to the
Parent Guarantee Agreement
SUBSIDIARY GUARANTORS
Name Address
104
EXHIBIT E
SUBSIDIARY GUARANTEE AGREEMENT dated as of
September 26, 1997, among (a) each of the
subsidiaries listed on Schedule I hereto (each such
subsidiary, individually, a "Subsidiary Guarantor"
and, collectively, the "Subsidiary Guarantors") of
HECHINGER INVESTMENT COMPANY OF DELAWARE, INC., a
Delaware corporation (the "Borrower"), (b) THE CHASE
MANHATTAN BANK, a New York banking corporation, as
administrative agent (the "Administrative Agent") and
as collateral agent (the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement
referred to below), (c) BANKAMERICA BUSINESS CREDIT,
INC., a Delaware corporation, as documentation agent
(the "Documentation Agent") and as borrowing base
audit agent (the "Borrowing Base Audit Agent") for
the Secured Parties, and (d) CITICORP USA, INC., a
Delaware corporation, as syndication agent (the
"Syndication Agent" and, together with the
Administrative Agent, the Collateral Agent, the
Documentation Agent and the Borrowing Base Audit
Agent, the "Agents") for the Secured Parties.
Reference is made to the Credit Agreement dated as of September 26,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, CENTER HOLDINGS, INC., a Delaware
corporation ("Holdings"), BSQ ACQUISITION, INC., a Delaware corporation, BSQ
TRANSFEREE CORP., a Delaware corporation, HECHINGER COMPANY, a Delaware
corporation, HECHINGER STORES COMPANY, a Delaware corporation, HECHINGER STORES
EAST COAST COMPANY, a Delaware corporation, the lenders from time to time party
thereto (the "Lenders"), The Chase Manhattan Bank, as issuing bank (in such
capacity, the "Issuing Bank"), as Administrative Agent and as swingline lender,
and the Agents. Capitalized terms used herein and not defined herein shall have
the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Subsidiary Guarantors is a Borrower Subsidiary and
acknowledges that it will derive substantial benefit from the making of the
Loans by the Lenders, and the issuance of the Letters of Credit by the Issuing
Bank. The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit are conditioned on, among other things, the execution
and delivery by the Subsidiary Guarantors of a Subsidiary Guarantee Agreement in
the form hereof. As consideration therefor and in order to induce the Lenders to
make Loans and the Issuing Bank to issue Letters of Credit, the Subsidiary
Guarantors are willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Subsidiary Guarantor unconditionally
guarantees (the "Guarantee"), jointly with the other Subsidiary Guarantors and
severally, as a primary obligor and not merely as a surety, (a) the due and
punctual payment by the Borrower of (i) the principal of and premium, if any,
and interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether such
interest is allowed or allowable as a claim in such proceeding) on the Loans,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any Letter of Credit, when and
as due, including payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral, and (iii) all other
105
2
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether such monetary
obligations are allowed or allowable as a claim in such proceeding), of the
Borrower to the Secured Parties under the Credit Agreement and the other Loan
Documents, (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Borrower under or pursuant to the Credit
Agreement and the other Loan Documents and (c) the due and punctual payment and
performance of all the covenants, agreements, obligations and liabilities of
each Loan Party under or pursuant to this Agreement and the other Loan Documents
(all the monetary and other obligations described in the preceding clauses (a)
through (c) being collectively called the "Obligations"). Each Subsidiary
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice to or further assent from it, and that it will
remain bound upon the Guarantee notwithstanding any extension or renewal of any
Obligation.
Anything contained in this Agreement to the contrary notwithstanding,
the obligations of each Subsidiary Guarantor hereunder shall be limited to a
maximum aggregate amount equal to the greatest amount that would not render such
Subsidiary Guarantor's obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any provisions of applicable state law (collectively, the
"Fraudulent Transfer Laws"), in each case after giving effect to all other
liabilities of such Subsidiary Guarantor, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding, however,
any liabilities of such Subsidiary Guarantor (a) in respect of intercompany
indebtedness to the Borrower or Affiliates of the Borrower to the extent that
such indebtedness would be discharged in an amount equal to the amount paid by
such Subsidiary Guarantor hereunder and (b) under any guarantee of senior
unsecured indebtedness or Indebtedness subordinated in right of payment to the
Obligations, which guarantee contains a limitation as to maximum amount similar
to that set forth in this paragraph, pursuant to which the liability of such
Subsidiary Guarantor hereunder is included in the liabilities taken into account
in determining such maximum amount) and after giving effect as assets to the
value (as determined under the applicable provisions of the Fraudulent Transfer
Laws) of any rights to subrogation, contribution, reimbursement, indemnity or
similar rights of such Subsidiary Guarantor pursuant to (i) applicable law or
(ii) any agreement providing for an equitable allocation among such Subsidiary
Guarantor and other Affiliates of the Borrower of obligations arising under
Guarantees by such parties (including the Indemnity, Subrogation and
Contribution Agreement).
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Subsidiary Guarantor waives presentment to, demand of
payment from and protest to the Borrower of any of the Obligations, and also
waives notice of acceptance of the Guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of each Subsidiary Guarantor hereunder shall not be affected by (a) the failure
of any Agent or any other Secured Party to assert any claim or demand or to
enforce or exercise any right or remedy against the Borrower or any other
Subsidiary Guarantor under the provisions of the Credit Agreement, any other
Loan Document or otherwise, (b) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of, this
Agreement, any other Loan Document, any Guarantee or any other agreement,
including with respect to any other Subsidiary Guarantor under this Agreement,
or (c) the failure to perfect any security interest in, or the release of, any
of the security held by or on behalf of the Collateral Agent or any other
Secured Party.
SECTION 3. Security. Each of the Subsidiary Guarantors authorizes the
Collateral Agent and each of the other Secured Parties to (a) take and hold
security for the payment of the Guarantee and the Obligations and exchange,
enforce, waive and release any such security, (b) apply such security and direct
the order or manner of sale thereof as they in their sole discretion may
determine and (c) release or substitute any one or more endorsees, other
Subsidiary Guarantors or other obligors.
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SECTION 4. Guarantee of Payment. Each Subsidiary Guarantor further
agrees that the Guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Collateral Agent or any other Secured Party to any of the security held for
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations
of each Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Subsidiary Guarantor
hereunder shall not be discharged or impaired or otherwise affected by the
failure of any Agent or any other Secured Party to assert any claim or demand or
to enforce any remedy under the Credit Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of any Subsidiary Guarantor or that would otherwise
operate as a discharge of any Subsidiary Guarantor as a matter of law or equity
(other than the indefeasible payment in full in cash of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, each of the Subsidiary Guarantors waives any defense based on
or arising out of any defense of the Borrower or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower, other than the indefeasible payment in full in
cash of all the Obligations. The Collateral Agent and the other Secured Parties
may, at their election, foreclose on any security held by one or more of them by
one or more judicial or nonjudicial sales, accept an assignment of any such
security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
Subsidiary Guarantor or exercise any other right or remedy available to them
against the Borrower or any other Subsidiary Guarantor, without affecting or
impairing in any way the liability of any Subsidiary Guarantor hereunder except
to the extent that all the Obligations have been indefeasibly paid in full in
cash. Pursuant to applicable law, each of the Subsidiary Guarantors waives any
defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Subsidiary
Guarantor against the Borrower or any other Subsidiary Guarantor or Subsidiary
Guarantors, as the case may be, or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Agents or any other
Secured Party has at law or in equity against any Subsidiary Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Subsidiary Guarantor
hereby promises to and will forthwith pay, or cause to be paid, to the
Collateral Agent or such other Secured Party as designated thereby in cash the
amount of such unpaid Obligations. Upon payment by any Subsidiary Guarantor of
any sums to the Collateral Agent or any Secured Party as provided above, all
rights of such Subsidiary Guarantor against the Borrower arising as a result
thereof by way of right of subrogation, contribution, reimbursement, indemnity
or otherwise shall in all respects be subordinate and junior in right of payment
to the prior indefeasible payment in full in cash of all the Obligations. In
addition, any indebtedness of the Borrower now or hereafter held by any
Subsidiary Guarantor is hereby subordinated in right of payment to the prior
payment in full of the Obligations. If any amount shall erroneously be paid to
any Subsidiary Guarantor on account of (a) such subrogation, contribution,
reimbursement, indemnity or similar right or (b) any such indebtedness of the
Borrower, such amount shall be held in trust for the benefit of the Secured
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Parties and shall forthwith be paid to the Collateral Agent to be credited
against the payment of the Obligations, whether matured or unmatured, in
accordance with the terms of the Loan Documents.
SECTION 8. Information. Each of the Subsidiary Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Subsidiary Guarantor assumes and incurs hereunder, and agrees that none of
the Agents or the other Secured Parties will have any duty to advise any of the
Subsidiary Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 9. Representations and Warranties. Each of the Subsidiary
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement are true and
correct.
SECTION 10. Termination. The Guarantees (a) shall terminate when all
the Obligations have been indefeasibly paid in full and the Lenders have no
further commitment to lend under the Credit Agreement, the LC Exposure has been
reduced to zero and the Issuing Bank has no further obligation to issue Letters
of Credit under the Credit Agreement and (b) shall continue to be effective or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any Obligation is rescinded or must otherwise be restored by any Secured
Party or any Subsidiary Guarantor upon the bankruptcy or reorganization of the
Borrower, any Subsidiary Guarantor or otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party, and all covenants,
promises and agreements by or on behalf of the Subsidiary Guarantors that are
contained in this Agreement shall bind and inure to the benefit of each party
hereto and their respective successors and assigns. This Agreement shall become
effective as to any Subsidiary Guarantor when a counterpart hereof executed on
behalf of such Subsidiary Guarantor shall have been delivered to the Collateral
Agent, and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such Subsidiary Guarantor
and the Collateral Agent and their respective successors and assigns, and shall
inure to the benefit of such Subsidiary Guarantor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
no Subsidiary Guarantor shall have the right to assign its rights or obligations
hereunder or any interest herein (and any such attempted assignment shall be
void). If all of the capital stock of a Subsidiary Guarantor is sold,
transferred or otherwise disposed of pursuant to a transaction permitted by
Section 6.05 of the Credit Agreement, such Subsidiary Guarantor shall be
released from its obligations under this Agreement without further action. This
Agreement shall be construed as a separate agreement with respect to each
Subsidiary Guarantor and may be amended, modified, supplemented, waived or
released with respect to any Subsidiary Guarantor without the approval of any
other Subsidiary Guarantor and without affecting the obligations of any other
Subsidiary Guarantor hereunder.
SECTION 12. Waivers; Amendment. (a) No failure or delay of any Agent in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Agents hereunder and of the other
Secured Parties under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by any Subsidiary
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any
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Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Subsidiary Guarantors with respect to which such waiver, amendment or
modification relates and each of the Agents, with the prior written consent of
the Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 14. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to each Subsidiary Guarantor shall be given
to it in care of the Borrower.
SECTION 15. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by the Subsidiary Guarantors
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Agents and the other Secured
Parties and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Issuing Bank regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid or the LC Exposure does not equal zero
and as long as the Commitments have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective as
provided in Section 11. Delivery of an executed signature page to this Agreement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 18. Jurisdiction; Consent to Service of Process. (a) Each
Subsidiary Guarantor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the Supreme Court of the
State of New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the
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judgment or in any other manner provided by law. Nothing in this Agreement or
any other Loan Document shall affect any right that the Collateral Agent or any
other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against any Subsidiary
Guarantor or its properties in the courts of any jurisdiction.
(b) Each Subsidiary Guarantor irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any other
Loan Document in any court referred to in paragraph (a) of this Section. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 14. Nothing in
this Agreement or any other Loan Document will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.
SECTION 19. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 19.
SECTION 20. Additional Subsidiary Guarantors. Pursuant to Section 5.12
of the Credit Agreement, each Subsidiary that was not in existence on the date
of the Credit Agreement is required to enter into this Agreement as a Subsidiary
Guarantor upon becoming a Subsidiary. Upon execution and delivery after the date
hereof by the Collateral Agent and such a Subsidiary of an instrument in the
form of Annex 1, such Subsidiary shall become a Subsidiary Guarantor hereunder
with the same force and effect as if originally named as a Subsidiary Guarantor
herein. The execution and delivery of any instrument adding an additional
Subsidiary Guarantor as a party to this Agreement shall not require the consent
of any other Subsidiary Guarantor hereunder. The rights and obligations of each
Subsidiary Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Guarantor as a party to this
Agreement.
SECTION 21. Right of Set-off. If an Event of Default shall have
occurred and be continuing, each Secured Party is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other Indebtedness at any time owing by such Secured
Party to or for the credit or the account of any Subsidiary Guarantor against
any or all the obligations of such Subsidiary Guarantor now or hereafter
existing under this Agreement and the other Loan Documents held by such Secured
Party, irrespective of whether or not such Secured Party shall have made any
demand under this Agreement or any other Loan Document and although such
obligations may be unmatured. The rights of each Secured Party under this
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Section 21 are in addition to other rights and remedies (including other rights
of set-off) that such Secured Party may have.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
EACH OF THE BORROWER SUBSIDIARIES
LISTED ON SCHEDULE I HERETO,
by
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent and as Collateral Agent,
by
-------------------------------------
Name:
Title:
BANKAMERICA BUSINESS CREDIT, INC., as
Documentation Agent and as Borrowing Base
Audit Agent,
by
-------------------------------------
Name:
Title:
CITICORP USA, INC., as Syndication Agent,
by
-------------------------------------
Name:
Title:
112
SCHEDULE I TO THE
Subsidiary Guarantee AGREEMENT
Subsidiary Guarantor Address
113
Annex 1 to the
Subsidiary Guarantee Agreement
SUPPLEMENT NO. dated as of , to the
Subsidiary Guarantee Agreement dated as of September
26, 1997, among (a) each of the subsidiaries listed
on Schedule I thereto (each such subsidiary,
individually, a "Subsidiary Guarantor" and,
collectively, the "Subsidiary Guarantors") of
HECHINGER INVESTMENT COMPANY OF DELAWARE, INC., a
Delaware corporation (the "Borrower"), (b) THE CHASE
MANHATTAN BANK, a New York banking corporation, as
administrative agent (the "Administrative Agent") and
as collateral agent (the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement
referred to below), (c) BANKAMERICA BUSINESS CREDIT,
INC., a Delaware corporation, as documentation agent
(the "Documentation Agent") and as borrowing base
audit agent (the "Borrowing Base Audit Agent") for
the Secured Parties, and (d) CITICORP USA, INC., a
Delaware corporation, as syndication agent (the
"Syndication Agent" and, together with the
Administrative Agent, the Collateral Agent, the
Documentation Agent and the Borrowing Base Audit
Agent, the "Agents") for the Secured Parties.
A. Reference is made to the Credit Agreement dated as of September 26,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, CENTERS HOLDINGS, INC., a Delaware
corporation, BSQ ACQUISITION, INC., a Delaware corporation, BSQ TRANSFEREE
CORP., a Delaware corporation, HECHINGER COMPANY, a Delaware corporation,
HECHINGER STORES COMPANY, a Delaware corporation, HECHINGER STORES EAST COAST
COMPANY, a Delaware corporation, the lenders from time to time party thereto
(the "Lenders"), The Chase Manhattan Bank, as issuing bank (in such capacity,
the "Issuing Bank"), as Administrative Agent and as swingline lender, and the
Agents.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Subsidiary Guarantee Agreement
and the Credit Agreement.
C. The Subsidiary Guarantors have entered into the Subsidiary Guarantee
Agreement in order to induce the Lenders to make Loans and the Issuing Bank to
issue Letters of Credit. Pursuant to Section 5.12 of the Credit Agreement, each
Borrower Subsidiary that was not in existence or not a Borrower Subsidiary on
the date of the Credit Agreement is required to enter into the Subsidiary
Guarantee Agreement as a Subsidiary Guarantor upon becoming a Borrower
Subsidiary. Section 20 of the Subsidiary Guarantee Agreement provides that
additional Borrower Subsidiaries of may become Subsidiary Guarantors under the
Subsidiary Guarantee Agreement by execution and delivery of an instrument in the
form of this Supplement. The undersigned Subsidiary (the "New Subsidiary
Guarantor") is executing this Supplement in accordance with the requirements of
the Credit Agreement to become a Subsidiary Guarantor under the Subsidiary
Guarantee Agreement in order to induce the Lenders to make additional Loans and
the Issuing Bank to issue additional Letters of Credit and as consideration for
Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Subsidiary Guarantor
agree as follows:
SECTION 1. In accordance with Section 20 of the Subsidiary Guarantee
Agreement, the New Subsidiary Guarantor by its signature below becomes a
Subsidiary Guarantor under the Subsidiary Guarantee Agreement with the same
force and effect as if originally named therein as a Subsidiary Guarantor and
the New Subsidiary Guarantor hereby (a) agrees to all the terms and provisions
of the Subsidiary Guarantee Agreement applicable to it as a Subsidiary Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Subsidiary Guarantor thereunder are true and correct
on and as of the date hereof. Each reference
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to a "Subsidiary Guarantor" in the Subsidiary Guarantee Agreement shall be
deemed to include the New Subsidiary Guarantor. The Subsidiary Guarantee
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Subsidiary Guarantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Subsidiary Guarantor and the
Collateral Agent. Delivery of an executed signature page to this Supplement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Subsidiary
Guarantee Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Subsidiary Guarantee Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision hereof in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other jurisdiction). The
parties hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 14 of the Subsidiary Guarantee Agreement. All
communications and notices hereunder to the New Subsidiary Guarantor shall be
given to it at the address set forth under its signature below, with a copy to
the Borrower.
SECTION 8. The New Subsidiary Guarantor agrees to reimburse the
Collateral Agent for its reasonable and documented out-of-pocket expenses in
connection with this Supplement, including the reasonable and documented fees,
disbursements and other charges of counsel for the Collateral Agent.
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IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Collateral
Agent have duly executed this Supplement to the Subsidiary Guarantee Agreement
as of the day and year first above written.
[Name Of New Subsidiary Guarantor],
by
------------------------------------
Name:
Title:
Address:
----------------------------
----------------------------
----------------------------
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
------------------------------------
Name:
Title:
116
EXHIBIT F
INDEMNITY, SUBROGATION and CONTRIBUTION
AGREEMENT dated as of September 26, 1997, among
HECHINGER INVESTMENT COMPANY OF DELAWARE, INC., a
Delaware corporation (the "Borrower"), each
subsidiary of the Borrower listed on Schedule I
hereto (the "Guarantors"), THE CHASE MANHATTAN BANK,
a New York banking corporation ("Chase"), as
administrative agent (in such capacity, the
"Administrative Agent") and as collateral agent (in
such capacity, the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement
referred to below), BANKAMERICA BUSINESS CREDIT,
INC., a Delaware corporation ("BABC") as
documentation agent (in such capacity, the
"Documentation Agent") and as borrowing base audit
agent (the "Borrowing Base Audit Agent") for the
Secured Parties, and CITICORP USA, INC., a Delaware
corporation ("Citicorp USA") as syndication agent (in
such capacity, the "Syndication Agent" and, together
with the Administrative Agent, the Collateral Agent,
the Documentation Agent and the Borrowing Base Audit
Agent, the "Agents") for the Secured Parties.
Reference is made to (a) the Credit Agreement dated as of September
26, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, CENTERS HOLDINGS, INC., a Delaware
corporation ("Holdings"), BSQ ACQUISITION, INC., a Delaware corporation ("BSQ
Acqco"), BSQ TRANSFEREE CORP., a Delaware corporation ("BSQ Newco"), HECHINGER
COMPANY, a Delaware corporation ("Hechinger"), HECHINGER STORES COMPANY, a
Delaware corporation ("Hechinger Stores"), HECHINGER STORES EAST COAST COMPANY,
a Delaware corporation ("Hechinger Stores East Coast"), the lenders from time
to time party thereto (the "Lenders"), Chase as issuing bank (in such capacity,
the "Issuing Bank"), as Administrative Agent and as swingline lender, and the
Agents and (b) the Subsidiary Guarantee Agreement dated as of September 26,
1997 between the Guarantors and the Agents (the "Guarantee Agreement").
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Guarantors have guaranteed such Loans and the other
Obligations (as defined in the Guarantee Agreement) of the Borrower under the
Credit Agreement pursuant to the Guarantee Agreement; certain Guarantors have
granted Liens on and security interests in certain of their assets to secure
such guarantees. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit are conditioned on, among other things,
the execution and delivery by the Borrower and the Guarantors of an agreement
in the form hereof.
Accordingly, the Borrower, each Guarantor and the Agents agree as
follows:
SECTION 1. Indemnity and Subrogation. In addition to all such rights
of indemnity and subrogation as the Guarantors may have under applicable law
(but subject to Section 3), the Borrower agrees that (a) in the event a payment
shall be made by any Guarantor under the Guarantee Agreement, the Borrower
shall indemnify such Guarantor for the full amount of such payment and such
Guarantor shall be subrogated to the rights of the Person to whom such payment
shall have been made to the extent of such payment and (b) in the event any
assets of any Guarantor shall be sold pursuant to any Security Document to
satisfy a claim of any Secured
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Party, the Borrower shall indemnify such Guarantor in an amount equal to the
greater of (i) the book value of the assets so sold and (ii) the fair market
value of the assets so sold.
SECTION 2. Contribution and Subrogation. Each Guarantor (a
"Contributing Guarantor") agrees (subject to Section 3) that, in the event a
payment shall be made by any other Guarantor under the Guarantee Agreement or
assets of any other Guarantor shall be sold pursuant to any Security Document
to satisfy a claim of any Secured Party and such other Guarantor (the "Claiming
Guarantor") shall not have been fully indemnified by the Borrower as provided
in Section 1, the Contributing Guarantor shall indemnify the Claiming Guarantor
in an amount equal to the amount of such payment or the greater of (a) the book
value of the assets so sold and (b) the fair market value of such assets, as
the case may be, in each case multiplied by a fraction of which the numerator
shall be the net worth of the Contributing Guarantor on the date hereof and the
denominator shall be the aggregate net worth of all the Guarantors on the date
hereof (or, in the case of any Guarantor becoming a party hereto pursuant to
Section 12, the date of the Supplement hereto executed and delivered by such
Guarantor). Any Contributing Guarantor making any payment to a Claiming
Guarantor pursuant to this Section 2 shall be subrogated to the rights of such
Claiming Guarantor under Section 1 to the extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors under Sections 1 and 2
and all other rights of indemnity, contribution or subrogation under applicable
law or otherwise shall be fully subordinated to the indefeasible payment in
full in cash of the Obligations. No failure on the part of the Borrower or any
Guarantor to make the payments required by Sections 1 and 2 (or any other
payments required under applicable law or otherwise) shall in any respect limit
the obligations and liabilities of any Guarantor with respect to its
obligations hereunder, and each Guarantor shall remain liable for the full
amount of the obligations of such Guarantor hereunder.
SECTION 4. Termination. This Agreement shall survive and be in full
force and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash, and so long as the LC Exposure has not been
reduced to zero or any of the Commitments under the Credit Agreement have not
been terminated, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by any Secured Party or any Guarantor
upon the bankruptcy or reorganization of the Borrower, any Guarantor or
otherwise.
SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. No Waiver; Amendment. (a) No failure on the part of any
Agent or any Guarantor to exercise, and no delay in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy by the Agents or
any Guarantor preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and
are not exclusive of any other remedies provided by law. None of the Agents or
any of the Guarantors shall be deemed to have waived any rights hereunder
unless such waiver shall be in writing and signed by such parties.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Borrower, the Guarantors and each of the Agents, with the prior written
consent of the Required Lenders (except as otherwise provided in the Credit
Agreement).
SECTION 7. Notices. All communications and notices hereunder shall
be in writing and given as provided in the Guarantee Agreement and addressed as
specified therein.
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SECTION 8. Binding Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party, and all covenants,
promises and agreements by or on behalf of the parties that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. Neither the Borrower nor any Guarantor may assign or
transfer any of its rights or obligations hereunder (and any such attempted
assignment or transfer shall be void) without the prior written consent of the
Required Lenders. Notwithstanding the foregoing, at the time any Guarantor is
released from its obligations under the Guarantee Agreement in accordance with
such Guarantee Agreement and the Credit Agreement, such Guarantor will cease to
have any rights or obligations under this Agreement.
SECTION 9. Survival of Agreement; Severability. (a) All covenants
and agreements made by the Borrower and each Guarantor herein and in the
certificates or other instruments prepared or delivered in connection with this
Agreement or the other Loan Documents shall be considered to have been relied
upon by the Agents, the other Secured Parties and each Guarantor and shall
survive the making by the Lenders of the Loans and the issuance of the Letters
of Credit by the Issuing Bank, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loans or any other fee
or amount payable under the Credit Agreement or this Agreement or under any of
the other Loan Documents is outstanding and unpaid or the LC Exposure does not
equal zero and as long as the Commitments have not been terminated.
(b) In case any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, no
party hereto shall be required to comply with such provision for so long as
such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 10. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall be effective with
respect to any Guarantor when a counterpart bearing the signature of such
Guarantor shall have been delivered to the Collateral Agent. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.
SECTION 11. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
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SECTION 12. Additional Guarantors. Pursuant to Section 5.12 of the
Credit Agreement, each Borrower Subsidiary that was not in existence or not
such a Borrower Subsidiary on the date of the Credit Agreement is required to
enter into the Guarantee Agreement as a Guarantor upon becoming such a Borrower
Subsidiary. Upon execution and delivery, after the date hereof, by the
Collateral Agent and such a Borrower Subsidiary of an instrument in the form of
Annex 1 hereto, such Borrower Subsidiary shall become a Guarantor hereunder
with the same force and effect as if originally named as a Guarantor hereunder.
The execution and delivery of any instrument adding an additional Guarantor as
a party to this Agreement shall not require the consent of any Guarantor
hereunder. The rights and obligations of each Guarantor hereunder shall remain
in full force and effect notwithstanding the addition of any new Guarantor as a
party to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first appearing
above.
HECHINGER INVESTMENT COMPANY
OF DELAWARE, INC.,
by
---------------------------------
Name:
Title:
EACH OF THE BORROWER
SUBSIDIARIES LISTED ON
SCHEDULE I HERETO, as a Guarantor,
by
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent and as Collateral
Agent,
by
---------------------------------
Name:
Title:
BANKAMERICA BUSINESS CREDIT,
INC., as Documentation Agent and as
Borrowing Base Audit Agent
by
---------------------------------
Name:
Title:
CITICORP USA, INC., as Syndication
Agent,
by
---------------------------------
Name:
Title:
121
SCHEDULE I
to the Indemnity Subrogation
and Contribution Agreement
Guarantors
Name Address
122
Annex 1 to
the Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. dated as of [ ], to the
Indemnity, Subrogation and Contribution Agreement
dated as of September 26, 1997 (as the same may be
amended, supplemented or otherwise modified from time
to time, the "Indemnity, Subrogation and Contribution
Agreement"), among HECHINGER INVESTMENT COMPANY OF
DELAWARE, INC., a Delaware corporation (the
"Borrower"), each Borrower Subsidiary listed on
Schedule I thereto (the "Guarantors"), THE CHASE
MANHATTAN BANK, a New York banking corporation
("Chase"), as administrative agent (in such capacity,
the "Administrative Agent") and as collateral agent
(in such capacity, the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement
referred to below), BANKAMERICA BUSINESS CREDIT,
INC., a Delaware corporation ("BABC") as
documentation agent (in such capacity, the
"Documentation Agent") and as borrowing base audit
agent (the "Borrowing Base Audit Agent") for the
Secured Parties, and CITICORP USA, INC., a Delaware
corporation ("Citicorp USA") as syndication agent (in
such capacity, the "Syndication Agent" and, together
with the Administrative Agent, the Collateral Agent,
the Documentation Agent and the Borrowing Base Audit
Agent, the "Agents") for the Secured Parties.
A. Reference is made to (a) the Credit Agreement dated as of
September 26, 1997 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, CENTERS HOLDINGS, INC., a
Delaware corporation ("Holdings"), BSQ ACQUISITION, INC., a Delaware
corporation ("BSQ Acqco"), BSQ TRANSFEREE CORP., a Delaware corporation ("BSQ
Newco"), HECHINGER COMPANY, a Delaware corporation ("Hechinger"), HECHINGER
STORES COMPANY, a Delaware corporation ("Hechinger Stores"), HECHINGER STORES
EAST COAST COMPANY, a Delaware corporation ("Hechinger Stores East Coast"), the
lenders from time to time party thereto (the "Lenders"), Chase as issuing bank
(in such capacity, the "Issuing Bank"), as Administrative Agent and as
swingline lender, and the Agents, and (b) the Subsidiary Guarantee Agreement
dated as of September 26, 1997, among the Guarantors and the Agents (the
"Guarantee Agreement").
B. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Indemnity, Subrogation
and Contribution Agreement and the Credit Agreement.
C. The Borrower and the Guarantors have entered into the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to make
Loans and the Issuing Bank to issue Letters of Credit. Pursuant to Section
5.12 of the Credit Agreement, each Borrower Subsidiary that was not in
existence or not such a Borrower Subsidiary on the date of the Credit Agreement
is required to enter into the Guarantee Agreement as a Guarantor upon becoming
a Borrower Subsidiary. Section 12 of the Indemnity, Subrogation and
Contribution Agreement provides that additional Borrower Subsidiaries may
become Guarantors under the Indemnity, Subrogation and Contribution Agreement
by execution and delivery of an instrument in the form of this Supplement. The
undersigned Borrower Subsidiary (the "New Guarantor") is executing this
Supplement in accordance with the requirements of the Credit Agreement to
become a Guarantor under the Indemnity, Subrogation and Contribution Agreement
in order to induce the Lenders to make additional Loans and the Issuing Bank to
issue additional Letters of Credit and as consideration for Loans previously
made and Letters of Credit previously issued.
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Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 12 of the Indemnity,
Subrogation and Contribution Agreement, the New Guarantor by its signature
below becomes a Guarantor under the Indemnity, Subrogation and Contribution
Agreement with the same force and effect as if originally named therein as a
Guarantor and the New Guarantor hereby agrees to all the terms and provisions
of the Indemnity, Subrogation and Contribution Agreement applicable to it as a
Guarantor thereunder. Each reference to a "Guarantor" in the Indemnity,
Subrogation and Contribution Agreement shall be deemed to include the New
Guarantor. The Indemnity, Subrogation and Contribution Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Guarantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any
respect, neither party hereto shall be required to comply with such provision
for so long as such provision is held to be invalid, illegal or unenforceable,
but the validity, legality and enforceability of the remaining provisions
contained herein and in the Indemnity, Subrogation and Contribution Agreement
shall not in any way be affected or impaired. The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7. All communications and notices hereunder shall be in
writing and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature.
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SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent
for its reasonable and documented out-of-pocket expenses in connection with
this Supplement, including the reasonable and documented fees, other charges
and disbursements of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have
duly executed this Supplement to the Indemnity, Subrogation and Contribution
Agreement as of the day and year first above written.
[Name Of New Guarantor],
by
------------------------------------
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
------------------------------------
Name:
Title:
125
SCHEDULE I
to Supplement No.___ to the Indemnity
Subrogation and Contribution Agreement
Guarantors
Name Address
126
EXHIBIT G
PLEDGE AGREEMENT dated as of September 26,
1997, among HECHINGER INVESTMENT COMPANY OF DELAWARE,
INC., a Delaware corporation (the "Borrower"),
CENTERS HOLDINGS, INC., a Delaware corporation
("Holdings"), BSQ ACQUISITION, INC., a Delaware
corporation ("BSQ Acqco"), BSQ TRANSFEREE CORP., a
Delaware corporation ("BSQ Newco"), HECHINGER
COMPANY, a Delaware corporation ("Hechinger"),
HECHINGER STORES COMPANY, a Delaware corporation
("Hechinger Stores"), HECHINGER STORES EAST COAST
COMPANY, a Delaware corporation ("Hechinger Stores
East Coast"), each other Subsidiary of Holdings
listed on Schedule I hereto (each such other
Subsidiary, individually, a "Subsidiary Pledgor" and,
collectively, the "Subsidiary Pledgors"; the
Borrower, Holdings, BSQ Acqco, BSQ Newco, Hechinger,
Hechinger Stores, Hechinger Stores East Coast and the
Subsidiary Pledgors are referred to collectively
herein as the "Pledgors") and THE CHASE MANHATTAN
BANK, a New York banking corporation ("Chase"), as
collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of September 26,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, BSQ Acqco, BSQ Newco,
Hechinger, Hechinger Stores, Hechinger Stores East Coast, the lenders from time
to time party thereto (the "Lenders"), Chase, as issuing bank (in such capacity,
the "Issuing Bank"), as administrative agent and as collateral agent for the
Lenders and as swingline lender, BankAmerica Business Credit, Inc., a Delaware
corporation ("BABC") as documentation agent and as borrowing base audit agent
for the Lenders, and Citicorp USA, Inc., a Delaware corporation, as syndication
agent for the Lenders, (b) the Parent Guarantee Agreement dated as of September
26, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Parent Guarantee Agreement"), among Holdings, BSQ Acqco, BSQ Newco, Hechinger,
Hechinger Stores, Hechinger Stores East Coast and the Agents and (c) the
Subsidiary Guarantee Agreement dated as of September 26, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Subsidiary Guarantee
Agreement" and, collectively with the Parent Guarantee Agreement, the "Guarantee
Agreements"), among the Subsidiary Pledgors and the Agents.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Holdings, BSQ Acqco, BSQ Newco, Hechinger, Hechinger Stores
and the Subsidiary Guarantors have agreed to guarantee, among other things, all
the obligations of the Borrower under the Credit Agreement. The obligations of
the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit are
conditioned upon, among other things, the execution and delivery by the Pledgors
of a Pledge Agreement in the form hereof to secure (a) the due and punctual
payment by the Borrower of (i) the principal of and premium, if any, and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether such
interest is allowed or allowable as a claim in such proceeding) on the Loans,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any Letter of Credit, when and
as due, including payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral, and (iii) all other
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during
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2
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether such monetary obligations are allowed or
allowable as a claim in such proceeding), of the Borrower to the Secured Parties
under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement and the other Loan
Documents and (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each Loan Party under or
pursuant to this Agreement and the other Loan Documents (all the monetary and
other obligations described in the preceding clauses (a) through (c) being
collectively called the "Obligations"). Capitalized terms used herein and not
defined herein shall have meanings assigned to such terms in the Credit
Agreement.
Accordingly, the Pledgors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
SECTION 1. Pledge. As security for the payment and performance, as the
case may be, in full of the Obligations, each Pledgor hereby transfers, grants,
bargains, sells, conveys, hypothecates, pledges, sets over and delivers unto
the Collateral Agent, its successors and assigns, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in all of the Pledgor's right, title and
interest in, to and under (a) the shares of capital stock or other equity
interest (including any equity interest in any joint venture listed on Schedule
III hereto (the "Joint Ventures")) owned by it and listed on Schedule II hereto
and any shares of capital stock or other equity interest of or any Subsidiary or
Joint Ventures obtained in the future by the Pledgor and the certificates
representing all such shares or equity interest (the "Pledged Stock"), provided
that the Pledged Stock shall not include (i) more than 65% of the issued and
outstanding shares of stock of any Foreign Subsidiary or (ii) to the extent that
applicable law requires that a Subsidiary of the Pledgor issue directors'
qualifying shares, such qualifying shares; (b)(i) the debt securities listed
opposite the name of the Pledgor on Schedule II hereto, (ii) any debt securities
in the future issued to the Pledgor and (iii) the promissory notes and any other
instruments evidencing such debt securities (the "Pledged Debt Securities"); (c)
all other property that may be delivered to and held by the Collateral Agent
pursuant to the terms hereof; (d) subject to Section 5, all payments of
principal or interest, dividends, cash, instruments and other property from time
to time received, receivable or otherwise distributed, in respect of, in
exchange for or upon the conversion of the securities referred to in clauses (a)
and (b) above; (e) subject to Section 5, all rights and privileges of the
Pledgor with respect to the securities and other property referred to in clauses
(a), (b), (c) and (d) above; and (f) all proceeds of any of the foregoing (the
items referred to in clauses (a) through (f) above being collectively referred
to as the "Collateral"). Upon delivery to the Collateral Agent, (a) any stock
certificates, notes or other securities now or hereafter included in the
Collateral (the "Pledged Securities") shall be accompanied by stock powers duly
executed in blank or other instruments of transfer satisfactory to the
Collateral Agent and by such other instruments and documents as the Collateral
Agent may reasonably request and (b) all other property comprising part of the
Collateral shall be accompanied by proper instruments of assignment duly
executed by the applicable Pledgor and such other instruments or documents as
the Collateral Agent may reasonably request. Each delivery of Pledged Securities
shall be accompanied by a schedule describing the securities theretofore and
then being pledged hereunder, which schedule shall be attached hereto as
Schedule II and made a part hereof. Each schedule so delivered shall supersede
any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees promptly
to deliver or cause to be delivered to the Collateral Agent any and all Pledged
Securities, and any and all certificates or other instruments or documents
representing the Collateral.
(b) Each Pledgor will cause any Indebtedness for borrowed money owed to
the Pledgor by
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3
any person to be evidenced by a duly executed promissory note that is pledged
and delivered to the Collateral Agent pursuant to the terms thereof.
SECTION 3. Representations, Warranties and Covenants. Each Pledgor
hereby represents, warrants and covenants, as to itself and the Collateral
pledged by it hereunder, to and with the Collateral Agent that:
(a) the Pledged Stock represents that percentage as set forth
on Schedule II of the issued and outstanding shares of each class of
the capital stock or other equity interest of the issuer with respect
thereto;
(b) except for the security interest granted hereunder, the
Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II, (ii) holds the same free and clear of all Liens, (iii)
will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on,
the Collateral, other than pursuant hereto, and (iv) subject to Section
5, will cause any and all Collateral, whether for value paid by the
Pledgor or otherwise, to be forthwith deposited with the Collateral
Agent and pledged or assigned hereunder;
(c) the Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will
defend its title or interest thereto or therein against any and all
Liens (other than the Lien created by this Agreement), however arising,
of all persons whomsoever;
(d) no consent of any other person (including stockholders or
creditors of any Pledgor) and no consent or approval of any
Governmental Authority or any securities exchange was or is necessary
to the validity of the pledge effected hereby;
(e) by virtue of the execution and delivery by the Pledgors of
this Agreement, when the Pledged Securities, certificates or other
documents representing or evidencing the Collateral are delivered to
the Collateral Agent in accordance with this Agreement, the Collateral
Agent will obtain a valid and perfected first lien upon and security
interest in such Pledged Securities as security for the payment and
performance of the Obligations;
(f) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of the
Collateral Agent in the Collateral as set forth herein;
(g) all the Pledged Stock has been duly authorized and validly
issued and is fully paid and nonassessable;
(h) all information set forth herein relating to the Pledged
Stock is accurate and complete in all material respects as of the date
hereof; and
(i) the pledge of the Pledged Stock pursuant to this Agreement
does not violate Regulation G, T, U or X or any successor thereto as of
the date hereof.
SECTION 4. Registration in Nominee Name; Denominations. The Collateral
Agent, on behalf of the Secured Parties, shall have the right (in its sole and
absolute discretion) to hold the Pledged Securities in its own name as pledgee,
the name of its nominee (as pledgee or as sub-agent) or the name of the
Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent.
Each Pledgor will promptly give to the Collateral Agent copies of any notices
or other communications received by it with respect to Pledged Securities
registered in the name of such Pledgor. Following an Event of Default, the
Collateral Agent shall have the right to exchange the certificates representing
Pledged Securities for certificates of smaller or larger denominations for any
purpose consistent with this Agreement.
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SECTION 5. Voting Rights; Dividends and Interest, etc. (a) Unless and
until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all
voting and/or other consensual rights and powers inuring to an owner of
Pledged Securities or any part thereof for any purpose consistent with
the terms of this Agreement, the Credit Agreement and the other Loan
Documents; provided, however, that such Pledgor will not be entitled to
exercise any such right if the result thereof could materially and
adversely affect the rights inuring to a holder of the Pledged
Securities or the rights and remedies of any of the Secured Parties
under this Agreement or the Credit Agreement or any other Loan Document
or the ability of the Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each
Pledgor, or cause to be executed and delivered to each Pledgor, all
such proxies, powers of attorney and other instruments as such Pledgor
may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and/or consensual rights and powers it is entitled
to exercise pursuant to subparagraph (i) above and to receive the cash
dividends it is entitled to receive pursuant to subparagraph (iii)
below.
(iii) Each Pledgor shall be entitled to receive and retain any
and all cash dividends, interest and principal paid on the Pledged
Securities to the extent and only to the extent that such cash
dividends, interest and principal are permitted by, and otherwise paid
in accordance with, the terms and conditions of the Credit Agreement,
the other Loan Documents and applicable laws. All noncash dividends,
interest and principal, and all dividends, interest and principal paid
or payable in cash or otherwise in connection with a partial or total
liquidation or dissolution, return of capital, capital surplus or
paid-in surplus, and all other distributions (other than distributions
referred to in the preceding sentence) made on or in respect of the
Pledged Securities, whether paid or payable in cash or otherwise,
whether resulting from a subdivision, combination or reclassification
of the outstanding capital stock of the issuer of any Pledged
Securities or received in exchange for Pledged Securities or any part
thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the
Collateral, and, if received by any Pledgor, shall not be commingled by
such Pledgor with any of its other funds or property but shall be held
separate and apart therefrom, shall be held in trust for the benefit of
the Collateral Agent and shall be forthwith delivered to the Collateral
Agent in the same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to dividends, interest or principal that such
Pledgor is authorized to receive pursuant to paragraph (a)(iii) above shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to receive
and retain such dividends, interest or principal. All dividends, interest or
principal received by the Pledgor contrary to the provisions of this Section 5
shall be held in trust for the benefit of the Collateral Agent, shall be
segregated from other property or funds of such Pledgor and shall be forthwith
delivered to the Collateral Agent upon demand in the same form as so received
(with any necessary endorsement). Any and all money and other property paid over
to or received by the Collateral Agent pursuant to the provisions of this
paragraph (b) shall be retained by the Collateral Agent in an account to be
established by the Collateral Agent upon receipt of such money or other property
and shall be applied in accordance with the provisions of Section 7. After all
Events of Default have been cured or waived, the Collateral Agent shall, within
five Business Days after all such Events of Default have been cured or waived,
repay to each Pledgor all cash dividends, interest or principal (without
interest), that such Pledgor would otherwise be permitted to retain pursuant to
the terms of paragraph (a)(iii) above and which remain in such account.
(c) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to exercise the voting and consensual rights
and powers it is entitled to exercise pursuant to paragraph (a)(i) of this
Section 5, and the obligations of the Collateral Agent under
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paragraph (a)(ii) of this Section 5, shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall have the sole and
exclusive right and authority to exercise such voting and consensual rights and
powers, provided that, unless otherwise directed by the Required Lenders, the
Collateral Agent shall have the right from time to time following and during the
continuance of an Event of Default to permit the Pledgors to exercise such
rights. After all Events of Default have been cured or waived, such Pledgor will
have the right to exercise the voting and consensual rights and powers that it
would otherwise be entitled to exercise pursuant to the terms of paragraph
(a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, subject to applicable regulatory and legal
requirements, the Collateral Agent may sell the Collateral, or any part thereof,
at public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate. The Collateral Agent shall be authorized at any such
sale (if it deems it advisable to do so) to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are purchasing the
Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of any Pledgor, and, to the extent permitted by applicable
law, the Pledgors hereby waive all rights of redemption, stay, valuation and
appraisal any Pledgor now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days' prior written notice
(which each Pledgor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of such Pledgor's Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Collateral Agent may fix and state in the
notice of such sale. At any such sale, the Collateral, or portion thereof, to be
sold may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any Collateral if it
shall determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Collateral Agent until the sale price is paid in full by the
purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
be sold again upon like notice. At any public (or, to the extent permitted by
applicable law, private) sale made pursuant to this Section 6, any Secured Party
may bid for or purchase, free from any right of redemption, stay or appraisal on
the part of any Pledgor (all said rights being also hereby waived and released),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to it from such Pledgor
as a credit against the purchase price, and it may, upon compliance with the
terms of sale, hold, retain and dispose of such property without further
accountability to such Pledgor therefor. For purposes hereof, (a) a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof, (b) the Collateral Agent shall be free to carry out such sale
pursuant to such agreement and (c) such Pledgor shall not be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Collateral Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Collateral Agent may proceed by a suit or suits at
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law or in equity to foreclose upon the Collateral and to sell the Collateral or
any portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver. Any sale pursuant to the provisions of this Section 6 shall be deemed
to conform to the commercially reasonable standards as provided in Section 9-
504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions.
SECTION 7. Application of Proceeds of Sale. The proceeds of any sale of
Collateral pursuant to Section 6, as well as any Collateral consisting of cash,
shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses incurred by
the Collateral Agent in connection with such sale or otherwise in
connection with this Agreement, any other Loan Document or any of the
Obligations, including all court costs and the reasonable and
documented fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder or
under any other Loan Document on behalf of any Pledgor and any other
reasonable and documented costs or expenses incurred in connection with
the exercise of any right or remedy hereunder or under any other Loan
Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Pledgors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 8. Reimbursement of Collateral Agent. (a) Each Pledgor agrees
to pay upon demand to the Collateral Agent the amount of any and all reasonable
and documented expenses, including the reasonable and documented fees, other
charges and disbursements of its counsel and of any experts or agents, that the
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Collateral Agent hereunder or (iv) the
failure by such Pledgor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Pledgor agrees to indemnify the Collateral Agent and
the Indemnitees (as defined in Section 9.03 of the Credit Agreement) against,
and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable and documented counsel
fees, other charges and disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations thereunder or the consummation of
the Transactions and the other transactions contemplated thereby or (ii) any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee or any Affiliate of such
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Indemnitee (or of any officer, director, employee, advisor or agent of such
Indemnitee or any of such Indemnitee's Affiliates).
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8 shall remain operative and in full force and effect regardless
of the termination of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document or any investigation made by or on behalf of the Collateral Agent or
any other Secured Party. All amounts due under this Section 8 shall be payable
on written demand therefor and shall bear interest at the rate specified in
Section 2.12 of the Credit Agreement.
SECTION 9. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor
hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent's name or in the name of such Pledgor, to ask for, demand,
xxx for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable to the Pledgor
representing any interest or dividend or other distribution payable in respect
of the Collateral or any part thereof or on account thereof and to give full
discharge for the same, to settle, compromise, prosecute or defend any action,
claim or proceeding with respect thereto, and to sell, assign, endorse, pledge,
transfer and to make any agreement respecting, or otherwise deal with, the same;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by the Collateral Agent,
or to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor their officers, directors, employees or agents shall be responsible to any
Pledgor for any act or failure to act hereunder, except for their own gross
negligence or wilful misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Collateral Agent and the Pledgor or Pledgors with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with Section 9.02 of the Credit Agreement.
SECTION 11. Securities Act, etc. In view of the position of the
Pledgors in relation to the Pledged Securities, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
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in effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Securities, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Securities could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Pledgor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Securities, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Securities for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion, (a) may proceed to make such a sale whether
or not a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under the Federal Securities
Laws and (b) may approach and negotiate with a single potential purchaser to
effect such sale. Each Pledgor acknowledges and agrees that any such sale might
result in prices and other terms less favorable to the seller than if such sale
were a public sale without such restrictions. In the event of any such sale, the
Collateral Agent shall incur no responsibility or liability for selling all or
any part of the Pledged Securities at a price that the Collateral Agent, in its
sole and absolute discretion, may in good xxxxx xxxx reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might have been realized if the sale were deferred until after registration as
aforesaid or if more than a single purchaser were approached. The provisions of
this Section 11 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.
SECTION 12. Registration, etc. Each Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default hereunder, if for
any reason the Collateral Agent desires to sell any of the Pledged Securities of
the Borrower at a public sale, it will, at any time and from time to time, upon
the written request of the Collateral Agent, use its best efforts to take or to
cause the issuer of such Pledged Securities to take such action and prepare,
distribute and/or file such documents, as are required or advisable in the
reasonable opinion of counsel for the Collateral Agent to permit the public sale
of such Pledged Securities. Each Pledgor further agrees to indemnify, defend and
hold harmless the Collateral Agent, each other Secured Party, any underwriter
and their respective officers, directors, affiliates and controlling persons
from and against all loss, liability, expenses, costs of counsel (including
reasonable and documented fees and expenses to the Collateral Agent of legal
counsel), and claims (including the reasonable and documented costs of
investigation) that they may incur insofar as such loss, liability, expense or
claim arises out of or is based upon any alleged untrue statement of a material
fact contained in any prospectus (or any amendment or supplement thereto) or in
any notification or offering circular, or arises out of or is based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements in any thereof not misleading, except insofar
as the same may have been caused by any untrue statement or omission based upon
information furnished in writing to such Pledgor or the issuer of such Pledged
Securities by the Collateral Agent or any other Secured Party expressly for use
therein. Each Pledgor further agrees, upon such written request referred to
above, to use its best efforts to qualify, file or register, or cause the issuer
of such Pledged Securities to qualify, file or register, any of the Pledged
Securities under the Blue Sky or other securities laws of such states as may be
requested by the Collateral Agent and keep effective, or cause to be kept
effective, all such qualifications, filings or registrations. Each Pledgor will
bear all costs and expenses of carrying out its obligations under this Section
12. Each Pledgor acknowledges that there is no adequate remedy at law for
failure by it to comply with the provisions of this Section 12 and that such
failure would not be adequately compensable in damages, and therefore agrees
that its agreements contained in this Section 12 may be specifically enforced.
SECTION 13. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall
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be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, any agreement
with respect to any of the Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument relating
to any of the foregoing, (c) any exchange, release or nonperfection of any other
collateral, or any release or amendment or waiver of or consent to or departure
from any guaranty, for all or any of the Obligations or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Pledgor in respect of the Obligations or in respect of this
Agreement (other than the indefeasible payment in full of all the Obligations).
SECTION 14. Termination or Release. (a) This Agreement and the security
interests granted hereby shall terminate when all the Obligations have been
indefeasibly paid in full in cash and the Lenders have no further commitment to
lend under the Credit Agreement, the LC Exposure has been reduced to zero and
the Issuing Bank has no further obligation to issue Letters of Credit under the
Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any Collateral
that is permitted under the Credit Agreement to any person that is not a
Pledgor, or, upon the effectiveness of any written consent to the release of the
security interest granted hereby in any Collateral pursuant to Section 9.02(b)
of the Credit Agreement, the security interest in such Collateral shall be
automatically released.
(c) In connection with any termination or release pursuant to paragraph
(a) or (b) above, the Collateral Agent shall execute and deliver to any Pledgor,
at such Pledgor's expense, all documents that such Pledgor shall reasonably
request to evidence such termination or release. Any execution and delivery of
documents pursuant to this Section 14 shall be without recourse to or warranty
by the Collateral Agent.
SECTION 15. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Pledgor shall be given
to it in care of the Borrower.
SECTION 16. Further Assurances. Each Pledgor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Collateral Agent its rights and remedies
hereunder.
SECTION 17. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party, and all covenants,
promises and agreements by or on behalf of any Pledgor that are contained in
this Agreement shall bind and inure to the benefit of its successors and
assigns. This Agreement shall become effective as to any Pledgor when a
counterpart hereof executed on behalf of such Pledgor shall have been delivered
to the Collateral Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be binding upon such
Pledgor and the Collateral Agent and their respective successors and assigns,
and shall inure to the benefit of such Pledgor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
no Pledgor shall have the right to assign its rights hereunder or any interest
herein or in the Collateral (and any such attempted assignment shall be void),
except as expressly contemplated by this Agreement or the other Loan Documents.
If all the capital stock of a Pledgor is sold, transferred or otherwise disposed
of to a person that is not an Affiliate of the Borrower pursuant to a
transaction permitted by Section 6.05 of the Credit Agreement, such Pledgor
shall be released from its obligations under this Agreement without further
action. This Agreement shall be construed as a separate agreement with respect
to each Pledgor and may be amended, modified, supplemented, waived or released
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with respect to any Pledgor without the approval of any other Pledgor and
without affecting the obligations of any other Pledgor hereunder.
SECTION 18. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by each Pledgor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank, regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or the LC Exposure does not equal zero and as long as the
Commitments have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute a single contract, and shall become effective
as provided in Section 17. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart of this Agreement.
SECTION 21. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement. Section headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting this Agreement.
SECTION 22. Jurisdiction; Consent to Service of Process. (a) Each
Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of
New York sitting in New York County and of the United States District Court of
the Southern District of New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement or any
other Loan Document, or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document
against any Pledgor or its properties in the courts of any jurisdiction.
(b) Each Pledgor irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other Loan Document in any court
referred to in paragraph (a) of this Section other than a court referred to in
the last sentence of paragraph (a) that is not referred to elsewhere in
paragraph (a). Each of
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the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 15. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 23. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 23.
SECTION 24. Additional Pledgors. Pursuant to Section 5.12 of the Credit
Agreement, each Borrower Subsidiary that was not in existence or not a Borrower
Subsidiary on the date of the Credit Agreement is required to enter in this
Agreement as a Subsidiary Pledgor upon becoming a Borrower Subsidiary. Upon
execution and delivery by the Collateral Agent and a Borrower Subsidiary of an
instrument in the form of Annex 1, such Borrower Subsidiary shall become a
Subsidiary Pledgor hereunder with the same force and effect as if originally
named as a Subsidiary Pledgor herein. The execution and delivery of such
instrument shall not require the consent of any Pledgor hereunder. The rights
and obligations of each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Pledgor as a party to this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
HECHINGER INVESTMENT COMPANY OF
DELAWARE, INC.,
by
-----------------------------
Name:
Title:
CENTERS HOLDINGS, INC.,
by
-----------------------------
Name:
Title:
BSQ ACQUISITION, INC.,
by
-----------------------------
Name:
Title:
BSQ TRANSFEREE CORP.,
by
-----------------------------
Name:
Title:
HECHINGER COMPANY,
by
-----------------------------
Name:
Title:
HECHINGER STORES COMPANY,
by
-----------------------------
Name:
Title:
HECHINGER STORES EAST COAST COMPANY,
by
-----------------------------
Name:
Title:
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13
THE SUBSIDIARY PLEDGORS LISTED ON
SCHEDULE I HERETO,
by
-----------------------------
Name:
Title: Authorized Officer
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14
THE CHASE MANHATTAN BANK, as Collateral
Agent,
by
------------------------------
Name:
Title:
140
Schedule I to the
Pledge Agreement
SUBSIDIARY PLEDGORS
Name Address
141
Schedule II to the
Pledge Agreement
CAPITAL STOCK
Number of Registered Number and Percentage
Issuer Certificate Owner Class of Shares of Shares
DEBT SECURITIES
Issuer Principal Amount Date of Note Maturity Date
142
Schedule III to the
Pledge Agreement
JOINT VENTURES
Name Description
143
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of , to the PLEDGE
AGREEMENT dated as of September 26, 1997, among
HECHINGER INVESTMENT COMPANY OF DELAWARE, INC., a
Delaware corporation (the "Borrower"), CENTERS
HOLDINGS, INC., a Delaware corporation ("Holdings"),
BSQ ACQUISITION, INC., a Delaware corporation ("BSQ
Acqco"), BSQ TRANSFEREE CORP., a Delaware corporation
("BSQ Newco"), HECHINGER COMPANY, a Delaware
corporation ("Hechinger"), HECHINGER STORES COMPANY,
a Delaware corporation ("Hechinger Stores"),
HECHINGER STORES EAST COAST COMPANY, a Delaware
corporation ("Hechinger Stores East Coast"), each
other Subsidiary of Holdings listed on Schedule I
thereto (each such other Subsidiary, individually, a
"Subsidiary Pledgor" and, collectively, the
"Subsidiary Pledgors"; the Borrower, Holdings, BSQ
Acqco, BSQ Newco, Hechinger, Hechinger Stores,
Hechinger Stores East Coast and the Subsidiary
Pledgors are referred to collectively herein as the
"Pledgors") and THE CHASE MANHATTAN BANK, a New York
banking corporation ("Chase"), as collateral agent
(in such capacity, the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement
referred to below).
Reference is made to (a) the Credit Agreement dated as of September 26,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, BSQ Acqco, BSQ Newco,
Hechinger, Hechinger Stores, Hechinger Stores East Coast, the lenders from time
to time party thereto (the "Lenders"), Chase, as issuing bank (in such capacity,
the "Issuing Bank"), as administrative agent and as collateral agent for the
Lenders and as swingline lender, BankAmerica Business Credit, Inc., a Delaware
corporation as documentation agent and as borrowing base audit agent for the
Lenders, and Citicorp USA, Inc., a Delaware corporation, as syndication agent
for the Lenders, (b) the Parent Guarantee Agreement dated as of September 26,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Parent Guarantee Agreement"), among Holdings, BSQ Acqco, BSQ Newco, Hechinger,
Hechinger Stores, Hechinger Stores East Coast and the Agents and (c) the
Subsidiary Guarantee Agreement dated as of September 26, 1997 (as amended,
supplemental or otherwise modified from time to time, the "Subsidiary Guarantee
Agreement" and, collectively with the Parent Guarantee Agreement, the "Guarantee
Agreements") among the Subsidiary Pledgors and the Agents.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
C. The Pledgors have entered into the Pledge Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.12 of the Credit Agreement, each Borrower
Subsidiary that was not in existence or not a Borrower Subsidiary on the date of
the Credit Agreement is required to enter into the Pledge Agreement as a
Subsidiary Pledgor upon becoming a Subsidiary. Section 24 of the Pledge
Agreement provides that such Borrower Subsidiaries may become Subsidiary
Pledgors under the Pledge Agreement by execution and delivery of an instrument
in the form of this Supplement. The undersigned Borrower Subsidiary (the "New
Pledgor") is executing this Supplement in accordance with the requirements of
the Credit Agreement to become a Subsidiary Pledgor under the Pledge Agreement
in order to induce the Lenders to make additional Loans and the Issuing Bank to
issue additional Letters of Credit and as consideration for Loans previously
made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Pledgor agree as follows:
SECTION 1. In accordance with Section 24 of the Pledge Agreement, the
New Pledgor by its signature below becomes a Pledgor under the Pledge Agreement
with the same force and effect as if originally named therein as a Pledgor and
the New Pledgor hereby (a) agrees to all the
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terms and provisions of the Pledge Agreement applicable to it as a Pledgor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Pledgor there under are true and correct on and as of
the date hereof. In furtherance of the foregoing, the New Pledgor, as security
for the payment and performance in full of the Obligations (as defined in the
Pledge Agreement), does hereby create and grant to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, their successors
and assigns, a security interest in and lien on all the New Pledgor's right,
title and interest in and to the Collateral (as defined in the Pledge Agreement)
of the New Pledgor. Each reference to a "Subsidiary Pledgor" or a "Pledgor" in
the Pledge Agreement shall be deemed to include the New Pledgor. The Pledge
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Pledgor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that set
forth on Schedule I attached hereto is a true and correct schedule of all its
Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
The parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 15 of the Pledge Agreement. All communications
and notices hereunder to the New Pledgor shall be given to it [at the address
set forth under its signature hereto][in care of the Borrower].
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SECTION 9. The New Pledgor agrees to reimburse the Collateral Agent for
its reasonable and documented out-of-pocket expenses in connection with this
Supplement, including the reason able and documented fees, other charges and
disbursements of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly
executed this Supplement to the Pledge Agreement as of the day and year first
above written.
[Name of New Pledgor],
by
-----------------------------
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
-----------------------------
Name:
Title:
146
Schedule I to
Supplement No.
to the Pledge Agreement
Pledged Securities of the New Pledgor
CAPITAL STOCK
Number of Registered Number and Percentage
Issuer Certificate Owner Class of Shares of Shares
DEBT SECURITIES
Issuer Principal Amount Date of Note Maturity Date
147
EXHIBIT H
SECURITY AGREEMENT dated as of September 26, 1997
among HECHINGER INVESTMENT COMPANY OF DELAWARE, INC., a
Delaware corporation (the "Borrower"), CENTERS HOLDINGS, INC.,
a Delaware corporation ("Holdings"), BSQ ACQUISITION, INC., a
Delaware corporation ("BSQ Acqco"), BSQ TRANSFEREE CORP., a
Delaware corporation ("BSQ Newco"), HECHINGER COMPANY, a
Delaware corporation ("Hechinger"), HECHINGER STORES COMPANY,
a Delaware corporation ("Hechinger Stores"), HECHINGER STORES
EAST COAST COMPANY, a Delaware corporation ("Hechinger Stores
East Coast"), each other Subsidiary of Holdings listed on
Schedule I hereto (each of Holdings, BSQ Acqco, BSQ Newco,
Hechinger, Hechinger Stores, Hechinger Stores East Coast and
each such other Subsidiary, individually, a "Guarantor" and,
collectively, the "Guarantors"; the Guarantors and the
Borrower are referred to collectively herein as the
"Grantors") and THE CHASE MANHATTAN BANK, a New York banking
corporation ("Chase"), as collateral agent (in such capacity,
the "Collateral Agent") for the Secured Parties (as defined
herein).
Reference is made to (a) the Credit Agreement dated as of September 26,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, BSQ Acqco, BSQ Newco,
Hechinger, Hechinger Stores, Hechinger Stores East Coast, the lenders from time
to time party thereto (the "Lenders"), Chase, as issuing bank (in such capacity,
the "Issuing Bank"), as administrative agent for the Lenders (in such capacity,
the "Administrative Agent"), as Collateral Agent and as swingline lender,
BankAmerica Business Credit, Inc., a Delaware corporation ("BABC"), as
documentation agent (in such capacity, the "Documentation Agent") and as
borrowing base audit agent (in such capacity, the "Borrowing Base Audit Agent")
for the Lenders and CITICORP USA, INC., a Delaware corporation, as syndication
agent for the Lenders (in such capacity, the "Syndication Agent" and, together
with the Administrative Agent, the Documentation Agent, the Borrowing Base Audit
Agent and the Collateral Agent, the "Agents"), (b) the Parent Guarantee
Agreement dated as of September 26, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Parent Guarantee Agreement"), among Holdings,
BSQ Acqco, BSQ Newco, Hechinger, Hechinger Stores and the Agents and (c) the
Subsidiary Guarantee Agreement dated as of September 26, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Subsidiary Guarantee
Agreement" and, together with the Parent Guarantee Agreement, the "Guarantee
Agreements") among the Guarantors listed on schedule I hereto and the Agents.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Guarantors has agreed to guarantee, among other
things, all the obligations of the Borrower under the Credit Agreement. The
obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit are conditioned upon, among other things, the execution and
delivery by the Grantors of an agreement in the form hereof to secure (a) the
due and punctual payment by the Borrower of (i) the principal of and premium, if
any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether such interest is allowed or allowable as a claim in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether such
monetary obligations are allowed or allowable as a claim in such proceeding), of
the Borrower to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of
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the Borrower under or pursuant to the Credit Agreement and the other Loan
Documents and (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each Loan Party under or
pursuant to this Agreement and the other Loan Documents (all the monetary and
other obligations described in the preceding clauses (a) through (c) being
collectively called the "Obligations").
Accordingly, the Grantors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:
"Account Debtor" shall mean any person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.
"Accounts" shall mean any and all right, title and interest of any
Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.
"Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
"Collateral" shall mean all (a) Accounts Receivable, (b) Documents, (c)
Equipment, (d) General Intangibles, (e) Inventory, (f) cash and cash accounts
and (g) Proceeds.
"Collection Deposit Account" shall mean a deposit account of a Grantor
maintained for the benefit of the Secured Parties with the Collateral Agent or
with a Sub-Agent pursuant to a Depository Agreement.
"Concentration Account" shall mean the cash collateral account
established at the office of The Chase Manhattan Bank located at 000 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000, in the name of the Collateral Agent, Account No.
323-515355.
"Copyright License" shall mean any written agreement, now or hereafter
in effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country,
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including registrations, recordings, supplemental registrations and pending
applications for registration in the United States Copyright Office, including
those listed on Schedule II.
"Credit Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Depository Agreement" shall mean a Depository Agreement substantially
in the form of Annex 1 hereto among the Borrower, the Collateral Agent and a
Sub-Agent.
"Depository System" shall have the meaning assigned to such term in
Section 5.01.
"Documents" shall mean all instruments, files, records, ledger sheets
and documents covering or relating to any of the Collateral.
"Equipment" shall mean all equipment, furniture and furnishings, and
all tangible personal property similar to any of the foregoing, including tools,
parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor. The term "Equipment" shall include Fixtures.
"Fixtures" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"General Fund Account" shall mean the general fund account established
at the office of The Chase Manhattan located at 000 Xxxx Xxxxxx, Xxx Xxxx, XX
00000, in the name of the Borrower, Account No. 323-071287.
"General Intangibles" shall mean all choses in action and causes of
action and all other assignable intangible personal property of any Grantor of
every kind and nature (other than Accounts Receivable) now owned or hereafter
acquired by any Grantor, including corporate or other business records,
indemnification claims, contract rights (including rights under leases, whether
entered into as lessor or lessee, Hedging Agreements and other agreements),
Intellectual Property, goodwill, registrations, franchises, tax refund claims
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to any Grantor to secure payment by an Account Debtor of any
of the Accounts Receivable.
"Intellectual Property" shall mean all intellectual and similar
property of any Grantor of every kind and nature now owned or hereafter acquired
by any Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.
"Inventory" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of any Grantor.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule III (other than those license agreements in
existence on the date hereof and listed on Schedule III and those license
agreements entered into after the date hereof that by their terms prohibit
assignment or a grant of a security interest by such Grantor as licensee
thereunder).
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"Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Overdraft" means, at any time, the amount by which the aggregate
amount debited from any deposit, concentration, operating or disbursement
account (including any Collection Deposit Account, the Concentration Account and
the General Fund Account) maintained by the Borrower or any other Grantor with
any Lender or any Affiliate of any Lender, as a result of processing of payment
orders issued by the Borrower or such Grantor or otherwise, exceeds the
aggregate funds on deposit in such account.
"Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent, now or hereafter owned by any Grantor or which any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.
"Patents" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all letters patent of the United States or any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including
those listed on Schedule IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate substantially in the
form of Annex 2 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer and
the chief legal officer of the Borrower.
"Proceeds" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession of
any Collateral and any payment received from any insurer or other person or
entity as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include (a) all cash and negotiable instruments received
by or held on behalf of the Collateral Agent, (b) any claim of any Grantor
against any third party for (and the right to xxx and recover for and the rights
to damages or profits due or accrued arising out of or in connection with) (i)
past, present or future infringement of any Patent now or hereafter owned by any
Grantor, or licensed under a Patent License, (ii) past, present or future
infringement or dilution of any Trademark now or hereafter owned by any Grantor
or licensed under a Trademark License or injury to the goodwill associated with
or symbolized by any Trademark now or hereafter owned by any Grantor, (iii)
past, present or future breach of any License and (iv) past, present or future
infringement of any Copyright now or hereafter owned by any Grantor or licensed
under a Copyright License and (c) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) the Documentation Agent, (e) the Borrowing
Base Audit Agent, (f) the Syndication Agent, (g) the Issuing Bank, (h) the
beneficiaries of each indemnification obligation undertaken by any Grantor under
any Loan Document and (i) the successors and assigns of each of the foregoing.
"Security Interest" shall have the meaning assigned to such term in
Section 2.01.
"Sub-Agent" shall mean a financial institution which shall have
delivered to the Collateral Agent an executed Depository Agreement.
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"Trademark License" shall mean any written agreement, now or hereafter
in effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Grantor or which any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Grantor under any such
agreement.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or any similar offices in any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule V, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right, title and interest
in, to and under the Collateral (the "Security Interest"); provided, however,
that, notwithstanding anything to the contrary contained herein or in any other
Loan Document, the portion of the Obligations attributable to the Loans
(together with interest thereon in accordance with the Credit Agreement) made by
the Lenders the proceeds of which are used by Borrower to repay the obligations
under the Hechinger Stores Credit Agreement shall be secured only by so much of
the Collateral as shall have secured the obligations to the creditors under the
Hechinger Stores Credit Agreement (the "Hechinger Replacement Loan"). Without
limiting the foregoing, the Collateral Agent is hereby authorized to file one or
more financing statements (including fixture filings), continuation statements,
filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other
country) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.
SECTION 2.02. No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Collateral.
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ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and valid
rights in and title to the Collateral with respect to which it has purported to
grant a Security Interest hereunder and has full power and authority to grant to
the Collateral Agent the Security Interest in such Collateral pursuant hereto
and to execute, deliver and perform its obligations in accordance with the terms
of this Agreement, without the consent or approval of any other person other
than any consent or approval which has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Schedule 6 to the Perfection Certificate,
which are all the filings, recordings and registrations (other than filings
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks and Copyrights) that
are necessary to publish notice of and protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral in
which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
(b) Each Grantor represents and warrants that fully executed security
agreements in the form hereof and containing a description of all Collateral
consisting of Intellectual Property with respect to United States Patents and
United States registered Trademarks (and Trademarks for which United States
registration applications are pending) and United States registered Copyrights
have been delivered to the Collateral Agent for recording by the United States
Patent and Trademark Office and the United States Copyright Office pursuant to
35 U.S.C. Section 261, 15 U.S.C. Section 1060 or 17 U.S.C. Section 205 and the
regulations thereunder, as applicable, and otherwise as may be required pursuant
to the laws of any other necessary jurisdiction, to protect the validity of and
to establish a legal, valid and perfected security interest in favor of the
Collateral Agent (for the ratable benefit of the Secured Parties) in respect of
all Collateral consisting of Patents, Trademarks and Copyrights in which a
security interest may be perfected by filing, recording or registration in the
United States (or any political subdivision thereof) and its territories and
possessions, or in any other necessary jurisdiction, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to perfect
the Security Interest with respect to any Collateral consisting of Patents,
Trademarks and Copyrights (or registration or application for registration
thereof) acquired or developed after the date hereof).
SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions and
(c) a security interest that shall be perfected in all Collateral in which a
security interest may be perfected upon the receipt and recording of this
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Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, within the three month period
(commencing as of the date hereof) pursuant to 35 U.S.C. Section 261 or 15
U.S.C. Section 1060 or the one month period (commencing as of the date hereof)
pursuant to 17 U.S.C. Section 205 and otherwise as may be required pursuant to
the laws of any other necessary jurisdiction. The Security Interest is and shall
be prior to any other Lien on any of the Collateral, other than Liens expressly
permitted to be prior to the Security Interest pursuant to Section 6.02 of the
Credit Agreement.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement. The Grantor has not filed or
consented to the filing of (a) any financing statement or analogous document
under the Uniform Commercial Code or any other applicable laws covering any
Collateral, (b) any assignment in which any Grantor assigns any Collateral or
any security agreement or similar instrument covering any Collateral with the
United States Patent and Trademark Office or the United States Copyright Office
or (c) any assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral with any
foreign governmental, municipal or other office, which financing statement or
analogous document, assignment, security agreement or similar instrument is
still in effect, except, in each case, for Liens expressly permitted pursuant to
Section 6.02 of the Credit Agreement.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. (a) Each Grantor agrees promptly to notify the Collateral Agent in
writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in its identity or corporate structure or (iv) in its Federal Taxpayer
Identification Number. Each Grantor agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Collateral Agent to continue at all times following such change to have a valid,
legal and perfected first priority security interest in all the Collateral. Each
Grantor agrees promptly to notify the Collateral Agent if any material portion
of the Collateral owned or held by such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Collateral Agent
may reasonably request, promptly to prepare and deliver to the Collateral Agent
a duly certified schedule or schedules in form and detail satisfactory to the
Collateral Agent showing the identity, amount and location of any and all
Collateral.
SECTION 4.02. Periodic Certification. Each year, at the time of
delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.01 of the Credit Agreement, the Borrower shall
deliver to the Collateral Agent a certificate executed by a Financial Officer
and the chief legal officer of the Borrower (a) setting forth the information
required pursuant to Section 2 of the Perfection Certificate or confirming that
there has been no change in such information since the date of such certificate
or the date of the most recent certificate delivered pursuant to Section 4.02
and (b) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of
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the Collateral have been filed of record in each governmental, municipal or
other appropriate office in each jurisdiction identified pursuant to clause (a)
above to the extent necessary to protect and perfect the Security Interest for a
period of not less than 18 months after the date of such certificate (except as
noted therein with respect to any continuation statements to be filed within
such period and except for any fixture filings not filed as of the Effective
Date). Each certificate delivered pursuant to this Section 4.02 shall identify
in the format of Schedule II, III, IV or V, as applicable, all Intellectual
Property of any Grantor in existence on the date thereof and not then listed on
such Schedules or previously so identified to the Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor shall, at its own
cost and expense, take any and all actions necessary to defend title to the
Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
expressly permitted pursuant to Section 6.02 of the Credit Agreement.
SECTION 4.04. Further Assurances. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the Collateral
Agent may from time to time request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements (including fixture filings) or other
documents in connection herewith or therewith. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to
supplement this Agreement by supplementing Schedule II, III, IV or V hereto or
adding additional schedules hereto to specifically identify any asset or item
that may constitute Copyrights, Licenses, Patents or Trademarks; provided,
however, that any Grantor shall have the right, exercisable within 10 days after
it has been notified by the Collateral Agent of the specific identification of
such Collateral, to advise the Collateral Agent in writing of any inaccuracy of
the representations and warranties made by such Grantor hereunder with respect
to such Collateral. Each Grantor agrees that it will use its best efforts to
take such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct with respect to such Collateral
within 30 days after the date it has been notified by the Collateral Agent of
the specific identification of such Collateral.
SECTION 4.05. Inspection and Verification. Following an Event of
Default and during the continuance thereof or otherwise in accordance with the
Credit Agreement, the Collateral Agent and such persons as the Collateral Agent
may reasonably designate shall have the right, at the Grantors' own cost and
expense, to inspect the Collateral, all records related thereto (and to make
extracts and copies from such records) and the premises upon which any of the
Collateral is located, to discuss the Grantors' affairs with the officers of the
Grantors and their independent accountants and to verify under reasonable
procedures the validity, amount, quality, quantity, value, condition and status
of, or any other matter relating to, the Collateral, including, in the case of
Accounts or Collateral in the possession of any third person, by contacting
Account Debtors or the third person possessing such Collateral for the purpose
of making such a verification. The Collateral Agent shall have the absolute
right to share any information it gains from such inspection or verification
with any Secured Party (it being understood that any such information shall be
deemed to be "Information" subject to the provisions of Section 9.16).
SECTION 4.06. Taxes; Encumbrances. At its option, on five days' prior
notice to the Borrower, the Collateral Agent may discharge past due taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Collateral and not permitted pursuant to
Section 6.02 of the Credit Agreement, and may pay for the maintenance and
preservation of the Collateral to the extent any Grantor fails to do so as
required by the Credit
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Agreement or this Agreement, and each Grantor jointly and severally agrees to
reimburse the Collateral Agent on demand for any payment made or any expense
incurred by the Collateral Agent pursuant to the foregoing authorization;
provided, however, that nothing in this Section 4.06 shall be interpreted as
excusing any Grantor from the performance of, or imposing any obligation on the
Collateral Agent or any Secured Party to cure or perform, any covenants or other
promises of any Grantor with respect to taxes, assessments, charges, fees,
liens, security interests or other encumbrances and maintenance as set forth
herein or in the other Loan Documents.
SECTION 4.07. Assignment of Security Interest. If at any time any
Grantor shall take a security interest in any property of an Account Debtor or
any other person to secure payment and performance of an Account, such Grantor
shall promptly assign such security interest to the Collateral Agent. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account Debtor or other person granting the security interest.
SECTION 4.08. Continuing Obligations of the Grantors. Each Grantor
shall remain liable to observe and perform all the conditions and obligations to
be observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance.
SECTION 4.09. Use and Disposition of Collateral. None of the Grantors
shall make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect of the Collateral, except as
expressly permitted by Section 6.02 of the Credit Agreement. Except as expressly
permitted in the Credit Agreement, none of the Grantors shall make or permit to
be made any transfer of the Collateral and each Grantor shall remain at all
times in possession of the Collateral owned by it, except that (a) Inventory may
be sold in the ordinary course of business and (b) unless and until the
Collateral Agent shall notify the Grantors that an Event of Default shall have
occurred and be continuing and that during the continuance thereof the Grantors
shall not sell, convey, lease, assign, transfer or otherwise dispose of any
Collateral (which notice may be given by telephone if promptly confirmed in
writing), the Grantors may use and dispose of the Collateral in any lawful
manner not inconsistent with the provisions of this Agreement, the Credit
Agreement or any other Loan Document. Without limiting the generality of the
foregoing, each Grantor agrees that it shall not permit any Inventory to be in
the possession or control of any warehouseman, bailee, agent or processor at any
time unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and shall have agreed in writing to hold the
Inventory subject to the Security Interest and the instructions of the
Collateral Agent and to waive and release any Lien held by it with respect to
such Inventory, whether arising by operation of law or otherwise.
SECTION 4.10. Limitation on Modification of Accounts. None of the
Grantors will, without the Collateral Agent's prior written consent, grant any
extension of the time of payment of any of the Accounts Receivable, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partly, any person liable for the payment thereof or allow any credit
or discount whatsoever thereon, other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business
and consistent with its current practices and in accordance with such prudent
and standard practices used in industries that are the same as or similar to
those in which such Grantor is engaged.
SECTION 4.11. Insurance. (a) The Grantors shall (i) maintain or shall
cause to be maintained insurance with financially sound and reputable insurers
with an A.M. Best rating of A- or better (or, to the extent consistent with
prudent business practice, a program of self-insurance approved by the
Administrative Agent) on such of its property and in at least such amounts and
against at least such risks as is customary with companies in the same or
similar businesses operating in the same or similar locations, including public
liability insurance against claims for personal injury or death occurring upon,
in or about or in connection with the use of any
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properties owned, occupied or controlled by it; (ii) maintain such other
insurance as may be required by law; and (iii) furnish to the Collateral Agent,
upon written request, full information as to the insurance carried.
(b) Fire and extended coverage policies maintained with
respect to any Collateral shall be endorsed or otherwise amended to include (i)
a non-contributing mortgage clause (regarding improvements to real property) and
lenders' loss payable clause (regarding personal property), in form and
substance satisfactory to the Collateral Agent, which endorsements or amendments
shall provide that, from and after the Effective Date, if the insurer shall have
received written notice from the Administrative Agent or the Collateral Agent of
the occurrence of an Event of Default, the insurer shall pay all proceeds
otherwise payable to the Borrower or the other Loan Parties under the policies
directly to the Administrative Agent or the Collateral Agent, (ii) a provision
to the effect that neither the Grantor, the Collateral Agent nor any other party
shall be a coinsurer and (iii) such other provisions as the Collateral Agent may
reasonably require from time to time to protect the interests of the Lenders.
Commercial general liability policies shall be endorsed to name the Collateral
Agent as an additional insured. Business interruption policies shall name the
Collateral Agent as loss payee and shall be endorsed or amended to include (i) a
provision that, from and after the Effective Date, if the insurer shall have
received written notice from the Administrative Agent or the Collateral Agent of
the occurrence of an Event of Default, the insurer shall pay all proceeds
otherwise payable to the Borrower or the other Loan Parties under the policies
directly to the Administrative Agent or the Collateral Agent, (ii) a provision
to the effect that none of the Borrower, the Administrative Agent or any other
party shall be a co-insurer and (iii) such other provisions as the
administrative Agent may reasonably require from time to time to protect the
interests of the Lenders. Each such policy referred to in this paragraph also
shall provide that it shall not be canceled, modified or not renewed (i) by
reason of nonpayment of premium except upon not less than 10 days' prior written
notice thereof by the insurer to the Collateral Agent (giving the Collateral
Agent the right to cure defaults in the payment of premiums) or (ii) for any
other reason except upon not less than 30 days' prior written notice thereof by
the insurer to the Collateral Agent. Such Grantor shall deliver to the
Collateral Agent, prior to the cancelation, modification or nonrenewal of any
such policy of insurance, a copy of a renewal or replacement policy (or other
evidence of renewal of a policy previously delivered to the Collateral Agent)
together with evidence satisfactory to the Collateral Agent of payment of the
premium therefor.
(c) Each Grantor irrevocably makes, constitutes and appoints
the Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral Agent
deems advisable. All sums disbursed by the Collateral Agent in connection with
this Section 4.11, including reasonable attorneys' fees, court costs, expenses
and other charges relating thereto, shall be payable, upon demand, by the
Grantors to the Collateral Agent and shall be additional Obligations secured
hereby.
SECTION 4.12. Intentionally Omitted.
SECTION 4.13. Legend. Subject to the rights and liens of the parties to
the Receivables Purchase Agreements, each Grantor shall legend, in form and
manner satisfactory to the Collateral Agent, its Accounts Receivable and its
books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned
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to the Collateral Agent for the benefit of the Secured Parties and that the
Collateral Agent has a security interest therein.
SECTION 4.14. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent that is
material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to xxxx any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
(c) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately if it
knows or has reason to know that any Patent, Trademark or Copyright material to
the conduct of its business may become abandoned, lost or dedicated to the
public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office or
any court or similar office of any country) regarding such Grantor's ownership
of any Patent, Trademark or Copyright, its right to register the same, or to
keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly informs
the Collateral Agent, and, upon request of the Collateral Agent, executes and
delivers any and all agreements, instruments, documents and papers as the
Collateral Agent may request to evidence the Collateral Agent's security
interest in such Patent, Trademark or Copyright, and each Grantor hereby
appoints the Collateral Agent as its attorney-in-fact to execute and file such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
(f) Each Grantor will take all necessary steps that are consistent with
the practice in any proceeding before the United States Patent and Trademark
Office, United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, to maintain and pursue each material application relating
to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant
or registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is material to the conduct of any Grantor's
business, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with good business judgment, to initiate opposition, interference and
cancellation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall
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notify the Collateral Agent and shall, if consistent with good business
judgment, promptly xxx for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or dilution,
and take such other actions as are appropriate under the circumstances to
protect such Collateral.
(h) Upon and during the continuance of an Event of Default, each
Grantor shall use its best efforts to obtain all requisite consents or approvals
by the licensor of each Copyright License, Patent License or Trademark License
to effect the assignment of all of such Grantor's right, title and interest
thereunder to the Collateral Agent or its designee.
ARTICLE V
Collections
SECTION 5.01. Depository System. (a) Within 90 days after the Closing
Date, the Grantors shall establish, subject to the control of the Collateral
Agent pursuant to the Depository Agreements, for the ratable benefit of the
Collateral Agent and the other Secured Parties, a system of deposit accounts
(the "Depository System") with one or more financial institutions that are
reasonably satisfactory to the Collateral Agent into which the Proceeds of all
Accounts Receivable and Inventory shall be deposited and forwarded to the
Collateral Agent in accordance with the Depository Agreements.
(b) All Proceeds of Inventory and Accounts Receivable that have been
received on any Business Day through the Depository System will be transferred
into the Concentration Account on such Business Day to the extent required by
the applicable Depository Agreement. All Proceeds stemming from the sale of a
substantial portion of the Collateral (other than Proceeds of Accounts) that
have been received by a Grantor on any Business Day will be transferred into the
Concentration Account on such Business Day. All Proceeds received on any
Business Day by the Collateral Agent pursuant to Section 5.02 will be
transferred into the Concentration Account on such Business Day.
(c) The Concentration Account is, and shall remain, under the sole
dominion and control of the Collateral Agent. Each Grantor acknowledges and
agrees that (i) such Grantor has no right of withdrawal from the Concentration
Account, (ii) the funds on deposit in the Concentration Account shall continue
to be collateral security for all of the Obligations and (iii) upon the
occurrence and during the continuance of an Event of Default, at the Collateral
Agent's election, the funds on deposit in the Concentration Account shall be
applied as provided in Section 6.02. So long as (y) no Event of Default has
occurred and is continuing, and (z) no Reduced Availability Event (as defined
below) has occurred and is continuing, the Collateral Agent shall promptly remit
any funds on deposit in the Concentration Account to the General Fund Account
and the Borrower shall have the right, at any time and from time to time, to
withdraw such amounts from the General Fund Account as it shall deem to be
necessary or desirable.
(d) Effective upon notice to the Grantors from the Collateral Agent (i)
after the occurrence and during the continuance of an Event of Default or (ii)
in the event that the total Borrowing Base does not exceed the sum of the Total
Exposures by at least $30,000,000 ("Reduced Availability Event") (which notice
may be given by telephone if promptly confirmed in writing), the Concentration
Account will, without any further action on the part of any Grantor, the
Collateral Agent or any Sub-Agent, convert into a closed account under the
exclusive dominion and control of the Collateral Agent in which funds are held
subject to the rights of the Collateral Agent hereunder. Each Grantor
irrevocably authorizes the Collateral Agent to notify each Sub-Agent (i) of the
occurrence of an Event of Default or a Reduced Availability Event and (ii) of
the matters referred to in this paragraph (d). Following the occurrence of an
Event of Default or a Reduced Availability Event, the Collateral Agent may
instruct each Sub-Agent to transfer immediately all funds held in each deposit
account to the Concentration Account.
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SECTION 5.02. Collections. (a) Subject to the rights and liens of the
parties to the Receivables Purchase Agreements, each Grantor agrees (i) to
notify and direct promptly each Account Debtor and every other person obligated
to make payments on Accounts Receivable or in respect of any Inventory to make
all such payments directly to the Depository System established in accordance
with Section 5.01, (ii) to use all reasonable efforts to cause each Account
Debtor and every other person identified in clause (i) above to make all
payments with respect to Accounts Receivable and Inventory directly to such
Depository System and (iii) promptly to deposit all payments received by it on
account of Accounts Receivable and Inventory, whether in the form of cash,
checks, credit card payments, notes, drafts, bills of exchange, money orders or
otherwise, in the Depository System in precisely the form in which received (but
with any endorsements of such Grantor necessary for deposit or collection), and
until they are so deposited such payments shall be held by such Grantor for the
benefit of the Collateral Agent.
(b) Without the prior written consent of the Collateral Agent, no
Grantor shall, in a manner adverse to the Lenders, change the general
instructions given to Account Debtors in respect of payment on Accounts to be
deposited in the Depository System. Until the Collateral Agent shall have
advised the Grantors to the contrary, each Grantor shall, and the Collateral
Agent hereby authorizes each Grantor to, enforce and collect all amounts owing
on the Inventory and Accounts Receivable, for the benefit and on behalf of the
Collateral Agent and the other Secured Parties; provided, however, that such
privilege may at the option of the Collateral Agent be terminated upon the
occurrence and during the continuance of any Event of Default or Reduced
Availability Event.
SECTION 5.03. Power of Attorney. Each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Grantor's true and lawful
agent and attorney-in-fact, and in such capacity the Collateral Agent shall have
the right, with power of substitution for each Grantor and in each Grantor's
name or otherwise, for the use and benefit of the Collateral Agent and the
Secured Parties, upon the occurrence and during the continuance of an Event of
Default or Reduced Availability Event (a) to receive, endorse, assign and/or
deliver any and all notes, acceptances, checks, drafts, money orders or other
evidences of payment relating to the Collateral or any part thereof; (b) to
demand, collect, receive payment of, give receipt for and give discharges and
releases of all or any of the Collateral; (c) to sign the name of any Grantor on
any invoice or xxxx of lading relating to any of the Collateral; (d) to send
verifications of Accounts Receivable to any Account Debtor; (e) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (f) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (g) to notify, or to require any
Grantor to notify, Account Debtors to make payment directly to the Collateral
Agent; and (h) to use, sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with all or any of the Collateral, and to do all
other acts and things necessary to carry out the purposes of this Agreement, as
fully and completely as though the Collateral Agent were the absolute owner of
the Collateral for all purposes; provided, however, that nothing herein
contained shall be construed as requiring or obligating the Collateral Agent or
any Secured Party to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent or any Secured
Party, or to present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or to become due
in respect thereof or any property covered thereby, and no action taken or
omitted to be taken by the Collateral Agent or any Secured Party with respect to
the Collateral or any part thereof shall give rise to any defense, counterclaim
or offset in favor of any Grantor or to any claim or action against the
Collateral Agent or any Secured Party. It is understood and agreed that the
appointment of the Collateral Agent as the agent and attorney-in-fact of the
Grantors for the purposes set forth above is coupled with an interest and is
irrevocable. The provisions of this Section shall in no event relieve any
Grantor of any of its obligations hereunder or under any other Loan Document
with respect to the Collateral or any part thereof or impose any obligation on
the Collateral Agent or any Secured Party to proceed in any particular manner
with respect to the Collateral or any part thereof, or in
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any way limit the exercise by the Collateral Agent or any Secured Party of any
other or further right which it may have on the date of this Agreement or
hereafter, whether hereunder, under any other Loan Document, by law or
otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest
to become an assignment, transfer and conveyance of any of or all such
Collateral by the applicable Grantors to the Collateral Agent, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the world on such terms
and conditions and in such manner as the Collateral Agent shall determine (other
than in violation of any then-existing licensing arrangements to the extent that
waivers cannot be obtained), and (b) with or without legal process and with or
without prior notice or demand for performance, to take possession of the
Collateral and without liability for trespass to enter any premises where the
Collateral may be located for the purpose of taking possession of or removing
the Collateral and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which such Grantor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Collateral Agent may fix and state in the notice (if any)
of such sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine. The Collateral Agent
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not
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incur any liability in case any such purchaser or purchasers shall fail to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. At any public (or, to the extent
permitted by law, private) sale made pursuant to this Section, any Secured Party
may bid for or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Grantor (all said
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to such Secured Party
from any Grantor as a credit against the purchase price, and such Secured Party
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to any Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Collateral Agent shall be free to carry
out such sale pursuant to such agreement and no Grantor shall be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Collateral Agent shall have entered into such
an agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Collateral Agent may proceed by a suit or suits at law or in equity
to foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral Agent shall
apply the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent or the Collateral Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with
such collection or sale or otherwise in connection with this Agreement
or any of the Obligations, including all court costs and the reasonable
and documented fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder or
under any other Loan Document on behalf of any Grantor and any other
reasonable and documented costs or expenses incurred in connection with
the exercise of any right or remedy hereunder or under any other Loan
Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sub-license
any of the Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer software
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and programs used for the compilation or printout thereof. The use of such
license by the Collateral Agent shall be exercised, at the option of the
Collateral Agent, upon the occurrence and during the continuation of an Event of
Default, provided that any license, sub-license or other transaction entered
into by the Collateral Agent in accordance herewith shall be binding upon the
Grantors notwithstanding any subsequent cure of an Event of Default.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and notices
hereunder to any Guarantor shall be given to it at its address or telecopy
number set forth on Schedule I, with a copy to the Borrower.
SECTION 7.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the making by the Lenders of the Loans, and
the execution and delivery to the Lenders of any notes evidencing such Loans,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect until this Agreement shall terminate.
SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement. This Agreement
shall be construed as a separate agreement with respect to each Grantor and may
be amended, modified, supplemented, waived or released with respect to any
Grantor without the approval of any other Grantor and without affecting the
obligations of any other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
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SECTION 7.06. Overdrafts. Each Grantor agrees to pay any such
Grantor's Overdrafts. Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents.
SECTION 7.07. Collateral Agent's Fees and Expenses; Indemnification.
(a) Each Grantor jointly and severally agrees to pay upon demand to the
Collateral Agent the amount of any and all reasonable and documented expenses,
including the reasonable and documented fees, disbursements and other charges of
its counsel and of any experts or agents, which the Collateral Agent may incur
in connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from or other realization upon any
of the Collateral, (iii) the exercise, enforcement or protection of any of the
rights of the Collateral Agent hereunder or (iv) the failure of any Grantor to
perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor jointly and severally agrees to indemnify the
Collateral Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable and documented fees, disbursements and other
charges of counsel, incurred by or asserted against any of them arising out of,
in any way connected with, or as a result of, the execution, delivery or
performance of this Agreement or any claim, litigation, investigation or
proceeding relating hereto or to the Collateral, whether or not any Indemnitee
is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Collateral Agent or any Lender. All amounts due under this Section 7.07
shall be payable on written demand therefor.
SECTION 7.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.09. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Agents, the Issuing Bank and the Lenders under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provisions of this Agreement or any
other Loan Document or consent to any departure by any Grantor therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on any
Grantor in any case shall entitle such Grantor or any other Grantor to any other
or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.02 of the Credit Agreement.
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SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.
SECTION 7.11. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7.12. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract (subject to Section 7.04),
and shall become effective as provided in Section 7.04. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
SECTION 7.13. Headings. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 7.14. Jurisdiction; Consent to Service of Process. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Agents, the Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against any
Grantor or its properties in the courts of any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
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SECTION 7.15. Termination. (a) This Agreement and the Security Interest
shall terminate when all the Obligations have been indefeasibly paid in full,
the Lenders have no further commitment to lend, the L/C Exposure has been
reduced to zero and the Issuing Bank has no further commitment to issue Letters
of Credit under the Credit Agreement, at which time the Collateral Agent shall
execute and deliver to the Grantors, at the Grantors' expense, all Uniform
Commercial Code termination statements and similar documents that the Grantors
shall reasonably request to evidence such termination. Any execution and
delivery of termination statements or documents pursuant to this Section 7.15
shall be without recourse to or warranty by the Collateral Agent. A Guarantor
shall automatically be released from its obligations hereunder and the Security
Interest in the Collateral of such Guarantor shall be automatically released in
the event that all the capital stock of such Guarantor shall be sold,
transferred or otherwise disposed of to a person that is not an Affiliate of the
Borrower in accordance with the terms of the Credit Agreement; provided that the
Required Lenders shall have consented to such sale, transfer or other
disposition (to the extent required by the Credit Agreement) and the terms of
such consent did not provide otherwise.
(b) The Security Interest in any Fixtures relating to particular real
estate that is sold, transferred, leased or otherwise disposed of by any
Transaction Party in accordance with Section 6.05 or Section 6.06 of the Credit
Agreement shall terminate automatically upon such sale, transfer, lease or other
disposition.
SECTION 7.16. Additional Grantors. Pursuant to Section 5.12 of the
Credit Agreement, each Borrower Subsidiary that was not in existence or not a
Borrower Subsidiary on the date of the Credit Agreement is required to enter
into this Agreement as a Grantor upon becoming a Borrower Subsidiary. Upon
execution and delivery by the Collateral Agent and a Borrower Subsidiary of an
instrument in the form of Annex 3 hereto, such Borrower Subsidiary shall become
a Grantor hereunder with the same force and effect as if originally named as a
Grantor herein. The execution and delivery of any such instrument shall not
require the consent of any Grantor hereunder. The rights and obligations of each
Grantor hereunder shall remain in full force and effect notwithstanding the
addition of any new Grantor as a party to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
HECHINGER INVESTMENT COMPANY OF
DELAWARE, INC.,
by
-------------------------------------
Name:
Title:
CENTERS HOLDINGS, INC.,
by
-------------------------------------
Name:
Title:
BSQ ACQUISITION, INC.,
by
-------------------------------------
Name:
Title:
BSQ TRANSFEREE CORP.,
by
-------------------------------------
Name:
Title:
HECHINGER COMPANY,
by
-------------------------------------
Name:
Title:
HECHINGER STORES COMPANY,
by
-------------------------------------
Name:
Title:
HECHINGER STORES EAST COAST
COMPANY,
by
-------------------------------------
Name:
Title:
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EACH OF THE GUARANTORS LISTED ON
SCHEDULE I HERETO,
by
-------------------------------------
Name:
Title: Authorized Officer
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THE CHASE MANHATTAN BANK,
as Collateral Agent,
by
-------------------------------------
Name:
Title: Authorized Officer
169
SCHEDULE I
GUARANTORS
170
SCHEDULE II
COPYRIGHTS
171
SCHEDULE III
LICENSES
172
SCHEDULE IV
PATENTS
173
SCHEDULE V
TRADEMARKS
174
Annex 1 to the
Security Agreement
DEPOSITORY AGREEMENT dated as of [ ], among [Name
of Grantor], a [ ] corporation (the "Grantor"), THE CHASE
MANHATTAN BANK, a New York banking corporation ("Chase"), as
collateral agent (in such capacity, the "Collateral Agent")
for the Secured Parties (such term, and each other capitalized
term used but not defined herein, having the meaning given it
in the Security Agreement referred to below) and [ ], a
[ ] banking corporation (the "Sub-Agent").
A. The Grantor and the Collateral Agent are parties to a Security
Agreement dated as of September 26, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Security Agreement"). Pursuant to the terms of
the Security Agreement, the Grantor has granted to the Collateral Agent, for the
ratable benefit of the Secured Parties, a security interest in its Accounts
Receivable and other Collateral (including Inventory, cash, cash accounts and
Proceeds) to secure the payment and performance of the Obligations and has
irrevocably appointed the Collateral Agent as its agent to collect amounts due
in respect of Accounts Receivable and Inventory.
B. The Sub-Agent has agreed to act as collection sub-agent of the
Collateral Agent to receive and forward payments with respect to the Accounts
Receivable and Inventory on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Collateral Agent hereby appoints the Sub-Agent as its collection
sub-agent under the Security Agreement and authorizes the Sub-Agent, on the
terms and subject to the conditions set forth herein, to receive payments in
respect of Collateral consisting of Accounts Receivable and Inventory.
2. The Sub-Agent has established and shall maintain deposit account
number [ ] (including all subaccounts thereof) for the benefit of the
Collateral Agent (such account being called the "Collection Deposit Account").
[Subject to the Sub-Agent's Terms for Deposit Services attached hereto as
Exhibit A, to the extent that the terms thereof relate to procedures or fees and
to the extent not inconsistent with the terms hereof,] all payments received by
the Sub-Agent in Account Number [ ] and [ ] or any replacements in
respect thereof (the "Accounts") shall be promptly deposited in the Collection
Deposit Account and shall not be commingled with other funds. All funds at any
time on deposit in the Collection Deposit Account shall be held by the Sub-Agent
for application in accordance with the terms of this Agreement. The Sub-Agent
agrees to give the Collateral Agent prompt notice if the Collection Deposit
Account shall become subject to any writ, judgment, warrant of attachment,
execution or similar process. As security for the payment and performance of the
Obligations, the Grantor hereby confirms and pledges, assigns and transfers to
the Collateral Agent, and hereby creates and grants to the Collateral Agent, a
security interest in the Collection Deposit Account, all property and assets
held therein and all Proceeds thereof.
3. Effective upon notice to the Grantors and the Sub-Agent from the
Collateral Agent (i) after the occurrence and during the continuance of any
Event of Default or (ii) after the occurrence and during the continuance of a
Reduced Availability Event, the Collection Deposit Account shall be under the
sole dominion and control of the Collateral Agent, who shall possess all right,
title and interest in all of the items from time to time in the Collection
Deposit Account and their Proceeds. Effective upon such notice, the Sub-Agent
shall be the Collateral Agent's agent for the purpose of holding and collecting
such items and their Proceeds, and neither the Grantor nor any person or entity
claiming by, through or under the Grantor shall have any right, title or
interest in, or control over the use of, or any right to withdraw any amount
from, the Collection Deposit Account, except that the Collateral Agent shall
have the right to withdraw amounts from the Collection Deposit Account.
Effective upon such notice, the Sub-Agent shall be entitled to rely on, and
shall act in accordance with, all instructions given to it by the Collateral
Agent with
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respect to the Collection Deposit Account. Effective upon such notice, the
Collateral Agent shall have the sole power to agree with the Sub-Agent as to
specifications for Account services.
4. Upon receipt of written, telecopy or telephonic notice (which, in
the case of telephonic notice, shall be promptly confirmed in writing or by
telecopy) from the Collateral Agent, the SubAgent shall, if so directed in such
notice (subject to the Sub-Agent's right to request that the Collateral Agent
furnish, in form satisfactory to the Sub-Agent, signature cards and/or other
appropriate documentation), promptly transmit or deliver to the Collateral Agent
at the office specified in paragraph 12 hereof (or such other office as the
Collateral Agent shall specify) (a) all funds, if any, then on deposit in, or
otherwise to the credit of, the Collection Deposit Account (provided that funds
on deposit that are subject to collection may be transmitted promptly upon
availability for withdrawal), (b) all checks, drafts and other instruments for
the payment of money received in the Accounts and in the possession of the
Sub-Agent, without depositing such checks, drafts or other instruments in the
Collection Deposit Account or any other account and (c) any checks, drafts and
other instruments for the payment of money received in the Accounts by the
Sub-Agent after such notice, in whatever form received, provided that the
Sub-Agent may retain a reasonable reserve in a separate deposit account with the
Sub-Agent in respect of unpaid fees and amounts which may be subject to
collection.
5. The Sub-Agent is hereby instructed and authorized to transfer by
wire transfer or Automated Clearing House ("ACH") from the Collection Deposit
Account all funds that are from time to time deposited or otherwise credited to
such account (after such funds become available to the Sub-Agent, either through
the Federal Reserve System or other clearing mechanism used by the Sub-Agent's
branch), to such account as the Collateral Agent may from time to time direct,
provided that, unless the Collateral Agent otherwise instructs, no such transfer
shall be required if such transfer would result in the transfer of an amount
less than $1,000. Unless otherwise directed by the Collateral Agent, such funds
shall be transferred on each business day by wire transfer or ACH and shall be
identified as follows:
The Chase Manhattan Bank
ABA Number
For credit to The Chase Manhattan Bank
New York, NY [ ]
Account Number
Re: Hechinger Investment Company of Delaware, Inc.
Cash Collateral Account
These transfer instructions and authorizations may not be amended,
altered or revoked by the Grantor without the prior written consent of the
Collateral Agent. The Collateral Agent, however, shall have the right to amend
or revoke these transfer instructions and authorizations at any time without the
consent of the Grantor.
6. The Sub-Agent shall furnish the Collateral Agent with monthly
statements setting forth the amounts deposited in the Collection Deposit Account
and all transfers and withdrawals therefrom, and shall furnish such other
information at such times as shall be reasonably requested by the Collateral
Agent.
7. The fees for the services of the Sub-Agent shall be mutually agreed
upon between the Grantor and the Sub-Agent and shall be the obligation of the
Grantor; provided, however, that, notwithstanding the terms of any agreement
under which the Collection Deposit Account shall have been established with the
Sub-Agent, the Grantor and the Sub-Agent agree not to terminate such Collection
Deposit Account for any reason (including the failure of the Grantor to pay such
fees) for so long as this Agreement shall remain in effect (it being understood
that the foregoing shall not be construed to prohibit the resignation of the
Sub-Agent in accordance with paragraph 9 below). Neither the Collateral Agent
nor the Secured Parties shall have any liability for the payment of any such
fees. The Sub-Agent may perform any of its duties hereunder by or through its
agents, officers or employees.
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8. The Sub-Agent hereby represents and warrants that (a) it is a
banking corporation duly organized, validly existing and in good standing under
the laws of [ ] and has full corporate power and authority under such laws to
execute, deliver and perform its obligations under this Agreement and (b) the
execution, delivery and performance of this Agreement by the Sub-Agent have been
duly and effectively authorized by all necessary corporate action and this
Agreement has been duly executed and delivered by the Sub-Agent and constitutes
a valid and binding obligation of the Sub-Agent enforceable in accordance with
its terms.
9. The Sub-Agent may resign at any time as Sub-Agent hereunder by
delivery to the Collateral Agent of written notice of resignation not less than
thirty days prior to the effective date of such resignation. The Sub-Agent may
be removed by the Collateral Agent at any time, with or without cause, by
written, telecopy or telephonic notice (which, in the case of telephonic notice,
shall be promptly confirmed in writing or by telecopy) of removal delivered to
the Sub-Agent. Upon receipt of such notice of removal, or delivery of such
notice of resignation, the Sub-Agent shall (subject to the Sub-Agent's right to
request that the Collateral Agent furnish, in form satisfactory to the
Sub-Agent, signature cards and/or other appropriate documentation), promptly
transmit or deliver to the Collateral Agent at the office specified in paragraph
12 (or such other office as the Collateral Agent shall specify) (a) all funds,
if any, then on deposit in, or otherwise to the credit of, the Collection
Deposit Account (provided that funds on deposit that are subject to collection
may be transmitted promptly upon availability for withdrawal), (b) all checks,
drafts and other instruments for the payment of money received in the Accounts
and in the possession of the Sub-Agent, without depositing such checks, drafts
or other instruments in the Collection Deposit Account or any other account and
(c) any checks, drafts and other instruments for the payment of money received
in the Accounts by the Sub-Agent after such notice, in whatever form received.
10. The Grantor consents to the appointment of the Sub-Agent and agrees
that the SubAgent shall incur no liability to the Grantor as a result of any
action taken pursuant to an instruction given by the Collateral Agent in
accordance with the provisions of this Agreement. The Grantor agrees to
indemnify and defend the Sub-Agent against any loss, liability, claim or expense
(including reasonable attorneys' fees) arising from the Sub-Agent's entry into
this Agreement and actions taken hereunder, except to the extent resulting from
the Sub-Agent's gross negligence or willful misconduct.
11. The term of this Agreement shall extend from the date hereof until
the earlier of (a) the date on which the Sub-Agent has been notified in writing
by the Collateral Agent that the Sub-Agent has no further duties under this
Agreement and (b) the date of termination specified in the notice of removal
given by the Collateral Agent, or notice of resignation given by the SubAgent,
as the case may be, pursuant to paragraph 9. The obligations of the Sub-Agent
contained in the last sentence of paragraph 9 and in paragraph 15, and the
obligations of the Grantor contained in paragraphs 7 and 10, shall survive the
termination of this Agreement.
12. All notices and communications hereunder shall be in writing and
shall be delivered by hand or by courier service, mailed by certified or
registered mail or sent by telecopy (except where telephonic instructions or
notices are authorized herein) and shall be effective on the day on which
received (a) in the case of the Collateral Agent, to The Chase Manhattan Bank,
[ ], Attention of [ ], and (b) in the case of the Sub-Agent, addressed to
[ ], Attention of [ ]. For purposes of this Agreement, any officer of the
Collateral Agent shall be authorized to act, and to give instructions and
notices, on behalf of the Collateral Agent hereunder.
13. The Sub-Agent will not assign or transfer any of its rights or
obligations hereunder (other than to the Collateral Agent) without the prior
written consent of the other parties hereto, and any such attempted assignment
or transfer shall be void.
14. Except as provided in paragraph 5 above, this Agreement may be
amended only by a written instrument executed by the Collateral Agent, the
Sub-Agent and the Grantor, acting by their duly authorized representative
officers.
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15. Except as otherwise provided in the Credit Agreement with respect
to rights of set off available to the Sub-Agent in its capacity as a Lender (if
and so long as the Sub-Agent is a Lender thereunder), the Sub-Agent hereby
irrevocably waives any right to set off against, or otherwise deduct from, any
funds held in the Collection Deposit Account and all items (and Proceeds
thereof) that come into its possession in connection with the Collection Deposit
Account any indebtedness or other claim owed by the Grantor or any affiliate
thereof to the Sub-Agent; provided, however, that this paragraph shall not limit
the ability of the Sub-Agent to, and the SubAgent may, (a) exercise any right to
set off against, or otherwise deduct from, any such funds to the extent
necessary for the Sub-Agent to collect any fees owed to it by the Grantor in
connection with the Collection Deposit Account, (b) charge back and net against
the Collection Deposit Account any returned or dishonored items or other
adjustments in accordance with the Sub- Agent's usual practices and (c) (i)
establish the reserves contemplated in paragraph 4 in respect of unpaid fees and
amounts which may be subject to collection and (ii) transfer funds in respect of
such reserves from the Collection Deposit Account to the separate deposit
account with the SubAgent as contemplated in paragraph 4.
16. This Agreement shall inure to the benefit of and be binding upon
the Collateral Agent, the Sub-Agent, the Grantor and their respective permitted
successors and assigns.
17. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.
18. EXCEPT TO THE EXTENT THE LAWS OF THE STATE OF [ ] GOVERN THE
COLLECTION DEPOSIT ACCOUNT, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
19. The Sub-Agent shall be an independent contractor. This Agreement
does not give rise to any partnership, joint venture or fiduciary relationship.
20. In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
178
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
[Name of Grantor],
by
-----------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
-----------------------
Name:
Title:
[Sub-Agent],
by
-----------------------
Name:
Title:
179
Annex 2 to the
Security Agreement
[Form Of]
PERFECTION CERTIFICATE
Reference is made to (a) the Credit Agreement dated as of September 26,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Hechinger Investment Company of Delaware, Inc., a
Delaware corporation (the "Borrower"), Centers Holdings, Inc., a Delaware
corporation, BSQ Acquisition, Inc., a Delaware corporation, BSQ Transferee
Corp., a Delaware corporation, Hechinger Company, a Delaware corporation,
Hechinger Stores Company, a Delaware corporation, Hechinger Stores East Coast
Company, a Delaware corporation, the lenders from time to time party thereto
(the "Lenders"), The Chase Manhattan Bank, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent"), and as collateral agent
(in such capacity, the "Collateral Agent") for the Lenders, BankAmerica Business
Credit, Inc., as documentation agent for the Lenders (in such capacity, the
"Documentation Agent"), and as borrowing base audit agent for the Lenders (in
such capacity, the "Borrowing Base Audit Agent"), Citicorp USA, Inc., as
syndication agent for the Lenders (in such capacity, the "Syndication Agent",
and together with the Administrative Agent, the Documentation Agent, the
Borrowing Base Audit Agent and the Collateral Agent, the "Agents") and The Chase
Manhattan Bank, as issuing bank (in such capacity, the "Issuing Bank") and as
swingline lender, (b) the Parent Guarantee Agreement dated as of September 26,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Parent Guarantee Agreement") among the Guarantors (as defined therein) and the
Agents and (c) the Subsidiary Guarantee Agreement dated as of September 26, 1997
(as amended, supplemented or otherwise modified from time to time, the
"Subsidiary Guarantee Agreement" and, collectively with the Parent Guarantee
Agreement, the "Guarantee Agreements"), among the Subsidiary Guarantors (as
defined therein) and the Agents.
The undersigned, a Financial Officer and a Legal Officer, respectively,
of the Borrower, hereby certify to the Agents and each other Secured Party as
follows:
1. Names. (a) The exact corporate name of each Grantor, as such
name appears in its respective certificate of incorporation, is as follows:
(b) Set forth below is each other corporate name each Grantor has had
in the past five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, no Grantor has changed
its identity or corporate structure in any way within the past five years.
Changes in identity or corporate structure would include mergers, consolidations
and acquisitions, as well as any change in the form, nature or jurisdiction of
corporate organization. If any such change has occurred, include in Schedule 1
the information required by Sections 1 and 2 of this certificate as to each
acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade names
or similar appellations) used by each Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
(e) Set forth below is the Federal Taxpayer Identification Number of
each Grantor:
180
2
2. Current Locations. (a) The chief executive office of each Grantor is
located at the address set forth opposite its name below:
Grantor Mailing Address County State
(b) Set forth below opposite the name of each Grantor are all locations
where such Grantor maintains any books or records relating to any Accounts
Receivable (with each location at which chattel paper, if any, is kept being
indicated by an "*"):
Grantor Mailing Address County State
(c) Set forth below opposite the name of each Grantor are all the
places of business of such Grantor not identified in paragraph (a) or (b) above:
Grantor Mailing Address County
State
(d) Set forth below opposite the name of each Grantor are all the
locations where such Grantor maintains any Collateral not identified above:
Grantor Mailing Address County
State
(e) Set forth below opposite the name of each Grantor are the names and
addresses of all persons other than such Grantor that have possession of any of
the Collateral of such Grantor:
Grantor Mailing Address County
State
3. Unusual Transactions. All Accounts Receivable have been originated
by the Grantors and all Inventory has been acquired by the Grantors in the
ordinary course of business.
4. File Search Reports. Attached hereto as Schedule 4(A) are true
copies of file search reports from the Uniform Commercial Code filing offices
where filings described in Section 3.16 of the Credit Agreement are to be made.
Attached hereto as Schedule 4(B) is a true copy of each financing statement or
other filing identified in such file search reports.
5. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 5 hereto have been prepared for filing in the
Uniform Commercial Code filing office in each jurisdiction where a Grantor has
Collateral as identified in Section 2 hereof.
6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule
setting forth, with respect to the filings described in Section 5 above, each
filing and the filing office in which such filing is to be made.
7. Filing Fees. All filing fees and taxes payable in connection with
the filings described in Section 5 above have been paid.
8. Stock Ownership. Attached hereto as Schedule 8 is a true and correct
list of all the duly authorized, issued and outstanding stock of each Subsidiary
and the record and beneficial owners of such stock. Also set forth on Schedule 8
is each equity Investment of the Borrower and each Subsidiary that represents
50% or less of the equity of the entity in which such investment was made.
181
3
9. Notes. Attached hereto as Schedule 9 is a true and correct list of
all notes held by the Borrower and each Subsidiary and all intercompany notes
between the Borrower and each Subsidiary of the Borrower and between each
Subsidiary of the Borrower and each other such Subsidiary.
10. Advances. Attached hereto as Schedule 10 is (a) a true and correct
list of all advances made by the Borrower to any Subsidiary of the Borrower or
made by any Subsidiary of the Borrower to the Borrower or any other Subsidiary
of the Borrower, which advances will be on and after the date hereof evidenced
by one or more intercompany notes pledged to the Collateral Agent under the
Pledge Agreement, and (b) a true and correct list of all unpaid intercompany
transfers of goods sold and delivered by or to the Borrower or any Subsidiary of
the Borrower.
11. Mortgage Filings. Attached hereto as Schedule 11 is a schedule
setting forth, with respect to each Mortgaged Property, (i) the exact corporate
name of the corporation that owns such property as such name appears in its
certificate of incorporation, (ii) if different from the name identified
pursuant to clause (i), the exact name of the current record owner of such
property reflected in the records of the filing office for such property
identified pursuant to the following clause and (iii) the filing office in which
a Mortgage with respect to such property must be filed or recorded in order for
the Collateral Agent to obtain a perfected security interest therein.
IN WITNESS WHEREOF, the undersigned have duly executed this certificate
on this [ ] day of [ ].
HECHINGER INVESTMENT COMPANY OF
DELAWARE, INC.,
by
-------------------------------
Name:
Title: [Financial Officer]
by
-------------------------------
Name:
Title: [Legal Officer]
182
Annex 3 to the
Security Agreement
SUPPLEMENT NO. __ dated as of , to the Security
Agreement dated as of September 26, 1997, among HECHINGER
INVESTMENT COMPANY OF DELAWARE, INC., a Delaware corporation
(the "Borrower"), CENTERS HOLDINGS, INC., a Delaware
corporation ("Holdings"), BSQ ACQUISITION, INC., a Delaware
corporation ("BSQ Acqco"), BSQ TRANSFEREE CORP., a Delaware
corporation ("BSQ Newco"), HECHINGER COMPANY, a Delaware
corporation ("Hechinger"), HECHINGER STORES COMPANY, a
Delaware corporation ("Hechinger Stores"), HECHINGER STORES
EAST COAST COMPANY, a Delaware corporation ("Hechinger Stores
East Coast"), each other Subsidiary of Holdings listed on
Schedule I thereto (each of Holdings, BSQ Acqco, BSQ Newco,
Hechinger, Hechinger Stores and each such other Subsidiary
individually a "Guarantor" and collectively, the "Guarantors";
the Guarantors and the Borrower are referred to collectively
herein as the "Grantors") and THE CHASE MANHATTAN BANK, a New
York banking corporation ("Chase"), as collateral agent (in
such capacity, the "Collateral Agent") for the Secured Parties
(as defined herein).
A. Reference is made to (a) the Credit Agreement dated as of September
26, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, BSQ Acqco, BSQ Newco,
Hechinger, Hechinger Stores, Hechinger Stores East Coast, the lenders from time
to time party thereto (the "Lenders"), Chase, as issuing bank (in such capacity,
the "Issuing Bank"), as administrative agent for the Lenders (in such capacity,
the "Administrative Agent"), as Collateral Agent and as swingline lender,
BankAmerica Business Credit, Inc., a Delaware corporation ("BABC"), as
documentation agent for the Lenders (in such capacity, the "Documentation
Agent") and as borrowing base audit agent for the Lenders (in such capacity, the
"Borrowing Base Audit Agent") and CITICORP USA, INC., a Delaware corporation, as
syndication agent for the Lenders (in such capacity, the "Syndication Agent"
and, together with the Administrative Agent, the Documentation Agent, the
Borrowing Base Audit Agent and the Collateral Agent, the "Agents"), (b) the
Parent Guarantee Agreement dated as of September 26, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Parent Guarantee
Agreement"), among Holdings, BSQ Acqco, BSQ Newco, Hechinger, Hechinger Stores,
Hechinger Stores East Coast and the Agents and (c) the Subsidiary Guarantee
Agreement dated as of September 26, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Subsidiary Guarantee Agreement" and, together
with the Parent Guarantee Agreement, the "Guarantee Agreements"), among the
Guarantors listed on schedule I hereto and the Agents.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement and the
Credit Agreement.
C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Section 7.16 of Security Agreement provides that additional Borrower
Subsidiaries may become Grantors under the Security Agreement by execution and
delivery of an instrument in the form of this Supplement. The undersigned
Borrower Subsidiary (the "New Grantor") is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Grantor
under the Security Agreement in order to induce the Lenders to make additional
Loans and the Issuing Bank to issue additional Letters of Credit and as
consideration for Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 7.16 of the Security Agreement,
the New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and (b)
represents and warrants that the representations and warranties made by it as a
Grantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Grantor, as security for the payment and
performance in full of the Obligations (as defined in the Security Agreement),
does
183
2
hereby create and grant to the Collateral Agent, its successors and assigns, for
the benefit of the Secured Parties, their successors and assigns, a security
interest in and lien on all of the New Grantor's right, title and interest in
and to the Collateral (as defined in the Security Agreement) of the New Grantor.
Each reference to a "Grantor" in the Security Agreement shall be deemed to
include the New Grantor. The Security Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Grantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that (a) set
forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Grantor and (b) set forth under
its signature hereto, is the true and correct location of the chief executive
office of the New Grantor.
SECTION 5. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it at
the address set forth under its signature below.
SECTION 9. The New Grantor agrees to reimburse the Collateral Agent for
its reasonable and documented out-of-pocket expenses in connection with this
Supplement, including the reasonable and documented fees, other charges and
disbursements of counsel for the Collateral Agent.
184
3
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.
[Name Of New Grantor],
by
---------------------------------
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
---------------------------------
Name:
Title:
185
SCHEDULE I
to Supplement No.___ to the
Security Agreement
LOCATION OF COLLATERAL
Description Location
186
SCHEDULE 1.01(a)
(Acquired BSQ Newco Assets)
All right, title and interest of BSQ Newco in and to the following,
provided that the transfer of certain Equipment and Real Property shall be by
way of lease or sublease:
1. Real Property. Leasehold or subleasehold interests in all of the
real estate listed on Annex I to this Schedule 1.01(a), together with any
improvements and fixtures (including equipment constituting fixtures) thereon or
attached and affixed thereto (the "REAL PROPERTY").
2. Equipment and Other Personal Property. All equipment, machinery,
spare parts, automobiles, trucks, vehicles, tools, operating and office
supplies, chemicals, furniture, fixtures, computer hardware and software, and
other tangible property ("EQUIPMENT"), either in the form of a transfer of the
ownership interest therein or as part of the leasehold interests created under
Paragraph 1 of this Schedule 1.01(a).
3. Records. Originals or, in the case of financial books and records,
copies, of all of the files, correspondence, mailing lists, advertising matter
and sales and promotional materials, litigation files, books, records, employee
manuals, accounts, costs and supply data, lists of customers, suppliers, vendors
and employees, and other materials and information used in the Borrower's
business of marketing and selling home improvement and home decor products and
services through a warehouse format (the "BORROWER'S BUSINESS"), but excepting
therefrom any such books, records and materials relating to liabilities of BSQ
Newco not assumed by Borrower, if any.
4. Inventory. All inventory, including raw materials,
work-in-process and finished products, goods, commodities and
supplies ("INVENTORY").
5. Goods in Transit. Anything falling under the description of
Equipment or Inventory in Paragraphs 2 and 4 above ordered in the ordinary
course of business by or on behalf of Builders Square or BSQ Newco but not yet
received prior to the Effective Date ("GOODS IN TRANSIT"); provided that the
interest of Borrower in such Equipment may be in the form of a leasehold
interest.
6. Prepaid Expenses. All prepaid expenses.
7. Receivables. All accounts and notes receivable existing as of the
Effective Date that were reflected on the Builders Square Pro Forma Balance
Sheet referred to in Section __ of the Agreement, or that would have been
reflected on such
187
Pro Forma Balance Sheet if they existed as of May 24, 1997, other than the BSQ
Acqco/BSQ Newco Note and the BSQ Newco Note.
8. Cash. Store "till" cash.
9. Insurance Proceeds. The right to any insurance proceeds with respect
to any of the items described in this Schedule 1.01(b), pursuant to the Builders
Square Purchase
Agreement.
10. Claims. All claims against third parties relating to the Borrower's
Business, including liquidated and unliquidated rights under manufacturers' and
vendors' warranties and any claims against third-party insurers of the
Borrower's Business or the items described in this Schedule 1.01(b), other than
potential claims under the Builders Square Acquisition Agreement and the
BSQ/Acqco Note and the BSQ Newco Note.
11. Intangible Property. All domestic and foreign patents, know-how,
trade secrets, trademarks, service marks, trade names, brand names, slogans and
copyrights, in all cases whether or not registered or under application and
including all such matters under all federal, state, local and Puerto Rican
laws, including all right, title and interest in and to the name "Builders
Square" and all derivative and similar names and marks and all other names (if
any) used in connection with any private label products sold primarily pursuant
to the Borrower's Business, and other intangible property relating to the
Borrower's Business.
12. Contract Rights. All rights arising under agreements, contracts,
commitments, warranties, vendor agreements and other arrangements, including
purchase orders for Goods in Transit, other than under the Builders Square
Acquisition Agreement.
13. Licenses. To the extent transferable, all licenses, permits and
authorizations of governmental entities and non-governmental parties relating to
the use, operation or enjoyment of the items described in this Schedule 1.01(a).
14. [Other Assets. Other assets described on the Balance Sheet of
Borrower.]
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188
SCHEDULE 1.01(b)
(Acquired Hechinger Assets)
All right, title and interest of Hechinger Stores and Hechinger East
Coast in and to the following, provided that the transfer of certain Equipment
and Real Property shall be by way of lease or sublease:
1. Real Property. Leasehold or subleasehold interests in all of the
real estate designated on Annex I to this Schedule 1.01(b), together with any
improvements and fixtures (including equipment constituting fixtures) thereon or
attached or affixed thereto (the "REAL PROPERTY").
2. Equipment and Other Personal Property. All equipment, machinery,
spare parts, automobiles, trucks, vehicles, tools, operating and office
supplies, chemicals, furniture, fixtures, computer hardware and software, and
other tangible property ("EQUIPMENT"), either in the form of a transfer of the
ownership interest therein or as part of the leasehold interests created under
Paragraph 1 of this Schedule 1.01(b).
3. Records. Originals or, in the case of financial books and records,
copies, of all of the files, correspondence, mailing lists, advertising matter
and sales and promotional materials, litigation files, books, records, employee
manuals, accounts, costs and supply data, lists of customers, suppliers, vendors
and employees, and other materials and information used in the Borrower's
business of marketing and selling home improvement and home decor products and
services through a warehouse format (the "BORROWER'S BUSINESS"), but excepting
therefrom any such books, records and materials relating to liabilities of
Hechinger Stores or Hechinger East Coast not assumed by Borrower, if any.
4. Inventory. All inventory, including raw materials, work-in-process
and finished products, goods, commodities and supplies ("INVENTORY").
5. Goods in Transit. Anything falling under the description of
Equipment or Inventory in Paragraphs 2 and 4 above ordered in the ordinary
course of business by or on behalf of Hechinger Stores or Hechinger East Coast
but not yet received prior to the Effective Date ("GOODS IN TRANSIT"); provided
that the interest of Borrower in such Equipment may be in the form of a
leasehold interest.
6. Prepaid Expenses. All prepaid expenses.
7. Receivables. All accounts and notesreceivable existing as of the
Effective Date that are reflected on the _________________.
189
8. Cash. Store "till" cash.
9. Insurance Proceeds. The right to any insurance proceeds with
respect to any of the items described in this Schedule 1.01(b).
10. Claims. All claims against third parties relating to the Borrower's
Business, including liquidated and unliquidated rights under manufacturers' and
vendors' warranties and any claims against third-party insurers of the
Borrower's Business or the items described in this Schedule 1.01(b).
11. Intangible Property. All domestic and foreign patents, know-how,
trade secrets, trademarks, service marks, trade names, brand names, slogans and
copyrights, in all cases whether or not registered or under application and
including all such matters under all federal, state, local laws, including all
right, title and interest in and to the name "Hechinger" and all derivative and
similar names and marks and all other names (if any) used in connection with any
private label products sold primarily pursuant to the Borrower's Business, and
other intangible property relating to the Borrower's Business.
12. Contract Rights. All rights arising under agreements, contracts,
commitments, warranties, vendor agreements and other arrangements, including
purchase orders for Goods in Transit.
13. Licenses. To the extent transferable, all licenses, permits and
authorizations of governmental entities and non-governmental parties relating to
the use, operation or enjoyment of the items described in this Schedule 1.01(b).
14. [Other Current Assets and Intangible Assets. Other current assets
and intangible assets (e.g., goodwill) described on the Balance Sheet of
Borrower.
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190
Permanent Facility
Commitments
===================================================================================================
Lender Contact Person, Telephone Commitments
and Telecopy Number
---------------------------------------------------------------------------------------------------
The Chase Manhattan Bank, as Xxxx Xxxxxx $35,000,000.00
Administrative Agent Telephone: (000) 000-0000
000 Xxxx Xxxxxx Telecopy: (000) 000-0000
Xxx Xxxx, Xxx Xxxx 00000
For Administrative Matters:
Xxx Xxxxx Xxxxxxxxx Xxxxx
0xx Xxxxx Telephone: (212) 000-
Xxx Xxxx, Xxx Xxxx 00000-0000 Telecopy: (212) 552-
---------------------------------------------------------------------------------------------------
Bank of America, as Xxxxx Xxxxxx $35,000,000.00
Documentation Agent and as Telephone: (000) 000-0000
Borrowing Base Audit Agent Telecopy: (626) 578-6143
00 Xxxxx Xxxx Xxxxxx
Xxxxx 000 For Administrative Matters:
Xxxxxxxx, XX 00000
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
Citicorp Securities, Inc., as Agent $35,000,000.00
000 Xxxxx Xxxxxxxx Xxxxxx Telephone:
6th Floor Telecopy:
Xxx Xxxxxxx, XX 00000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
AT&T Commercial Finance Xxxx Xxxxxxxxx $29,000,000.00
Corporation, as Participant Telephone: (000) 000-0000
c/o AT&T Capital Corporation Telecopy: (201) 606-4776
0 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 For Administrative Matters:
Xxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
---------------------------------------------------------------------------------------------------
191
===================================================================================================
Lender Contact Person, Telephone Commitments
and Telecopy Number
---------------------------------------------------------------------------------------------------
BankBoston, N.A., as Co-Agent Xxxx Xxxxxxx $29,000,000.00
000 Xxxxxxx Xxxxxx Telephone: (000) 000-0000
Xxxxxx, XX 00000 Telecopy: (000) 000-0000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
BNY Financial Corporation, as Xxx Xxxxxxx $21,000,000.00
Participant Telephone: (000) 000-0000
x/x Xxxx xx Xxx Xxxx Telecopy: (212) 408-7399
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000 For Administrative Matters:
Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
---------------------------------------------------------------------------------------------------
BTM Capital Corp., as Co-Agent Xxxxxxx Xxxxxxx $29,000,000.00
0000 Xxxxxxxx Xxxx Xxxxx Telephone: (000) 000-0000
Suite 600 Telecopy: (000) 000-0000
Xxxxx Xxxxxx, XX 00000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
Congress Financial Corporation Xxxxx Xxxxxx $29,000,000.00
(Western), as Co-Agent Telephone: (000) 000-0000
000 Xxxxx Xxxx Xxxxxx Telecopy: (000) 000-0000
Xxxxxxxx, XX 00000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
Deutsch Financial Services, as Xxxx Xxxxxx $14,000,000.00
Participant Telephone: (000) 000-0000
000 Xxxxxxxxx Xxxxxx Xxxxx Telecopy: (000) 000-0000
Xx. Xxxxx, XX 00000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
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192
===================================================================================================
Lender Contact Person, Telephone Commitments
and Telecopy Number
---------------------------------------------------------------------------------------------------
Dresdner Bank Xxx Xxxxx $29,000,000.00
New York and Grand Cayman Telephone: (000) 000-0000
Branches, as Co-Agent Telecopy: (000) 000-0000
c/o Dresdner Koeinwort Xxxxxx
000 Xxxxx Xxxxx Xxxxxx For Administrative Matters:
00xx Xxxxx
Xxx Xxxxxxx, XX 00000 Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
Fleet Capital, as Participant Xxx Xxxxx $21,000,000.00
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx Telephone: (000) 000-0000
Xxx Xxxx, XX 00000 Telecopy:
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
Xxxxxx Financial Corp., as Co- Xxxxxx Xxxxxx $29,000,000.00
Agent Telephone: (000) 000-0000
000 Xxxx Xxxxxx Telecopy: (000) 000-0000
Xxx Xxxx, XX 00000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
IBJ Xxxxxxxx Business Credit Xxxxxx Xxxxx $14,000,000.00
Corporation, as Participant Telephone: (000) 000-0000
One Xxxxx Xxxxxx, 0xx Xxxxx Telecopy: (000) 000-0000
Xxx Xxxx, XX 00000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
Lasalle Business Credit, Inc., as Xxxxxxx Xxxxxxxx $21,000,000.00
Participant Telephone: (000) 000-0000
000 Xxxxxxx Xxxxxx, 00xx Xxxxx Telecopy: (000) 000-0000
Xxx Xxxx, XX 00000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
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===================================================================================================
Lender Contact Person, Telephone Commitments
and Telecopy Number
---------------------------------------------------------------------------------------------------
Mellon Bank, N.A., as Participant Xxx Xxxxxx $21,000,000.00
Mellon Bank Center Telephone: (000) 000-0000
0000 Xxxxxx Xxxxxx, 0xx Xxxxx Telecopy: (000) 000-0000
Xxxxxxxxxxxx, XX 00000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
National Bank of Canada, as Xxxxxxx Xxxxxxxx $11,000,000.00
Participant Telephone: (000) 000-0000
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000 Telecopy: (000) 000-0000
Xxxxxxxxx, XX 00000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
National City Commercial Xxxxx Xxxxxxxx $14,000,000.00
Finance, Inc., as Participant Telephone: (000) 000-0000
c/o National City Bank Telecopy: (000) 000-0000
(Cleveland)
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000 For Administrative Matters:
Xxxxxxxxx, XX 00000-0000
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
PNC Business Credit, as Xxxx Peak $21,000,000.00
Participant Telephone: (000) 000-0000
2 Tower Center Telecopy: (000) 000-0000
Xxxx Xxxxxxxxx, XX 00000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
Sanwa Business Credit Corp., as Xxxx X. Xxxxxx $29,000,000.00
Co-Agent Telephone: (000) 000-0000
000 Xxxxxxx Xxxxxx Telecopy: (000) 000-0000
Xxxxx 000
Xxx Xxxx, XX 00000 For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
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===================================================================================================
Lender Contact Person, Telephone Commitments
and Telecopy Number
---------------------------------------------------------------------------------------------------
Signet Bank, as Participant Xxxx Xxxxx $14,000,000.00
0 Xxxxx 0xx Xxxxxx Telephone: (000) 000-0000
Xxxxxxxx, XX 00000 Telecopy: (000) 000-0000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
The CIT Group/Business Credit, Xxxxx Xxxxxxxx $35,000,000.00
Inc., as Co-Agent Telephone: (000) 000-0000
1211 Avenue of the Americas Telecopy: (000) 000-0000
Xxx Xxxx, XX 00000
For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
Transamerica Business Credit Xxxxx Xxxxxx $21,000,000.00
Corp., as Participant Telephone: (000) 000-0000
555 Xxxxxxxx Xxxxx Avenue Telecopy: (000) 000-0000
Xxxxx X-000
Xxx, XX 00000 For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
Xxx Xxxxxx America Capital Xxxx Xxxxxxx $29,000,000.00
Prime Rate Income Trust, as Telephone: (000) 000-0000
Participant Telecopy: (000) 000-0000
Xxx Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000 For Administrative Matters:
Telephone:
Telecopy:
---------------------------------------------------------------------------------------------------
Xxxxx Fargo Bank, National Xxxx Xxxx $35,000,000.00
Association, as Co-Agent Telephone: (000) 000-0000
000 Xxxxxx Xxxxxx, 00xx Xxxxx Telecopy: (000) 000-0000
Xxx Xxxxxxxxx, XX 00000
For Administrative Matters:
Telephone:
Telecopy:
===================================================================================================
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SCHEDULE 3.12 SUBSIDIARIES
All Subsidiaries are Subsidiary Loan Parties and are directly or indirectly
owned 100% by Holdings. The Subsidiaries as of the Effective Date are as
follows:
I. Centers Holdings, Inc. (has 1 direct subsidiary)
A. BSQ Acquisition, Inc. (has 2 direct subsidiaries)
1. BSQ Transferee Corp. (has no subsidiaries)
2. Hechinger Company (has 4 direct subsidiaries)
x. Xxxxxxxxx Stores Company (has 2 direct subsidiaries)
(1) Hechinger Stores East Coast Company
(2) Hechinger Investment Company of Delaware, Inc. (has 2
subsidiaries)
(a) Hechinger Royalty Company
(b) HIDS, Inc.
x. Xxxxxxxxx International, Inc.
x. Xxxxxxxxx Property Company
x. Xxxxxxxxx Financial Holdings Company (has 9 subsidiaries)
(1) Hechinger Finance, Inc.
(2) Pennsy, Inc.
(3) HS Square, Inc.
(4) Hechinger Towers Company
(5) PhilProp Holding Company, a Pennsylvania corporation
(6) ManProp Holding Company, a Virginia corporation
(7) BucksProp Holding Company, a Pennsylvania corporation
(8) HProp, Inc.
(9) RemProp, Inc.
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