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Exhibit 4.1
$50,000,000
LOAN AND SECURITY AGREEMENT
DATED AS OF NOVEMBER 25, 2003
AMONG
XXXXXXXX'X OPERATING CO.
(THE BORROWER)
AND
XXXXXXXX'X HOLDINGS, INC.,
XXXXXXXX'X, INC. AND
XXXXXXXX'X REAL ESTATE HOLDINGS, INC.
(COLLECTIVELY, THE GUARANTORS)
AND
THE FINANCIAL INSTITUTIONS PARTY
HERETO FROM TIME TO TIME
(COLLECTIVELY, THE LENDERS)
AND
THE CIT GROUP/BUSINESS CREDIT, INC.
(THE AGENT)
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS............................................................................................1
SECTION 1.1 DEFINITIONS. FOR THE PURPOSES OF THIS AGREEMENT:...........................................1
SECTION 1.2 OTHER REFERENTIAL PROVISIONS................................................................32
SECTION 1.3 EXHIBITS AND SCHEDULES......................................................................34
ARTICLE II. REVOLVING CREDIT LOANS...............................................................................34
SECTION 2.1 REVOLVING CREDIT LOANS......................................................................34
SECTION 2.2 MANNER OF BORROWING REVOLVING CREDIT LOANS..................................................34
SECTION 2.3 REPAYMENT OF REVOLVING CREDIT LOANS.........................................................37
SECTION 2.4 REVOLVING CREDIT NOTE.......................................................................37
ARTICLE III. LETTER OF CREDIT FACILITY...........................................................................37
SECTION 3.1 ISSUANCE....................................................................................37
SECTION 3.2 ADVANCES AUTOMATIC; PARTICIPATIONS..........................................................38
SECTION 3.3 CASH COLLATERAL.............................................................................39
SECTION 3.4 FEES AND EXPENSES...........................................................................40
SECTION 3.5 REQUEST FOR INCURRENCE OF LETTER OF CREDIT OBLIGATIONS......................................40
SECTION 3.6 OBLIGATION ABSOLUTE.........................................................................40
SECTION 3.7 INDEMNIFICATION; NATURE OF LENDERS' DUTIES..................................................41
ARTICLE IV. GENERAL LOAN PROVISIONS..............................................................................42
SECTION 4.1 INTEREST....................................................................................42
SECTION 4.2 FEES........................................................................................45
SECTION 4.3 MANNER OF PAYMENT...........................................................................46
SECTION 4.4 LOAN ACCOUNTS; STATEMENTS OF ACCOUNT........................................................46
SECTION 4.5 TERMINATION OF AGREEMENT....................................................................47
SECTION 4.6 MAKING OF ADVANCES..........................................................................47
SECTION 4.7 SETTLEMENT AMONG LENDERS....................................................................48
SECTION 4.8 CHANGED CIRCUMSTANCES.......................................................................52
SECTION 4.9 OBLIGATIONS ABSOLUTE........................................................................53
SECTION 4.10 AGENT ADVANCES..............................................................................53
SECTION 4.11 OVERADVANCES................................................................................54
SECTION 4.12 FUNDING LOSSES..............................................................................55
SECTION 4.13 WAIVER OF SURETYSHIP DEFENSES...............................................................55
SECTION 4.14 CHANGE OF CONTROL...........................................................................56
ARTICLE V. CONDITIONS PRECEDENT..................................................................................56
SECTION 5.1 CONDITIONS PRECEDENT TO REVOLVING CREDIT LOANS AND LETTERS OF CREDIT........................56
SECTION 5.2 ALL ADVANCES; LETTERS OF CREDIT.............................................................60
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES.....................................................60
SECTION 6.1 REPRESENTATIONS AND WARRANTIES..............................................................60
SECTION 6.2 SURVIVAL OF REPRESENTATION AND WARRANTIES, ETC..............................................72
ARTICLE VII. SECURITY INTEREST...................................................................................72
SECTION 7.1 SECURITY INTEREST...........................................................................72
SECTION 7.2 CONTINUED PRIORITY OF SECURITY INTEREST.....................................................73
SECTION 7.3 THE UCC.....................................................................................75
ARTICLE VIII. COLLATERAL COVENANTS...............................................................................76
SECTION 8.1 COLLECTIONS; PAYMENTS.......................................................................76
SECTION 8.2 INSPECTION, VERIFICATION AND NOTIFICATION...................................................78
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SECTION 8.3 INVENTORY COVENANTS.........................................................................79
SECTION 8.4 RETURNED INVENTORY..........................................................................79
SECTION 8.5 OWNERSHIP AND DEFENSE OF TITLE..............................................................79
SECTION 8.6 INSURANCE...................................................................................80
SECTION 8.7 LOCATION OF OFFICES AND COLLATERAL..........................................................81
SECTION 8.8 RECORDS RELATING TO COLLATERAL..............................................................82
SECTION 8.9 MAINTENANCE OF EQUIPMENT....................................................................82
SECTION 8.10 INFORMATION AND REPORTS.....................................................................82
SECTION 8.11 COVENANTS REGARDING INTELLECTUAL PROPERTY COLLATERAL........................................84
SECTION 8.12 LANDLORD AND OTHER WAIVERS..................................................................84
SECTION 8.13 CONTROL AGREEMENTS..........................................................................85
ARTICLE IX. AFFIRMATIVE COVENANTS................................................................................85
SECTION 9.1 PRESERVATION OF CORPORATE EXISTENCE AND SIMILAR MATTERS.....................................85
SECTION 9.2 COMPLIANCE WITH APPLICABLE LAW..............................................................86
SECTION 9.3 MAINTENANCE OF PROPERTY.....................................................................86
SECTION 9.4 CONDUCT OF BUSINESS.........................................................................86
SECTION 9.5 INSURANCE...................................................................................86
SECTION 9.6 PAYMENT OF TAXES AND CLAIMS.................................................................86
SECTION 9.7 ACCOUNTING METHODS AND FINANCIAL RECORDS....................................................87
SECTION 9.8 USE OF PROCEEDS.............................................................................87
SECTION 9.9 HAZARDOUS WASTE AND SUBSTANCES; ENVIRONMENTAL REQUIREMENTS..................................87
SECTION 9.10 FURTHER ASSURANCES..........................................................................88
ARTICLE X. INFORMATION...........................................................................................88
SECTION 10.1 FINANCIAL STATEMENTS........................................................................88
SECTION 10.2 ACCOUNTANTS' CERTIFICATE....................................................................89
SECTION 10.3 COMPLIANCE CERTIFICATE......................................................................89
SECTION 10.4 COPIES OF OTHER REPORTS.....................................................................90
SECTION 10.5 NOTICE OF LITIGATION AND OTHER MATTERS......................................................90
SECTION 10.6 ERISA.......................................................................................91
SECTION 10.7 ACCURACY OF INFORMATION.....................................................................91
SECTION 10.8 REVISIONS OR UPDATES TO SCHEDULES...........................................................92
ARTICLE XI. NEGATIVE COVENANTS...................................................................................92
SECTION 11.1 INDEBTEDNESS FOR MONEY BORROWED.............................................................92
SECTION 11.2 GUARANTIES..................................................................................92
SECTION 11.3 INVESTMENTS AND ACQUISITIONS................................................................92
SECTION 11.4 CAPITAL EXPENDITURES........................................................................92
SECTION 11.5 RESTRICTED DISTRIBUTIONS AND PAYMENTS.......................................................92
SECTION 11.6 MERGER, CONSOLIDATION AND SALE OF ASSETS....................................................93
SECTION 11.7 TRANSACTIONS WITH AFFILIATES................................................................93
SECTION 11.8 LIENS.......................................................................................93
SECTION 11.9 OPERATING LEASES............................................................................93
SECTION 11.10 BENEFIT PLANS...............................................................................93
SECTION 11.11 SALES AND LEASEBACKS........................................................................94
SECTION 11.12 CAPITAL STRUCTURE AND BUSINESS..............................................................94
SECTION 11.13 NO IMPAIRMENT OF INTERCOMPANY TRANSFERS.....................................................94
SECTION 11.14 NO SPECULATIVE TRANSACTIONS.................................................................94
SECTION 11.15 PARENT NOTES................................................................................94
SECTION 11.16 TERMINATIONS; AMENDMENTS NOT AUTHORIZED.....................................................95
SECTION 11.17 NO RESTRICTION ON PAYMENTS TO AGENT.........................................................95
SECTION 11.18 REAL ESTATE; LEASES.........................................................................95
SECTION 11.19 PNC LOANS AND ACCOUNTS......................................................................95
SECTION 11.20 EXISTING DOCUMENTARY LETTERS OF CREDIT......................................................95
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ARTICLE XII. DEFAULT.............................................................................................95
SECTION 12.1 EVENTS OF DEFAULT...........................................................................95
SECTION 12.2 REMEDIES....................................................................................98
SECTION 12.3 APPLICATION OF PROCEEDS....................................................................101
SECTION 12.4 MISCELLANEOUS PROVISION CONCERNING REMEDIES................................................101
SECTION 12.5 TRADEMARK LICENSE..........................................................................103
SECTION 12.6 PAYOUT AGREEMENT PAYMENTS..................................................................103
ARTICLE XIII. ASSIGNMENTS.......................................................................................104
SECTION 13.1 SUCCESSORS AND ASSIGNS; PARTICIPATIONS.....................................................104
SECTION 13.2 REPRESENTATION OF LENDERS..................................................................107
ARTICLE XIV. THE AGENT..........................................................................................107
SECTION 14.1 APPOINTMENT OF AGENT.......................................................................107
SECTION 14.2 DELEGATION OF DUTIES.......................................................................107
SECTION 14.3 EXCULPATORY PROVISIONS.....................................................................108
SECTION 14.4 RELIANCE BY AGENT..........................................................................108
SECTION 14.5 NOTICE OF DEFAULT..........................................................................108
SECTION 14.6 NON-RELIANCE ON AGENT AND OTHER LENDERS....................................................109
SECTION 14.7 INDEMNIFICATION............................................................................109
SECTION 14.8 AGENT IN ITS INDIVIDUAL CAPACITY...........................................................109
SECTION 14.9 SUCCESSOR AGENT............................................................................110
SECTION 14.10 NOTICES FROM AGENT TO LENDERS..............................................................110
SECTION 14.11 AGENCY FOR PERFECTION......................................................................110
ARTICLE XV. MISCELLANEOUS.......................................................................................110
SECTION 15.1 NOTICES....................................................................................110
SECTION 15.2 EXPENSES...................................................................................111
SECTION 15.3 STAMP AND OTHER TAXES......................................................................113
SECTION 15.4 SETOFF; PRO RATA PARTICIPATION.............................................................113
SECTION 15.5 LITIGATION.................................................................................114
SECTION 15.6 WAIVER OF RIGHTS...........................................................................115
SECTION 15.7 REVERSAL OF PAYMENTS.......................................................................115
SECTION 15.8 INJUNCTIVE RELIEF..........................................................................115
SECTION 15.9 ACCOUNTING MATTERS.........................................................................115
SECTION 15.10 AMENDMENTS.................................................................................115
SECTION 15.11 ASSIGNMENT.................................................................................117
SECTION 15.12 PERFORMANCE OF EACH CREDIT PARTY'S DUTIES..................................................117
SECTION 15.13 INDEMNIFICATION............................................................................117
SECTION 15.14 ALL POWERS COUPLED WITH INTEREST...........................................................117
SECTION 15.15 SURVIVAL...................................................................................117
SECTION 15.16 SEVERABILITY OF PROVISIONS.................................................................118
SECTION 15.17 GOVERNING LAW..............................................................................118
SECTION 15.18 COUNTERPARTS...............................................................................118
SECTION 15.19 REPRODUCTION OF DOCUMENTS..................................................................118
SECTION 15.20 TERM OF AGREEMENT..........................................................................118
SECTION 15.21 CONFIDENTIALITY............................................................................119
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EXHIBITS
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EXHIBIT A FORM OF REVOLVING CREDIT NOTE
EXHIBIT B FORM OF BORROWING NOTICE
EXHIBIT C FORM OF BORROWING BASE CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL TO CREDIT PARTIES
EXHIBIT E FORM OF ASSIGNMENT AND TRANSFER AGREEMENT
EXHIBIT F FORM OF OFFICER'S CERTIFICATE
EXHIBIT G FORM OF SECRETARY'S CERTIFICATE
EXHIBIT H INTENTIONALLY OMITTED
EXHIBIT I FORM OF TRADEMARK SECURITY AGREEMENT
EXHIBIT J FORM OF CREDIT CARD CONTROL AGREEMENT
EXHIBIT K FORM OF INSURANCE LOSS PAYABLE ENDORSEMENT
EXHIBIT L FORM OF STOCK PLEDGE AGREEMENT
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SCHEDULES
SCHEDULE 2.2: Authorized Officers
SCHEDULE 6.1(a): Organization; Power; Qualification; FEIN
SCHEDULE 6.1(b): Subsidiaries and Ownership of the Borrower
SCHEDULE 6.1(e): Business Description
SCHEDULE 6.1(f): Compliance with Law; Government Approvals
SCHEDULE 6.1(g): Real Estate; Titles to Properties
SCHEDULE 6.1(h): Liens
SCHEDULE 6.1(i): Indebtedness and Guaranties
SCHEDULE 6.1(j): Litigation
SCHEDULE 6.1(k): Tax Returns and Payments
SCHEDULE 6.1(n): Benefit Plans; ERISA
SCHEDULE 6.1(r): Inventory
SCHEDULE 6.1(t): Chief Executive Office
SCHEDULE 6.1(v): Corporate and Fictitious Names
SCHEDULE 6.1(z): Intellectual Property
SCHEDULE 6.1(aa): Trade Names
SCHEDULE 6.1(bb): Brokers
SCHEDULE 6.1(cc): Insurance
SCHEDULE 6.1(dd): Deposit and Disbursement Accounts
SCHEDULE 6.1(gg): Agreements and other Documents
SCHEDULE 9.8: Use of Proceeds
SCHEDULE 12.1(j): Excluded Judgments
v
LOAN AND SECURITY AGREEMENT
Dated as of November 25, 2003
XXXXXXXX'X OPERATING CO., a Delaware corporation ("Borrower"),
XXXXXXXX'X HOLDINGS, INC., a Delaware corporation ("Parent"), XXXXXXXX'X, INC.,
a Delaware corporation ("Sub-Parent"), and XXXXXXXX'X REAL ESTATE HOLDINGS,
INC., a Delaware corporation ("REH"; together with Parent and Sub-Parent, the
"Guarantors" and each a "Guarantor"; and together with the Borrower, the "Credit
Parties" and each a "Credit Party"), the financial institutions party to this
Agreement from time to time (collectively, the "Lenders"), and THE CIT
GROUP/BUSINESS CREDIT, INC., a New York corporation (the "Agent"), agree as
follows:
RECITALS: The Borrower has requested that Lenders make, and the Lenders
desire to make, available to the Borrower, a revolving credit facility in an
aggregate amount of up to $50,000,000 (including a letter of credit subline in
an aggregate amount of up to $15,000,000), upon the terms and subject to the
conditions set forth herein.
ARTICLE I.
DEFINITIONS
SECTION 1.1 Definitions. For the purposes of this Agreement:
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"Accounts" means, as to any Person, all of such Person's then
owned or existing and future acquired or arising (a) "accounts", as such term is
defined in the Uniform Commercial Code, and any and all other receivables
(whether or not specifically listed on schedules furnished to Agent), including,
without limitation, all accounts created by, or arising from, all of Borrower's
sales, leases, rentals or other dispositions of goods or renditions of services
to its customers (whether or not they have been earned by performance),
including but not limited to, those accounts arising from sales, leases, rentals
or other dispositions of goods or rendition of services made under any of the
trade names, logos or styles of Borrower, or through any division of Borrower;
(b) Instruments, Documents, Chattel Paper, Contracts, Contract Rights,
acceptances, and tax refunds relating to any of the foregoing or arising
therefrom; (c) unpaid seller's rights (including rescission, replevin,
reclamation, repossession and stoppage in transit) relating to any of the
foregoing or arising therefrom; (d) rights to any Goods relating to any of the
foregoing or arising therefrom, including rights to returned, reclaimed or
repossessed Goods; (e) reserves and credit balances relating to any of the
foregoing or arising therefrom; (f) Supporting Obligations and Letter of Credit
Rights relating to any of the foregoing or arising therefrom; (g) insurance
policies or rights relating to any of the foregoing; (h) General Intangibles
relating to any of the foregoing or arising therefrom, including, without
limitation, all payment intangibles and other rights to payment (including, but
not limited to, those arising in connection with bank and non-bank credit card
receivables) and books and records and any electronic media and software
relating thereto; (i) notes, deposits or property of Account Debtors relating to
any of the foregoing or arising therefrom securing the obligations of any such
Account Debtors to the Borrower; (j) healthcare insurance receivables; and (k)
cash and non-cash Proceeds of any and all the foregoing.
"Account Debtor" means a Person who is obligated on or in
connection with an Account.
"Acquire", as applied to any Business Unit or Investment,
means the acquiring or acquisition of such Business Unit or Investment by
purchase, exchange, issuance of stock or other securities, or by merger,
reorganization or any other method.
"Advance" means an amount or amounts advanced by the Lenders
to the Borrower under the Revolving Credit Facility pursuant to ARTICLE 2
hereof.
"Affiliate" means, with respect to a Person, (a) any partner,
officer, manager, director, employee or managing agent of such Person or such
Person's Affiliates, (b) any spouse, parent, siblings, children or grandchildren
(by birth or adoption) of such Person and (c) any other Person (other than a
Subsidiary) that, (i) directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such given
Person, (ii) directly or indirectly beneficially owns or holds 10% or more of
any class of voting stock or partnership or other voting interest of such Person
or any Subsidiary of such Person, or (iii) 10% or more of the voting stock or
partnership or other voting interest of which is directly or indirectly
beneficially owned or held by such Person or a Subsidiary of such Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities or partnership or other voting
interest, by contract or otherwise; provided, however, that the term "Affiliate"
shall specifically exclude the Agent and each Lender.
"Agent" means CITBC, solely in its capacity as agent for the
Lenders, and any successor agent appointed pursuant to SECTION 14.9 hereof.
"Agent's Office" means the office of the Agent specified in or
determined in accordance with the provisions of SECTION 15.1(C) hereof.
"Agreement" means this Loan and Security Agreement, including
all Schedules, Exhibits and other attachments hereto, and all amendments,
modifications and supplements hereto and thereto and shall mean and refer to
this Agreement as the same may be in effect at the time such reference becomes
operative.
"Agreement Date" means the date as of which this Agreement is
dated.
"Anniversary Date" means the Initial Anniversary Date and the
same date in every year thereafter.
"Applicable Law" means all applicable provisions of
constitutions, statutes, rules, regulations and orders of all governmental
bodies and of all orders and decrees of all courts and arbitrators, including,
without limitation, applicable Environmental Laws.
2
"Applicable Margin" means the percentage per annum set forth
below opposite the Excess Availability for the respective interest rate option
below, to be determined quarterly based on the daily average Excess Availability
for the immediately preceding calendar quarter:
Excess Availability Applicable Margin
----------------------------------------------------------------
Prime Option LIBOR Option
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Less than $15 million 0.75% 2.25%
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$15 million or greater but less
than $40 million 0.50% 2.00%
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$40 million or greater 0.25% 1.75%
------------------------------------- ------------------------------ ---------------------------------
The adjustment to the Applicable Margin, if any, shall be effective on
the first Business Day of the then current calendar quarter (the "Adjustment
Date"). Each Applicable Margin shall be effective from one Adjustment Date until
the day before the next Adjustment Date. Any adjustment in the Applicable Margin
shall be applicable to all existing Revolving Credit Loans outstanding, as well
as any new Advances made or issued.
"Appraised GOB Value" means the net "going out of business"
value of the relevant Inventory determined from time to time pursuant to an
appraisal conducted by Great American Group or any other appraiser that is (a)
satisfactory to Agent, in its sole discretion and (b) consented to by Borrower
(which consent shall not be unreasonably withheld), which appraisal shall be
conducted in accordance with the terms of SECTION 8.3 hereof.
"Asset Disposition" means the sale, transfer, conveyance or
other disposition (including, without limitation, pursuant to any merger,
consolidation or sale-leaseback transaction) of any asset or property of any
Credit Party, including, but not limited to, the capital stock of any Credit
Party.
"Assignment and Transfer" means an assignment and transfer
agreement, substantially in the form of EXHIBIT E hereto, assigning all or a
portion of a Lender's interests, rights and obligations under this Agreement
pursuant to SECTION 13.1.
"Audited Financial Statements" shall have the meaning assigned
to such term in SECTION 10.1(A) hereof.
"Availability Reserve" means such reserve or reserves as the
Agent may establish or deem necessary from time to time in the exercise of its
reasonable credit judgment, including, without limitation, (i) any reserve
established by Agent, in its Permitted Discretion, pursuant to
3
SECTIONS 8.1, 8.12, and 8.13 hereof and (ii) any reserve established by Agent,
in its reasonable credit judgment, as a result of any issues, circumstances or
facts that could negatively impact the Borrower or the business, prospects,
profits, operations, industry, financial condition or assets of the Borrower,
including, without limitation, (w) Permitted Liens described in CLAUSES (A) or
(E) of the definition thereof attaching to Eligible Credit Card Accounts and/or
Eligible Inventory, (x) Permitted Liens described in CLAUSE (C) of the
definition thereof to the extent such Permitted Liens could reasonably be
expected to materially and adversely affect the value of the Collateral located
on the subject Real Estate or the ability of Agent to realize upon such
Collateral (y) judgments entered against Borrower and (z) rights of chargeback,
setoff and/or similar rights of a credit card issuer to the extent such
chargebacks, setoffs or similar rights have not been reflected as reductions in
the most recent Borrowing Base Certificate furnished to Agent.
"Availability Shortfall" means that Excess Availability, as
measured by Agent at any time and from time to time during the term hereof, is
less than $5,000,000.
"Benefit Plan" or "Plan" means an "employee benefit plan" as
defined in Section 3(3) of ERISA (other than a Multi-Employer Plan) in respect
of which Borrower or any Related Company is, or with respect to defined benefit
plans (as defined under ERISA) within the immediately preceding six years was,
an "employer" as defined in Section 3(5) of ERISA, including such plans as may
be established after the Effective Date.
"Blocked Account" means an account of Borrower maintained by
it with a Clearing Bank pursuant to a Blocked Account Agreement.
"Blocked Account Agreement" means an agreement among Borrower,
the Agent and a Clearing Bank, in form and substance satisfactory to Agent,
concerning the collection, treatment and remission of payments or other deposits
which represent the proceeds of Collateral.
"Borrower" shall have the meaning ascribed to such term in the
preamble of this Agreement.
"Borrowing Base" means, at any time, an amount equal to the
lesser of:
(a) (i) $50,000,000 minus (ii) an amount
equal to the Letter of Credit Reserve,
or
(b) (i) an amount equal to the sum of (A)
the lesser of (1) seventy-five percent (75%) of Eligible
Inventory at Cost, less the amount of any Inventory Reserves,
or (2) eighty-five percent (85%) of Eligible Inventory at its
Appraised GOB Value, less the amount of any Inventory
Reserves; and (B) eighty-five percent (85%) of Eligible Credit
Card Accounts; minus (ii) an amount equal to the sum of (A)
the Letter of Credit Reserve, (B) a reserve in an amount equal
to ten percent (10%) of the aggregate amount of all Revolving
Credit Loans and Letter of Credit Obligations (with Letter of
Credit Obligations, for this purpose, not to include
Reimbursement Obligations constituting
4
Revolving Credit Loans) outstanding and/or requested by
Borrower at such time and (C) the amount of any Availability
Reserves.
"Borrowing Base Certificate" means a certificate in the form
attached hereto as EXHIBIT C (or another form acceptable to the Agent) setting
forth the calculation of the Borrowing Base, including a calculation of each
component thereof, in sufficient detail provided by Borrower or otherwise in
such detail as shall be reasonably satisfactory to the Agent. All calculations
of the Borrowing Base in connection with the preparation of any Borrowing Base
Certificate shall originally be made by the Borrower and certified to the Agent;
provided, that the Agent shall have the right to review and adjust the Borrowing
Base to the extent that such calculation is not in accordance with this
Agreement.
"Borrowing Notice" shall have the meaning assigned to such
term in SECTION 2.2(A)(I) hereof.
"Business Day" means (a) any day other than a Saturday, Sunday
or other day on which either the office of JPMorgan Chase & Co. in New York, New
York or the Agent's office in New York, New York is authorized to close and (b)
with respect to all notices, determinations, fundings and payments in connection
with LIBOR or the LIBOR Option, any day that is a Business Day pursuant to
CLAUSE (A) above and that is also a day on which trading in Dollars is carried
on by and between banks in the London Interbank Market.
"Business Unit" means the assets constituting the business or
a division or operating unit thereof of any Person.
"Capital Expenditures" means, with respect to Borrower, all
expenditures made and liabilities incurred for the acquisition of assets (other
than assets which constitute a Business Unit) which are not, in accordance with
GAAP, treated as expense items for Borrower in the year made. Insurance proceeds
and any other payments received on account of any casualty loss applied to the
repair or replacement of the property affected by such casualty loss within one
(1) year of the receipt of such proceeds and/or payments shall not constitute
Capital Expenditures.
"Capitalized Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented
by obligations under a Capitalized Lease, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Cash Collateral" means collateral consisting of cash or Cash
Equivalents on which the Agent, for the benefit of itself as Agent and the
Lenders, has a first priority Lien.
"Cash Collateral Account" shall have the meaning assigned to
such term in SECTION 3.3(A) hereof.
"Cash Equivalents" means
5
(a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or
issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within one
year from the date of acquisition thereof;
(b) commercial paper maturing no more than
one year from the date issued and, at the time of acquisition
thereof, having a rating of at least A-2 from Standard &
Poor's Corporation or at least P-1 from Xxxxx'x Investors
Service, Inc.;
(c) certificates of deposit or bankers'
acceptances issued in Dollar denominations and maturing within
one year from the date of issuance thereof issued by any
commercial bank organized under the laws of the United States
of America or any state thereof or the District of Columbia
having combined capital and surplus of not less than
$250,000,000.00 and, unless issued by the Agent or a Lender,
not subject to set-off or offset rights in favor of such bank
arising from any extension of credit by such bank; and
(d) repurchase agreements in form and
substance and for amounts satisfactory to the Agent with a
term of not more than seven days for underlying securities of
the types described in CLAUSES (A), (B) and (C) above, entered
into with any financial institution meeting the qualifications
specified in clause (c).
"Change of Control" means any of the following: (a) any person
or group of persons (within the meaning of the Securities Exchange Act of 1934,
as amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended) of 50% or more of the issued and outstanding
shares of capital stock of Parent having the right to vote for the election of
directors of Parent under ordinary circumstances; (b) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the board of directors of Parent (together with any new (including replacement)
directors whose election to such board of directors of Parent or whose
nomination for election by the stockholders of Parent was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in office; (c) Parent
ceases to own and control all of the issued and outstanding capital stock of
Sub-Parent, (d) Sub-Parent ceases to own and control all of the issued and
outstanding capital stock of Borrower or (e) Borrower ceases to own and control
all of the issued and outstanding capital stock of any of its Subsidiaries,
except, solely with respect to SUBCLAUSES (C), (D) and (E), in the event of the
merger, consolidation and/or sale of assets of any such entities that is
expressly permitted under SECTION 11.6 of this Agreement.
"Charges" means all Federal, state, county, city, municipal,
local, foreign or other governmental taxes (including, without limitation, taxes
owed to PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) the Collateral, (ii) the Secured
Obligations, (iii) the employees, payroll, income or gross receipts of Borrower,
(iv) the ownership or use of any assets by Borrower or (v) any other aspect of
Borrower's business.
6
"Chase Bank Rate" means the rate of interest per annum
announced by JPMorgan Chase & Co. from time to time as its prime rate in effect
at its principal office in the City of New York. Such rate is not intended to be
the lowest rate of interest charged by JPMorgan Chase & Co. to its borrowers.
"Chattel Paper" means as to any Person, any "chattel paper,"
as such term is defined in the Uniform Commercial Code, including electronic
chattel paper, now owned or hereafter acquired by such Person.
"CITBC" means The CIT Group/Business Credit, Inc., a New York
corporation.
"Clearing Bank" means any banking institution with which a
Blocked Account has been established pursuant to a Blocked Account Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means all of Borrower's right, title and interest
in and to each of the following (whether in the name of Borrower or under any of
Borrower's Trade Names), wherever located and whether now or hereafter existing
or now owned or hereafter acquired or arising:
(a) all Accounts,
(b) all Chattel Paper,
(c) all Contracts,
(d) all Contract Rights,
(e) all Deposit Accounts,
(f) all Documents,
(g) all Equipment,
(h) all Fixtures,
(i) all General Intangibles (including
payment intangibles and Software),
(j) all Instruments,
(k) all Inventory,
(l) all Investment Property,
(m) all Real Estate,
7
(n) all Supporting Obligations and Letter of
Credit Rights,
(o) all other Goods and property, whether or
not delivered, including, without limitation, such other goods
and property (i) the sale or lease of which gives or purports
to give rise to any Account or other Collateral, including,
but not limited to, all Inventory and other merchandise
returned or rejected by or repossessed from customers, or (ii)
securing any Account or other Collateral, including, without
limitation, all rights as an unpaid vendor or lienor
(including, without limitation, stoppage in transit, replevin
and reclamation) with respect to such other Goods and
properties,
(p) all substitutes and replacements for,
accessories, attachments, and other additions to, any of the
above and any and all products or masses into which any Goods
are physically united such that their identity is lost,
(q) all policies and certificates of
insurance relating to any of the foregoing, now owned or
hereafter acquired, evidencing or pertaining to any and all
items of Collateral,
(r) all files, correspondence, computer
programs, tapes, discs and related data processing software
which contain information identifying or pertaining to any of
the Collateral or any Account Debtor, or showing the amounts
thereof or payments thereon or otherwise necessary or helpful
in the realization thereon or the collection thereof,
(s) all cash deposited with the Agent or any
Lender or which the Agent, for the benefit of the Lenders, or
any Lender is entitled to retain or otherwise possess as
Collateral pursuant to the provisions of this Agreement or any
of the Security Documents or any agreement relating to any
Letters of Credit, and
(t) any and all products and Proceeds of the
foregoing (including, but not limited to, any claim to any
item referred to in this definition, and any claim against any
third party for loss of, damage to or destruction of any or
all of the Collateral or for proceeds payable under, or
unearned premiums with respect to, policies of insurance) in
whatever form, including, but not limited to, cash,
Instruments, Chattel Paper, security agreements and other
documents.
Notwithstanding the foregoing, Collateral shall not include any Real Estate
lease or general intangible that (x) by its express terms (which terms are
enforceable under applicable law) or (y) pursuant to applicable law (regardless
of whether the terms thereof permit assignment), cannot be subject to the
Security Interest; provided, however, that, in the event of the termination or
elimination (whether by agreement, lapse or otherwise) of each prohibition or
requirement for any consent contained in any such Real Estate lease or general
intangible, such Real Estate lease or general intangible, as applicable, shall
immediately (without any act or delivery by any Person) be deemed to be
Collateral; and provided, further, that each Credit Party agrees to use
reasonable efforts to negotiate for the consent to the Security Interest by
landlords under Real Estate leases and other parties to agreements regarding
general intangibles entered into by such Credit Party after the Effective Date.
8
"Collection Account" means the Agent's account at JPMorgan
Chase & Co., New York, New York.
"Collection Report" means a report delivered by the Borrower
to the Agent, from time to time, pursuant to the provisions of SECTION 8.10(B).
"Commitment" means, as to each Lender, the amount set forth
opposite such Lender's name on the signature pages hereof, representing such
Lender's obligation, upon and subject to the terms and conditions of this
Agreement (including the applicable provisions of SECTION 13.1), to make
Revolving Credit Loans and to purchase participations in Letters of Credit or,
from and after the date hereof, in the Register representing such Lender's
obligation to make Revolving Credit Loans and to purchase participations in
Letters of Credit.
"Commitment Percentage" means, as to any Lender, the
percentage of the Revolving Credit Facility obtained by dividing such Lender's
Commitment by the Revolving Credit Facility Amount.
"Consolidated Balance Sheet" means a consolidated balance
sheet for Parent and its consolidated Subsidiaries, eliminating all
inter-company transactions and Liabilities and prepared in accordance with GAAP.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste the use,
possession or discharge into the environment of which is regulated by
Environmental Laws.
"Contracts" means, as to any Person, all "contracts" as such
term is used in the Uniform Commercial Code, including, without limitation, all
of such Person's then owned or existing and future acquired or arising
contracts, undertakings or agreements (other than rights evidenced by chattel
paper, documents or instruments as such terms are defined in the Uniform
Commercial Code) in or under which such Person may now or hereafter have any
right, title or interest, including, without limitation, any agreement relating
to Inventory, the terms of payment or the terms of performance of any Account or
any other Collateral.
"Contract Rights" means, as to any Person, all of such
Person's then owned or existing and future acquired or arising rights under
Contracts not yet fully performed and not evidenced by an instrument or chattel
paper, to the extent that the same may lawfully be assigned.
"Control Agreement" means an acknowledgement from, or an
agreement among the Borrower, Agent, for the benefit of the Lenders, and (i) the
issuer of uncertificated securities with respect to uncertificated securities in
the name of Borrower, in form and substance satisfactory to Agent; (ii) a
securities intermediary with respect to securities, whether certificated or
uncertificated, securities entitlements and other financial assets held in a
securities account in the name of Borrower, in form and substance satisfactory
to Agent; (iii) a futures commission merchant or clearing house, as applicable,
with respect to commodity accounts and commodity
9
contracts held by Borrower, in form and substance satisfactory to Agent; or (iv)
a credit card company, in form and substance satisfactory to Agent, with respect
to collections of and payments upon customer credit card transactions, whereby,
among other things, the issuer, securities intermediary, futures commission
merchant or credit card company disclaims any security interest in the
applicable financial assets and acknowledges the Lien of Agent, for the benefits
of the Lenders, on such financial assets.
"Cost" means with respect to Eligible Inventory of Borrower,
the lower of cost or market value of such Eligible Inventory as determined in
accordance with GAAP.
"Credit Party" and "Credit Parties" shall have the meanings
ascribed to such terms in the preamble of this Agreement.
"Default" means any of the events specified in SECTION 12.1
which with the passage of time or giving of notice or both would constitute an
Event of Default.
"Default Margin" means two percent (2%) per annum.
"Deposit Accounts" means, as to any Person, all "deposit
accounts" as defined in the Uniform Commercial Code, now owned or hereafter
acquired, including, without limitation, all of such Person's demand, time,
savings, passbook, money market or like depository accounts and all certificates
of deposit, maintained with a bank, savings and loan association, credit union
or like organization (other than an account evidenced by a certificate of
deposit that is an instrument under the Uniform Commercial Code).
"Disbursement Account" means an account maintained by and in
the name of Borrower with a Disbursing Bank for the purposes of depositing
proceeds of Advances.
"Disbursing Bank" means any commercial bank within which
Borrower maintains a Disbursement Account after the Effective Date.
"Documentary Letter of Credit" means any documentary letter of
credit issued or authorized to be issued by an Issuing Bank for the account of
Borrower pursuant to ARTICLE 3 hereof.
"Documents" means, as to any Person, all "documents" as
defined in the Uniform Commercial Code, now owned or hereafter acquired,
including, without limitation, all of such Person's certificates or documents of
origin and of title, warehouse receipts and manufacturers statements of origin.
"Dollar" and "$" mean freely transferable United States
dollars.
"ERISA" means the Employee Retirement Income Security Act of
1974, as in effect from time to time, and any successor statute.
10
"Early Termination Date" means any date, prior to the Initial
Anniversary Date, on which the Borrower terminates this Agreement or the
Revolving Credit Facility.
"Early Termination Fee" means an amount equal to (a) two
percent (2%) of the Revolving Credit Facility Amount if the Early Termination
Date falls within the first year after the Effective Date, (b) one percent (1%)
of the Revolving Credit Facility Amount if the Early Termination Date falls
within the second year after the Effective Date and (c) one-half of one percent
(0.50%) of the Revolving Credit Facility Amount if the Early Termination Date
falls thereafter but prior to the Initial Anniversary Date. If the Early
Termination Date occurs in connection with a Rule 13e-3 transaction (as defined
in Rule 13e-3 of the Securities Exchange Act of 1934, as amended from time to
time) with respect to Parent (a "Rule 13e-3 Transaction") and (i) CITBC is given
written notice by Parent of Parent's intent to make inquiries with respect to
the debt (specifically excluding equity) financing of such Rule 13e-3
Transaction (any such financing, a "13e-3 Financing") prior to any Credit Party
or any officer thereof contacting another financial institution with respect to
a 13e-3 Financing; (ii) CITBC is given a right to substantially match all
material terms of any written proposal for a 13e-3 Financing submitted to Parent
by a financial institution other than CITBC (an "Alternative Financier"); (iii)
CITBC fails to substantially match the material terms of such written proposal
within a reasonable time (not exceeding fourteen (14) days) of CITBC's receipt
of such written proposal; and (iv) such 13e-3 Financing closes with such
Alternative Financier on material terms substantially similar to, or material
terms more beneficial to Parent than, the terms contained in such written
proposal, then the Early Termination Fee shall be an amount equal to $0.
"Effective Date" means the later of (a) the Agreement Date,
and (b) the first date on which all of the conditions set forth in ARTICLE 5
shall have been fulfilled.
"Effective Interest Rate" means each rate of interest per
annum on the Revolving Credit Loans in effect from time to time pursuant to the
provisions of SECTION 4.1.
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any State thereof, having total assets
in excess of $500,000,000.00 or any commercial finance or asset-based lending
affiliate of any such commercial bank; (ii) a savings and loan association or
savings bank organized under the laws of the United States, or any State
thereof, having a net worth of at least $250,000,000.00 calculated in accordance
with GAAP; and (iii) any Lender listed on the signature page of this Agreement;
provided in each case that the representations contained in SECTIONS 13.1(C) and
13.2 hereof shall be applicable with respect to such institution or Lender.
"Eligible Credit Card Accounts" of Borrower, means the unpaid
portion of any credit card receivable payable in Dollars to Borrower, net of any
returns, discounts, claims, credits, charges or other allowances, chargebacks,
offsets, deductions, counterclaims, disputes or other defenses relating to a
particular credit card receivable or otherwise, and reduced by the aggregate
amount of all reserves, limits and deductions provided for in this definition,
which are deemed by Agent in its reasonable credit judgment to be eligible for
inclusion in calculation of the Borrowing Base. Unless otherwise approved in
writing by the Agent, the following credit card receivables shall be excluded
from Eligible Credit Card Accounts of Borrower:
11
(a) Accounts that (i) do not arise from the
sale, lease or rental of goods or rendition of services, (ii) are not owned by
Borrower and/or (iii) do not represent complete bona fide transactions which
require no further act under any circumstances on the part of Borrower to make
such Accounts payable by the Account Debtor;
(b) Accounts that are unpaid more than five
(5) Business Days after the date of the sale resulting in any such Account;
(c) (i) Accounts and underlying contracts
that contravene any laws, rules or regulations applicable thereto, including,
without limitation, the underlying credit card merchant agreement and rules and
regulations relating to truth-in-lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and/or
privacy and/or (ii) Accounts where a party to the underlying contract is in
violation of the underlying credit card merchant agreement or any such laws,
rules and/or regulations, in each case to the extent that the foregoing affects
the enforceability of any such Account;
(d) Accounts that are not valid, legally
enforceable obligations of the Account Debtors with respect thereto;
(e) Accounts (i) that are not subject to the
Security Interest, which is perfected as to such Accounts, and/or are subject to
any other Lien whatsoever (other than the Security Interest and Permitted Liens
described in CLAUSES (A) and (E) of the definition thereof) and/or (ii) that
arose from the sale of goods that were, at the time of such sale, subject to any
Lien whatsoever (other than the Security Interest and Permitted Liens described
in CLAUSES (A) and (E) of the definition thereof);
(f) Accounts in connection with which
Borrower is in breach of any express or implied representation or warranty with
respect to the goods, the sale of which gave rise to such Accounts, and/or is in
breach of any representation or warranty, covenant or other agreement contained
in the Loan Documents with respect to such Accounts;
(g) Accounts in connection with which the
Account Debtor thereunder has not executed and delivered to Agent a Control
Agreement (as described in CLAUSE (IV) of the definition thereof) with respect
thereto; or
(h) Accounts that do not satisfy any other
requirements deemed necessary by the Agent in its reasonable credit judgment and
which are customary either in the commercial finance industry or in the lending
practices of the Agent.
"Eligible Inventory" of Borrower means items of Inventory of Borrower
held for sale in the ordinary course of the business of Borrower. Unless
otherwise approved in writing by the Agent, the following Inventory shall be
excluded from Eligible Inventory:
(a) Inventory that is not owned by Borrower, Inventory that is
not subject to the Security Interest, which is perfected as to such Inventory,
and/or Inventory that is subject to any
12
claim of reclamation, adverse claim, security interest or right of equal or
superior priority to the Security Interest, or any other Lien whatsoever (other
than Permitted Liens described in CLAUSES (A) and (E) of the definition
thereof);
(b) Inventory that does not consist of finished goods;
(c) Inventory that is not in saleable condition and/or does
not meet all material standards applicable to such goods for their use or sale
imposed by any Person having regulatory authority over such matters;
(d) Inventory that is not currently usable or merchantable
and/or not readily saleable to the public, at prices approximating at least the
Cost thereof, in the normal course of Borrower's business;
(e) Inventory that is stale, obsolete, seconds, returned to
vendors or used goods taken in trade;
(f) Inventory that is not located at one of the locations
listed in SCHEDULE 6.1(R), unless such Inventory is in-transit between any such
locations in the United States of America and (i) such Inventory continues to be
subject to the first priority Security Interest of Agent therein; (ii) if such
Inventory is subject to a negotiable xxxx of lading or other negotiable
document, then no such xxxx of lading or document shall have been delivered to
any Person other than Agent; (iii) if such Inventory is subject to a
non-negotiable xxxx of lading or other similar non-negotiable document, then
such xxxx of lading or document shall have been consigned to Agent; and (iv)
such Inventory shall be subject to casualty insurance with respect to which
Agent is loss payee;
(g) Inventory that is not in the possession and control of the
Borrower, unless (i) (A) such Inventory is located in a facility owned by a
third party or is subject to a mortgage in favor of a lender other than Agent
and (B) the mortgagee, lessor, warehouseman, bailee or other third party, as the
case may be, shall have executed and delivered to the Agent a Waiver and Consent
in form and substance satisfactory to the Agent or (ii) such Inventory is
in-transit between any of the locations listed in SCHEDULE 6.1(R) in the United
States of America and (A) such Inventory continues to be subject to the first
priority Security Interest of Agent therein; (B) if such Inventory is subject to
a negotiable xxxx of lading or other negotiable document, then no such xxxx of
lading or document shall have been delivered to any Person other than Agent; (C)
if such Inventory is subject to a non-negotiable xxxx of lading or other similar
non-negotiable document, then such xxxx of lading or document shall have been
consigned to Agent; and (D) such Inventory shall be subject to casualty
insurance with respect to which Agent is loss payee;
(h) Inventory that is food (other than seasonal candy (in
accordance with Borrower's historical business practices)), perishables, live
plants, excess inventory, damaged, defective or unmerchantable goods, cash
discounts, sample inventory, display items, packaging or shipping materials,
supplies used or consumed in Borrower's business, shrinkage or Inventory
scheduled for return to vendors;
13
(i) Inventory with respect to which Borrower is in breach of
any express or implied representation or warranty;
(j) Inventory that was produced in violation of the Fair Labor
Standards Act and subject to the so-called "hot goods" provision contained in
Title 29, Chapter 8, U.S.C. ss.215(a);
(k) Inventory that is subject to a license agreement, unless
Borrower shall have entered into a licensor consent letter with the applicable
licensor in form and substance satisfactory to Agent; or
(l) Inventory that is not acceptable to Agent for inclusion in
Eligible Inventory pursuant to Agent's Permitted Discretion.
Notwithstanding the foregoing, Inventory that is subject to a
Documentary Letter of Credit in form and substance reasonably satisfactory to
Agent, is insured in a manner acceptable to Agent and the documents with respect
to which have been consigned to Agent in a manner acceptable to Agent shall not
be disqualified from qualifying as Eligible Inventory under CLAUSES (F) or (G)
above if such Inventory otherwise qualifies as Eligible Inventory.
"Environmental Laws" means all federal, state, local and
foreign laws now or hereafter in effect relating to pollution or protection of
the environment, including laws relating to emissions, discharges, Releases or
threatened Releases of pollutants, Contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport, or handling of pollutants, Contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes, and any and
all regulations, notices or demand letters issued, entered, promulgated or
approved thereunder; such laws and regulations include but are not limited to
the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., as
amended; the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 6901 et seq., as amended; the Toxic Substances Control Act,
15 U.S.C. ss. 2601 et seq., as amended; the Clean Air Act, 46 U.S.C. ss. 7401 et
seq., as amended; and state and federal lien and environmental cleanup programs.
"Environmental Lien" means a Lien in favor of any governmental
entity for (a) any liability under Environmental Laws or (b) damages arising
from, or costs incurred by such governmental entity in response to, a Release or
threatened Release of Contaminant into the environment.
"Environmental Liabilities" means, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or
14
express warranty, strict liability, criminal or civil statute or common law,
arising under or related to any Environmental Laws, Environmental Permits, or in
connection with any Release or threatened Release or presence of a Hazardous
Material whether on, at, in, under, from or about or in the vicinity of any real
or personal property.
"Environmental Permits" means all permits, licenses,
authorizations, certificates, approvals, registrations or other written
documents required by any Governmental Authority under any Environmental Laws.
"Equipment" means, as to any Person, all "equipment" as such
term is defined in the Uniform Commercial Code, now owned or hereafter acquired,
including, without limitation, all of such Person's then owned or existing and
future acquired or arising machinery, apparatus, equipment, furnishings,
Fixtures, motor vehicles, computers, trade fixtures, tractors, trailers, rolling
stock, fittings, and other tangible personal property (other than Inventory) of
every kind and description used in such Person's business operations or owned by
such Person or in which such Person has an interest and all parts, accessories
and special tools and all increases and accessions thereto and substitutions and
replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of
1974, as in effect from time to time, and any successor statute.
"Event of Default" means any of the events specified in
SECTION 12.1, provided that any requirement for notice or lapse of time or any
other express condition has occurred or been satisfied.
"Excess Availability" means, at any time, the amount by which
(a) the Borrowing Base at such time exceeds (b) the aggregate amount of all
Revolving Credit Loans outstanding and/or requested by Borrower at such time.
"Existing Lender" means Deutsche Bank (successor to Bankers
Trust Company).
"Fee Letter" means that certain letter agreement dated as of
the date of this Agreement by and among Agent and the Credit Parties pursuant to
which certain fees are to be paid to The CIT Group/Business Credit, Inc. by
Borrower.
"Financial Officer" means the chief financial officer, chief
accounting officer, Treasurer or Controller of Borrower, or an officer in a
comparable position at Borrower.
"Financing Statements" means all UCC financing statements
required by Agent and executed by Borrower, in form and substance satisfactory
to the Agent for the purpose of perfecting a security interest in the personal
property Collateral.
"Fiscal Month" means each of the twelve (12) monthly
accounting periods of the Credit Parties comprising their Fiscal Year.
15
"Fiscal Quarter" means each of the quarterly accounting
periods of the Credit Parties comprising their Fiscal Year.
"Fiscal Year" means each of the fiscal years of the Credit
Parties ending on the Saturday nearest to January 31st of the applicable year.
"Fixtures" means, as to any Person, all "fixtures" as such
term is defined in the Uniform Commercial Code, now owned or hereafter acquired
by such Person.
"Form 10-K" means the Parent's annual report on Form 10-K and
the accompanying consolidated financial statements filed with the Securities and
Exchange Commission.
"Form 10-Q" means, for any given Fiscal Quarter, the Parent's
quarterly report on Form 10-Q and the accompanying consolidated financial
statements filed with the Securities and Exchange Commission.
"GAAP" means accounting principles generally accepted in the
United States as in effect from time to time.
"General Intangibles" means, as to any Person, all "general
intangibles" as defined in the Uniform Commercial Code, now owned or hereafter
acquired, including, without limitation, all of such Person's then owned or
existing and future acquired or arising general intangibles, choses in action
and causes of action and all other intangible personal property of such Person
of every kind and nature, including, without limitation, Intellectual Property,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, trade secrets, goodwill, computer software, customer lists,
licenses, franchises, tax refund claims, reversions or any rights thereto and
any other amounts payable to such Person from any Benefit Plan, Multiemployer
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, and business interruption, property,
casualty or any similar type of insurance and any proceeds thereof.
"Goods" means, as to any Person, all "goods" as defined in the
Uniform Commercial Code, now owned or hereafter acquired, including, without
limitation, all of such Person's then owned or existing and future acquired or
arising movables, Fixtures, Equipment, Inventory and other tangible personal
property.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all governmental bodies, whether federal, state, local or foreign
national or provincial and all agencies thereof.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
16
"Guarantor" and "Guarantors" shall have the meanings ascribed
to such terms in the preamble of this Agreement.
"Guaranty," "Guaranteed" or to "Guarantee" as applied to any
obligation of another Person means
(a) a guaranty (other than by endorsement of
negotiable instruments for collection in the ordinary course
of business), directly or indirectly, in any manner, of any
part or all of such obligation of such other Person, and
(b) an agreement direct or indirect,
contingent or otherwise, and whether or not constituting a
guaranty, the practical effect of which is to assure the
payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation of such
other Person whether by (i) the purchase of securities or
obligations, (ii) the purchase, sale or lease (as lessee or
lessor) of property or the purchase or sale of services
primarily for the purpose of enabling the obligor with respect
to such obligation to make any payment or performance (or
payment of damages in the event of nonperformance) of or on
account of any part or all of such obligation or to assure the
owner of such obligation against loss, (iii) the supplying of
funds to, or in any other manner investing in, the obligor
with respect to such obligation, (iv) repayment of amounts
drawn down by beneficiaries of letters of credit, or (v) the
supplying of funds to or investing in a Person on account of
all or any part of such Person's obligation under a guaranty
of any obligation or indemnifying or holding harmless, in any
way, such Person against any part or all of such obligations.
"Indebtedness" of any Person means, without duplication, (a)
all obligations for money borrowed or for the deferred purchase price of
property or services (excluding accounts payable arising in the ordinary course
of business) or in respect of Reimbursement Obligations under letters of credit,
(b) all obligations represented by bonds, debentures, notes and accepted drafts
that represent extensions of credit, (c) Capitalized Lease Obligations, (d) all
obligations (including, during the noncancellable term of any lease in the
nature of a title retention agreement, all future payment obligations under such
lease discounted to their present value in accordance with GAAP) secured by any
Lien to which any property or asset owned or held by such Person is subject,
whether or not the obligation secured thereby shall have been assumed by such
Person, (e) all obligations of other Persons which such Person has Guaranteed,
including, but not limited to, all obligations of such Person consisting of
recourse liability with respect to accounts receivable sold or otherwise
disposed of by such Person and (f) in the case of Borrower (without
duplication), the Revolving Credit Loans. The obligation to make any payments
under a Real Estate lease entered into in the ordinary course of a Credit
Party's business shall not constitute Indebtedness.
"Initial Anniversary Date" means the third (3rd) anniversary
of the Effective Date.
"Instruments" means, as to any Person, all "instruments," as
such term is defined in the Uniform Commercial Code, now owned or hereafter
acquired by such Person, including, without limitation, all certificated
securities, all certificates of deposit, and all notes and other
17
evidences of indebtedness, other than instruments that constitute, or are a part
of a group of writings that constitute, Chattel Paper.
"Intellectual Property" means, as to any Person, all of such
Person's then owned existing and future acquired or arising patents, patent
rights, copyrights, works which are the subject of copyrights, trademarks,
service marks, trade names, patent, trademark and service xxxx applications, and
all licenses and rights related to any of the foregoing and all other rights
under any of the foregoing, all extensions, renewals reissues, divisions,
continuations and continuations-in-part of any of the foregoing and all rights
to xxx for past, present and future infringements of any of the foregoing.
"Interbank Offered Rate" means at any time of determination,
and subject to availability, for each LIBOR Period, the higher of the applicable
reserve adjusted London Interbank Offered Rate paid in London on dollar deposits
from other banks (a) as quoted by JPMorgan Chase & Co., (b) as published under
"Money Rates" in the New York City edition of the Wall Street Journal or, if
there is no such publication or statement therein as to the Lender Interbank
Offered Rate, then in any publication used in the New York City financial
community, or (c) as determined by the Agent based upon information presented on
Telerate Systems at Page 3750 as of 11:00 a.m. (London Time).
"Interest Payment Date" means the first (1st) day of each
calendar month commencing on the first day of the month immediately following
the Effective Date and continuing thereafter until the Secured Obligations have
been irrevocably paid in full.
"Inventory" means, as to any Person, all "inventory" as
defined in the Uniform Commercial Code, including, without limitation, all of
such Person's then owned or existing and future acquired or arising (a)
inventory, merchandise, Goods and other personal property intended for sale or
lease or for display or demonstration, (b) work in process, (c) raw materials
and other materials and supplies of every nature and description used or which
might be used in connection with the manufacture, packing, shipping,
advertising, selling, leasing or furnishing of the foregoing or otherwise used
or consumed in the conduct of business and (d) Documents evidencing, and General
Intangibles relating to, any of the foregoing.
"Inventory Reserves" means such reserve or reserves as the
Agent may establish or deem necessary from time to time in the exercise of its
Permitted Discretion with respect to changes in the determination of the
saleability, at retail, of the Eligible Inventory or which reflect such other
factors as negatively affect the market value of the Eligible Inventory. Without
limiting the generality of the foregoing, Inventory Reserves may include, but
are not limited to, reserves based on (i) obsolescence, (ii) shrinkage, (iii)
imbalance, (iv) change in Inventory character, composition or mix, (v) markdowns
(both permanent and point of sale), (vi) vendor chargebacks, (vii) retail
markdowns and markups inconsistent with the prior period practice and
performance, current business plans or advertising calendar and planned
advertising events, (viii) estimated reclamation claims of unpaid sellers of
Inventory to Borrower, (ix) with respect to Eligible Inventory that is subject
to a Documentary Letter of Credit, estimated freight charges and duties with
respect thereto and (x) any other issues, circumstances or facts that could
otherwise negatively impact the value or saleability of Inventory. For the
avoidance of doubt,
18
Agent shall not establish Inventory Reserves with respect to Inventory that is
not Eligible Inventory.
"Investment" means, with respect to any Person: (a) the direct
or indirect purchase or acquisition of any beneficial interest in, any share of
capital stock of, evidence of Indebtedness of or other security issued by any
other Person, (b) any loan, advance or extension of credit to, or contribution
to the capital of, any other Person, excluding advances to employees in the
ordinary course of business or (c) any commitment or option to take any of the
actions described in CLAUSES (A) or (B) above.
"Investment Accounts" means any and all of Borrower's
Securities Accounts, brokerage accounts and commodities accounts.
"Investment Property" means, as to any Person, all "investment
property", as defined in the Uniform Commercial Code, including, without
limitation, (i) all securities, whether certificated or uncertificated,
including, but not limited to, stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of such Person, including,
but not limited to, the rights of such Person to any Investments Accounts and
the financial assets held by a financial intermediary in such accounts and any
free credit balance or other money owing by any financial intermediary with
respect to such accounts; (iii) all commodity contracts of such Person; and (iv)
all Investment Accounts of such Person.
"IRS" means the Internal Revenue Service or any successor
agency thereto.
"Issuing Bank" means Agent or any banking institution which is
an issuer of a Letter of Credit and its successors and assigns hereunder.
"Lender" means at any time any financial institution party to
this Agreement at such time, including any such Person becoming a party hereto
pursuant to the provisions of ARTICLE 13, and its successors and assigns, and
"Lenders" means at any time all of the financial institutions party to this
Agreement at such time, including any such Persons becoming parties hereto
pursuant to the provisions of ARTICLE 13, and their successors and assigns.
"Letter of Credit" means any Documentary Letter of Credit or
Standby Letter of Credit.
"Letter of Credit Amount" means, with respect to any Letter of
Credit, the aggregate maximum amount at any time available for drawing under
such Letter of Credit.
"Letter of Credit Default Margin" means 2.00% per annum.
"Letter of Credit Facility" means that part of this Agreement
pursuant to which Letters of Credit or guarantees thereof are provided to
Borrower.
"Letter of Credit Facility Amount" means the amount of
$15,000,000.
19
"Letter of Credit Fee" and "Letter of Credit Fees" shall have
the meanings ascribed thereto in SECTION 4.2(B) of this Agreement.
"Letter of Credit Obligations" means, at any time, the sum of
(a) the aggregate Reimbursement Obligations of the Borrower at such time, PLUS
(b) the aggregate Letter of Credit Amount of Letters of Credit outstanding at
such time (for the avoidance of doubt, not including any amounts drawn under the
subject Letters of Credit and constituting Reimbursement Obligations), PLUS (c)
the aggregate Letter of Credit Amount of Letters of Credit the issuance of which
has been authorized by the Agent and the Issuing Bank pursuant to SECTION 3.1
but that have not yet been issued, in each case as determined by the Agent.
"Letter of Credit Reserve" means, at any time, the aggregate
Letter of Credit Obligations at such time, excluding Letter of Credit
Obligations that are fully secured by Cash Collateral.
"Letter of Credit Rights" means, as to any Person, all "letter
of credit rights" as defined in the Uniform Commercial Code, now owned or
hereafter acquired by such Person.
"Liabilities" means, as at the end of any fiscal period, all
liabilities determined in accordance with GAAP and included on a balance sheet.
"LIBOR" means, with respect to the LIBOR Period applicable
thereto, a simple per annum interest rate determined pursuant to the following
formula:
LIBOR = Interbank Offered Rate
-----------------------------------------------
1 - LIBOR Reserve Percentage
LIBOR shall be adjusted automatically (i) on the effective
date of any change to the LIBOR Reserve Percentage, (ii) at the beginning of the
applicable LIBOR Period or (iii) on the first day of any LIBOR Period following
the conversion or continuation of such LIBOR Advance.
"LIBOR Advance" means those Revolving Credit Loans for which
Borrower has elected to use LIBOR for interest rate computations.
"LIBOR Option" means (a) until the twelve (12) month
anniversary of the Effective Date, a fixed rate for the LIBOR Period equal to
the LIBOR for such period plus two percent (2%) per annum, and (b) after the
twelve (12) month anniversary of the Effective Date and subject to the
requirements set forth in the definition of Applicable Margin, a fixed rate for
the LIBOR Period equal to the LIBOR for such period plus the Applicable Margin.
"LIBOR Period" means, with respect to each LIBOR Advance, the
period commencing on the date of the making of, continuation of, or conversion
to such LIBOR Advance and ending one, two, three or six months thereafter, as
the Borrower may elect in the applicable Borrowing Notice; provided that:
20
(a) any LIBOR Period that would otherwise end on a day that is
not a Business Day shall, subject to the provisions of CLAUSE (C)
below, be extended to the next succeeding Business Day, unless such
Business Day falls in the next calendar month, in which case such LIBOR
Period shall end on the immediately preceding Business Day;
(b) any LIBOR Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR
Period) shall, subject to CLAUSE (C) below, end on the last Business
Day of a calendar month;
(c) any LIBOR Period that would otherwise end after the
Termination Date shall end on the Termination Date; and
(d) notwithstanding CLAUSE (C) above, no LIBOR Period shall
have a duration of less than one (1) month and, if any applicable LIBOR
Period would be for a shorter period, such LIBOR Period shall not be
available hereunder.
"LIBOR Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System, as such regulation may
be amended from time to time, or any successor regulation, as the maximum
reserve requirement (including, without limitation, any basic, supplemental,
emergency, special or marginal reserves) applicable to any member bank with
respect to "Eurocurrency" liabilities as that term is defined in Regulation D
(or against any other category of liabilities that includes deposits by
reference to which the interest rate of any LIBOR Advance is determined),
whether or not the Agent or any Lender has any Eurocurrency liabilities subject
to such reserve requirement at that time. All LIBOR Advances shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed subject to
reserve requirements without the benefit of credits for proration, exceptions or
offsets that may be available from time to time to the Agent or any Lender.
"Lien" as applied to the property of any Person means: (a) any
mortgage, deed to secure debt, deed of trust, lien, pledge, charge, lease
constituting a Capitalized Lease Obligation, conditional sale or other title
retention agreement, or other security interest, security title or encumbrance
of any kind in respect of any property of such Person or upon the income and
profits therefrom, whether such interest is based on the common law, statute or
contract, (b) any arrangement, express or implied, under which any property of
such Person is transferred, sequestered or otherwise identified for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to the payment of the general, unsecured creditors
of such Person and (c) the filing of, or any agreement to give, any financing
statement under the UCC of any state or its equivalent in any jurisdiction.
"Loan Account" and "Loan Accounts" shall have the meanings
ascribed thereto in SECTION 4.4(A).
21
"Loan Documents" means, collectively, this Agreement, the
Notes, the Security Documents, the Fee Letter and each other instrument,
agreement or document executed by any Credit Party in connection with this
Agreement whether prior to, on or after the Effective Date and each other
instrument, agreement or document referred to herein or contemplated hereby, all
in form and substance acceptable to the Agent.
"Margin Stock" means margin stock as defined in Section
221.1(h) of Regulation U, as the same may be amended or supplemented from time
to time.
"Materially Adverse Effect" means a materially adverse effect
upon (a) the business, assets, liabilities, condition (financial or otherwise)
or results of operations or business prospects of the Credit Parties taken as a
whole, (b) any Credit Party's ability to perform its obligations hereunder or
under any other Loan Document to which it is a party or upon the enforceability
of such obligations against such Credit Party or (c) the value of the
Collateral, the Security Interest or the practical realization of the benefits
of Agent's and each Lender's rights and remedies under this Agreement and the
other Loan Documents.
"Minimum Commitment" shall have the meaning ascribed to such
term in SECTION 13.1(B) hereof.
"Money Borrowed" means, as applied to Indebtedness, (a)
Indebtedness for money borrowed, (b) Indebtedness, whether or not in any such
case the same was for money borrowed, (i) represented by notes payable and
drafts accepted, that represent extensions of credit or (ii) constituting
obligations evidenced by bonds, debentures, notes or similar instruments, (c)
Indebtedness that constitutes a Capitalized Lease Obligation, (d) Indebtedness
that is such by virtue of CLAUSE (E) of the definition thereof, but only to the
extent that the obligations Guaranteed are obligations that would constitute
Indebtedness for Money Borrowed and (e) obligations in respect of mandatory
redeemable capital stock, if any, of Borrower.
"Multi-employer Plan" means a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA to which Borrower or a Related Company is
required to contribute or has contributed within the immediately preceding six
years.
"Net Outstandings" of any Lender means, at any time, the sum
of (a) all amounts paid by such Lender to the Agent in respect of Revolving
Credit Loans or otherwise under this Agreement MINUS (b) all amounts paid by the
Agent to such Lender which are received by the Agent and which, pursuant to this
Agreement, are paid over to such Lender for application in reduction of the
outstanding principal balance of the Revolving Credit Loans or the Letter of
Credit Obligations.
"Net Proceeds" means with respect to any Asset Disposition,
the aggregate cash payments received (directly or indirectly), including any
cash payments received by way of deferred payment of principal pursuant to a
note or installment receivable or otherwise, therefrom, but only as and when
received, net of (i) the transaction costs of such Asset Disposition, including,
without limitation, all reasonable legal and investment banking fees and
expenses, title and recording tax expenses, commissions, fees and expenses
incurred in obtaining
22
regulatory approvals and other reasonable and customary fees and expenses
incurred or agreed to be incurred, (ii) any tax liability arising from such
Asset Disposition, including, without limitation, all foreign, federal, state
and local income or other Taxes estimated to be payable currently, attributable
thereto, and (iii) the amount of any contractually required repayments of
Indebtedness (other than the Secured Obligations) to the extent secured by a
Permitted Lien thereon.
"Non-Ratable Loan" means a Revolving Credit Loan made by the
Settlement Lender in accordance with the provisions of SECTION 4.7(B)(II).
"Notes" means the Revolving Credit Notes.
"Operating Lease" shall have the meaning assigned to such term
in SECTION 11.9 hereof.
"Operating Lease Obligations" means, with respect to an
Operating Lease for any Credit Party, as of any date, an amount equal to the sum
of (a) (i) the monthly lease payment for such Operating Lease including, without
limitation, additional rent, escalation payments and any other payments by
Borrower to any lessor under an Operating Lease relating to common area
maintenance, operating expenses, real estate taxes, insurance or any other
expenses allocated to Borrower as tenant under such Operating Lease multiplied
times (ii) the number of months then remaining in the current term of such
Operating Lease plus (b) any unpaid percentage rent due in the current term of
such Operating Lease.
"Overadvance" means any advance made pursuant to SECTION 4.11
hereof.
"Overextension" shall have the meaning assigned to such term
in SECTION 2.3(B) hereof.
"Parent" shall have the meaning assigned to such term in the
preamble of this Agreement.
"Parent Notes" shall have the meaning ascribed to the term
"Securities" in the Senior Note Indenture.
"Payoff Letter" means a letter, in form and substance
reasonably satisfactory to Agent, from Borrower's Existing Lender under their
existing credit facility, notifying the Agent and the Borrower of the amount
necessary to repay in full all of the obligations of the Credit Parties to the
Existing Lender and committing to terminate and release all Liens existing in
favor of the Existing Lender in the properties and assets of the Credit Parties.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency.
"Permitted Discretion" means Agent's judgment exercised in
good faith based upon its consideration of any factor which Agent believes in
good faith: (a) will or could
23
reasonably be expected to adversely affect the value of any real or personal
property of any Credit Party, including, without limitation, any Inventory,
Accounts (including credit card receivables), Equipment or General Intangibles
(including leasehold interests in real property, but excluding any intellectual
property registered with a non-U.S. Governmental Authority) and other
Collateral, in each case of any Credit Party, the enforceability or priority of
Agent's Liens thereon or the amount which Agent or the Lenders would be likely
to receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral; (b) suggests that any
collateral report or financial information delivered to Agent by any Person on
behalf of any Credit Party is incomplete, inaccurate or misleading in any
material respect; or (c) materially increases the likelihood of a bankruptcy,
reorganization or other insolvency proceeding involving any Credit Party or any
of the Collateral. In exercising such judgment, Agent may consider such factors
already included in or tested by the definition of Eligible Credit Card Accounts
or Eligible Inventory, as well as any of the following: (i) the changes in
collection history and dilution with respect to Borrower's credit card
receivables; (ii) changes in demand for, and pricing of, Borrower's Inventory;
(iii) changes in any concentration of risk with respect to Borrower's credit
card receivables and Inventory; and (iv) any other factors that change the
credit risk of lending to Borrower on the security of Borrower's credit card
receivables and Inventory. The burden of establishing lack of good faith and/or
lack of reasonableness hereunder shall be on Borrower.
"Permitted Guaranties" means (a) solely with respect to the
Guarantors, their Guarantees of the Liabilities under this Agreement and their
Guarantees of Permitted Obligations and (b) solely with respect to Borrower, (i)
those guarantees described on SCHEDULE 6.1(I) and (ii) endorsements for
collection in the ordinary course of business.
"Permitted Indebtedness for Money Borrowed" means (a) the
Indebtedness to Lenders arising under this Agreement, (b) solely with respect to
Parent, the Indebtedness under the Senior Notes and the Indebtedness incurred
with respect to unsecured debt that is subject to a subordination agreement and
other terms and conditions acceptable in writing in all respects to Agent in its
good faith discretion, (c) Capitalized Lease Obligations (i) not to exceed
$5,000,000 in the aggregate during the period beginning on the Effective Date
and ending on the Initial Anniversary Date and (ii) not to exceed an aggregate
amount mutually agreeable to the parties to this Agreement upon any renewal
hereof and (d) the Indebtedness set forth on SCHEDULE 6.1(I) hereof.
"Permitted Investments" means, solely with respect to
Borrower, (a) direct obligations of the United States of America or any agency
thereof or any agency sponsored thereby, or obligations fully guaranteed as to
principal and interest by the United States of America, or any agency thereof
(including, but not limited to, U.S. Treasury bills, notes, bonds and strips) or
any agency sponsored thereby (including, but not limited to, by or under the
Government National Mortgage Association (GNMA), Tennessee Valley Authority
(TVA), World Bank, Federal Farm Credit Bank (FFCB), Federal National Mortgage
Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC), Federal Home
Loan Bank (FHLB), Student Loan Marketing Association (SLMA), Financing
Corporation (FICO), The Resolution Funding Corporation (REFCO), Farm Credit
System Financial Assistance Corporation and the Federal Housing Finance Board);
(b) certificates of deposit issued by any bank or trust company organized under
the laws of the United States of America or any state
24
thereof and having capital, surplus and undivided profits of at least Five
Hundred Million Dollars ($500,000,000); (c) commercial paper, banker's
acceptances, time deposits, certificates of deposit, taxable municipal
securities, money market preferreds, dutch auction securities, unconditional
demand floating rate securities and other securities rated X-0, X-0, X-0 or D-1
(by Standard & Poor's Corporation, Xxxxx'x Investors Services, Inc., Duff &
Xxxxxx, LLC, Fitch IBCA or Xxxxxxxx BankWatch, as applicable) or the equivalent
at the time of purchase; (d) corporate bonds and medium term notes with
long-term debt ratings of at least "Investment Grade" (by Standard & Poor's
Corporation, Xxxxx'x Investors Services, Inc., Duff & Xxxxxx, LLC, Fitch IBCA or
Xxxxxxxx BankWatch, as applicable); (e) asset-backed securities rated "AAA" (by
Standard & Poor's Corporation, Xxxxx'x Investors Services, Inc., Duff & Xxxxxx,
LLC, Fitch IBCA or Xxxxxxxx BankWatch, as applicable); (f) mortgage-backed
securities and collateralized mortgage obligations rated "AAA" (by Standard &
Poor's Corporation, Xxxxx'x Investors Services, Inc., Duff & Xxxxxx, LLC, Fitch
IBCA or Xxxxxxxx BankWatch, as applicable); and (g) repurchase agreements that
are (i) collateralized at 102% of their market value (including accrued
interest) by obligations of the United States Government, any agency thereof or
any agency sponsored thereby and (ii) with respect to which brokers/dealers are
the primary dealers as recognized by the Federal Reserve System.
"Permitted Liens" means: (a) Liens securing taxes, assessments
and other governmental charges or levies (excluding any Lien imposed pursuant to
any of the provisions of ERISA) or the claims of materialmen, suppliers (not
including vendors of Goods), mechanics, carriers, warehousemen or landlords for
labor, materials, supplies or rentals incurred in the ordinary course of
business, but in all cases, only if payment shall not at the time be required to
be made in accordance with SECTION 9.6, and (b) Liens consisting of deposits or
pledges made in the ordinary course of business in connection with, or to secure
payment of utility payments, bids, tenders, contracts (other than contracts for
payment of money), obligations under workers' compensation, unemployment
insurance or similar legislation or under surety or performance bonds, in each
case arising in the ordinary course of business; (c) Liens constituting
encumbrances in the nature of zoning restrictions, easements and rights or
restrictions of record on the use of the Real Estate; (d) Liens securing
Permitted Obligations (excluding Real Estate leases and Permitted Obligations
described in CLAUSES (B) and/or (d) of the definition of Permitted Indebtedness
for Money Borrowed but including Liens permitted by clause (f) below); (e) Liens
arising out of or resulting from any judgment or award, the time for the appeal
or petition for rehearing of which shall not have expired, or in respect of
which the Credit Party is fully protected by insurance or in respect of which
the Credit Party shall at any time in good faith be prosecuting an appeal or
proceeding for a review and in respect of which a stay of execution pending such
appeal or proceeding for review shall have been secured, and as to which
appropriate reserves have been established on the books of the Credit Party; and
(f) Liens listed on SCHEDULE 6.1(H).
"Permitted Obligations" means the aggregate amount of
outstanding Purchase Money Indebtedness, Operating Lease Obligations and
Permitted Indebtedness for Money Borrowed.
25
"Person" means an individual, corporation, partnership,
limited liability company, association, trust or unincorporated organization, or
a government or any agency, division, department, or political subdivision
thereof.
"Pledge Agreements" means the Pledge Agreements with respect
to (a) in the case of Parent, the capital stock of Sub-Parent and (b) in the
case of Sub-Parent, the capital stock of Borrower and REH, substantially in the
form of EXHIBIT L hereto, executed and delivered by Parent and Sub-Parent
contemporaneously herewith, as the same may be amended, modified or supplemented
from time to time.
"Prime Advance" means those Revolving Credit Loans for which
Borrower has elected to use the Prime Option for interest rate computations.
"Prime Option" means (a) until the twelve (12) month
anniversary of the Effective Date, an annual rate of interest equal to the Chase
Bank Rate plus one-half of one percent (0.50%) and (b) after the twelve (12)
month anniversary of the Effective Date and subject to the requirements set
forth in the definition of Applicable Margin, an annual rate of interest equal
to the Chase Bank Rate plus the Applicable Margin.
"Proceeds" means "proceeds," as such term is defined in the
Uniform Commercial Code, including (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Borrower from time to time with
respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to Borrower from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral by any Governmental Authority (or any Person
acting under color of governmental authority), (c) any claim of Borrower against
third parties (i) for past, present or future infringement of any patent or
patent license, or (ii) for past, present or future infringement or dilution of
any copyright, copyright license, trademark or trademark license, or for injury
to the goodwill associated with any trademark or trademark license, (d) any
recoveries by Borrower against third parties with respect to any litigation or
dispute concerning any of the Collateral including claims arising out of the
loss or nonconformity of, interference with the use of, defects in, or
infringement of rights in, or damage to, Collateral, (e) all amounts collected
on, or distributed on account of, other Collateral, including dividends,
interest, distributions and Instruments with respect to Investment Property and
pledged Stock, and (f) any and all other amounts, rights to payment or other
property acquired upon the sale, lease, license, exchange or other disposition
of Collateral and all rights arising out of Collateral.
"Projections" shall have the meaning assigned to such term in
SECTION 6.1(L) hereof.
"Purchase Money Indebtedness" means Indebtedness created to
finance or refinance the payment of all or any part of the purchase price (not
in excess of the fair market value thereof) of any Equipment incurred at the
time of or within ten (10) days prior to or after the acquisition of such
Equipment and secured only by Purchase Money Liens.
26
"Purchase Money Lien" means any Lien securing Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
Equipment which was financed or refinanced through the incurrence of the
Purchase Money Indebtedness secured by such Lien.
"Real Estate" means all of the Credit Parties' now or
hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds and future interests, together with all of the
Credit Parties' now or hereafter owned or leased interests in the improvements
and emblements thereon, the fixtures attached thereto and the easements
appurtenant thereto, including, without limitation, the real property described
on SCHEDULE 6.1(G).
"Register" shall have the meaning assigned to such term in
SECTION 13.1(D) hereof.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"REH" shall have the meaning assigned to such term in the
preamble of this Agreement.
"Reimbursement Agreement" means, with respect to a Letter of
Credit, such form of application therefor and form of reimbursement agreement
therefor (whether in a single document or several documents) as the Issuing Bank
may employ in the ordinary course of business for its own account, with such
modifications thereto as may be agreed upon by an Issuing Bank and Borrower,
provided that such application and agreement and any modifications thereto are
not inconsistent with the terms of this Agreement.
"Reimbursement Obligations" means the reimbursement or
repayment obligations of Borrower to an Issuing Bank pursuant to ARTICLE 3 or
pursuant to a Reimbursement Agreement with respect to amounts that have been
drawn under Letters of Credit.
"Related Company" means, as to any Person, any (a) corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as such Person, (b) partnership or other
trade or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Code) with such Person, or (c) member of the
same affiliated service group (within the meaning of Section 414(m) of the Code)
as such Person or any corporation described in CLAUSE (A) above or any
partnership, trade or business described in CLAUSE (B) above.
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water or
groundwater.
27
"Remedial Action" means actions required to (i) clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(iii) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
"Replacement Letters of Credit" shall have the meaning
assigned to such term in SECTION 3.3(A) hereof.
"Required Lenders" means, at any time, any combination of
Lenders whose Commitment Percentages at such time aggregate at least sixty-six
and two-thirds percent (66 2/3%).
"Restricted Distribution" by any Person means (a) its
retirement, redemption, purchase, or other acquisition for value of any capital
stock or other equity securities or partnership interests issued by such Person,
(b) the declaration or payment of any dividend or distribution on or with
respect to any such securities or partnership interests, (c) any loan or advance
by such Person to, or other investment by such Person in, the holder of any of
such securities or partnership interests (other than employee loans made by a
Credit Party in the ordinary course of business consistent with such Credit
Party's historical business practices) and (d) any other payment by such Person
in respect of such securities or partnership interests.
"Restricted Payment" means (a) any retirement, redemption,
repurchase, prepayment or other acquisition, or the setting aside of any money
for a sinking, defeasance or other analogous fund for any such retirement,
redemption, repurchase, prepayment or other acquisition, prior to the stated
maturity thereof or prior to the due date of any regularly scheduled installment
or amortization payment with respect thereto, of any Indebtedness of a Person
(other than the Secured Obligations), (b) the payment by any Person of the
principal amount of or interest on any Indebtedness owing to an Affiliate
(excluding the Credit Parties) of such Person, and (c) the payment of any
management, consulting or similar fee by any Person to an Affiliate of such
Person (other than such payments made in the ordinary course of such Person's
business in a manner that does not violate SECTION 11.7 of this Agreement).
"Revolving Credit Facility" means that part of this Agreement
pursuant to which Revolving Credit Loans are provided to Borrower.
"Revolving Credit Facility Amount" means the principal amount
equal to $50,000,000.
"Revolving Credit Loans" means, as measured at any time, the
aggregate outstanding amount of the Advances made to Borrower pursuant to
SECTION 2.1.
"Revolving Credit Notes" means the Revolving Credit Notes made
by the Borrower payable to the order of a Lender evidencing the obligation of
Borrower to pay the aggregate unpaid principal amount of the Revolving Credit
Loans made to it by such Lender (and any promissory note or notes that may be
issued from time to time in substitution, renewal,
28
extension, replacement or exchange therefor whether payable to such Lender or to
a different Lender in connection with a Person becoming a Lender after the
Effective Date or otherwise) substantially in the form of EXHIBIT A hereto, with
all blanks properly completed, either as originally executed or as the same may
from time to time be supplemented, modified, amended, renewed, extended or
refinanced.
"Schedule of Accounts" means a schedule delivered by the
Borrower to the Agent, from time to time, pursuant to the provisions of SECTION
8.10(A).
"Schedule of Inventory" means a schedule delivered by the
Borrower to the Agent, from time to time, pursuant to the provisions of SECTION
8.10(C).
"Secured Obligations" means, in each case whether now in
existence or hereafter arising, (a) the principal of, and interest and premium,
if any, on, the Revolving Credit Loans, (b) the Reimbursement Obligations and
all other obligations of Borrower to the Agent or any Lender arising in
connection with the issuance of Letters of Credit, (c) all indebtedness,
liabilities, obligations, covenants and duties of Borrower to the Agent or to
the Lenders of every kind, nature and description arising under or in respect of
this Agreement, the Notes, or any of the other Loan Documents, whether direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any note, and
whether or not for the payment of money, including without limitation, fees
required to be paid pursuant to ARTICLE 4 and expenses required to be paid or
reimbursed pursuant to SECTION 15.2 and (d) with respect to each of the
foregoing, all interest, charges, expenses, fees and other sums accruing after
the commencement of a bankruptcy with respect to Borrower, whether or not a
claim therefore may be made in such bankruptcy.
"Security Documents" means each of the following:
(a) the Financing Statements;
(b) the Blocked Account Agreements;
(c) the Control Agreements;
(d) the Waivers and Consents;
(e) the Trademark Security Agreement;
(f) the Pledge Agreements; and
(g) each other agreement, document, instrument or writing
executed and delivered by Borrower or any other Person securing the
Secured Obligations.
"Security Interest" means the valid and perfected first
priority Liens of the Agent, for the benefit of the Agent and the Lenders, on
and in the Collateral effected hereby or by any of the Security Documents or
pursuant to the terms hereof or thereof.
29
"Senior Note Indenture" means that certain Indenture dated as
of October 10, 0000 xxxxxxx Xxxxxx xxx Xxxxxx Xxxxxx Trust Company of New York,
as trustee thereunder.
"Settlement Date" means each Business Day after the Effective
Date selected by the Agent in its sole discretion subject to and in accordance
with the provisions of SECTION 4.7(B)(I) as of which a Settlement Report is
delivered by the Agent and on which settlement is to be made among the Lenders
in accordance with the provisions of SECTION 4.7.
"Settlement Lender" means, for the purposes of SECTION 4.7,
the Agent in its capacity as a Lender.
"Settlement Report" means each report, substantially in the
form agreed to by Agent and Lenders, prepared by the Agent and delivered to each
Lender and setting forth, among other things, as of the Settlement Date
indicated thereon and as of the next preceding Settlement Date, the aggregate
principal balance of all Revolving Credit Loans outstanding, each Lender's
Commitment Percentage thereof, each Lender's Net Outstandings and all
Non-Ratable Loans made, and all payments of principal, interest and fees
received by the Agent from Borrower during the period beginning on such next
preceding Settlement Date and ending on such Settlement Date.
"Software" means all "software" as such term is defined in the
Uniform Commercial Code, now owned or hereafter acquired by Borrower, other than
software embedded in any category of Goods, including all computer programs and
all supporting information provided in connection with a transaction related to
any program.
"Standby Letter of Credit" means any letter of credit (other
than a Documentary Letter of Credit) issued by an Issuing Bank for the account
of Borrower pursuant to ARTICLE 3 hereof.
"Sub-Parent" shall have the meaning assigned to such term in
the preamble of this Agreement.
"Subsidiary"
(a) when used to determine the relationship of a Person to
another Person, means a Person of which an aggregate of 50% or more of
the stock of any class or classes or 50% or more of other ownership
interests is owned of record or beneficially by such other Person, or
by one or more Subsidiaries of such other Person, or by such other
Person and one or more Subsidiaries of such Person,
(i) if the holders of such stock, or other ownership
interests, (A) ordinarily, in the absence of contingencies,
have voting power to elect a majority of the directors (or
other individuals performing similar functions) of such
Person, even though the right so to vote has been suspended by
the happening of such a contingency, or (B) are entitled, as
such
30
holders, to vote for the election of a majority of the
directors (or individuals performing similar functions) of
such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or
(ii) in the case of such other ownership interests,
if such ownership interests constitute a majority voting
interest, and
(b) when used with respect to a Plan, ERISA or a provision of
the Code pertaining to employee benefit plans, also means any
corporation, trade or business (whether or not incorporated) which is
under common control with Borrower and is treated as a single employer
with Borrower under Section 414(b) or (c) of the Code and the
regulations thereunder.
"Supporting Obligations" means, as to any Person, all
"supporting obligations" as such term is defined in the Uniform Commercial Code,
now owned or hereafter acquired, including, without limitation, all of such
Person's mortgages, deeds to secure debt and deeds of trust on real or personal
property, guaranties, leases, security agreements, and other agreements and
property which secure or relate to any Collateral, or are acquired for the
purpose of securing and enforcing any item thereof,
"Termination Date" means the first to occur of (a) the Initial
Anniversary Date or an Anniversary Date occurring thereafter, which shall occur
only upon sixty (60) days' prior written notice by the terminating party (any of
the Agent, a Lender or the Borrower), unless Borrower terminates this Agreement
on an Early Termination Date and then only upon payment of the Early Termination
Fee (if required) by the Borrower or Agent terminates this Agreement pursuant to
SECTION 4.14 hereof, (b) the date of termination of the Lenders' obligations to
make Advances and to incur Letter of Credit Obligations or permit existing
Advances to remain outstanding pursuant to SECTION 12.2 or (c) the tenth (10th)
Anniversary Date.
"Termination Event" means (a) a "Reportable Event" as defined
in Section 4043(b) of ERISA, but excluding any such event as to which the
provision for 30 days' notice to the PBGC is waived under applicable
regulations, (b) the filing of a notice of intent to terminate a Benefit Plan or
the treatment of a Benefit Plan amendment as a termination under Section 4041 of
ERISA or (c) the institution of proceedings to terminate a Benefit Plan by the
PBGC under Section 4042 of ERISA or the appointment of a trustee to administer
any Benefit Plan.
"Title IV Plan" means a Benefit Plan which is subject to Title
IV of ERISA.
"Trademark Security Agreement" means the Trademark Security
Agreement, substantially in the form of EXHIBIT I hereto, executed and delivered
by Borrower to the Agent, for the benefit of the Lenders, contemporaneously
herewith as the same may be amended, modified or supplemented from time to time.
"Trade Names" shall have the meaning assigned to such term in
SECTION 6.1(AA) hereof.
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"UCC" and "Uniform Commercial Code" means the Uniform
Commercial Code as in effect from time to time in New York; provided, that to
the extent that the UCC is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the UCC, the definition of such term contained in Article 9 of the UCC shall
govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "UCC" or "Uniform
Commercial Code" means the Uniform Commercial Code as enacted and in effect in
such other jurisdiction solely for purposes of the provisions thereof relating
to such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.
"Unfunded Vested Accrued Benefits" means with respect to any
Title IV Plan as of the most recent annual valuation date for such Title IV
Plan, the amount (if any) by which (a) the present value of all vested
non-forfeitable benefits under such Title IV Plan exceeds (b) the fair market
value of all Title IV Plan assets allocable to such benefits, all determined in
accordance with the assumptions used for annual funding for the Title IV Plan
pursuant to Section 412 of the Code as of the most recent annual valuation date
for such Title IV Plan.
"Unused Line Fee" shall have the meaning assigned to such term
in SECTION 4.2(A).
"Vendor Line of Credit" shall mean that certain $12,000,000
vendor line of credit facility to be provided by The CIT Group/Commercial
Services, Inc.
"Vendor Line of Credit Documents" shall mean, collectively,
all instruments, agreements or documents executed by any Credit Party in
connection with the Vendor Line of Credit.
"Waiver and Consent" shall have the meaning assigned to such
term in SECTION 8.12 hereof.
SECTION 1.2 Other Referential Provisions.
(a) All defined terms in this Agreement, the Exhibits and
Schedules hereto shall have the same meanings when used in any other
Loan Document, unless the context shall require otherwise.
(b) Except as otherwise expressly provided herein, all
accounting terms not specifically defined or specified herein shall
have the meanings generally attributed to such terms under GAAP
including, without limitation, applicable statements and
interpretations issued by the Financial Accounting Standards Board and
bulletins, opinions, interpretations and statements issued by the
American Institute of Certified Public Accountants or its committees.
All financial computations hereunder shall be computed, unless
otherwise specifically provided herein, in accordance with GAAP. That
certain terms or computations are explicitly modified by the phrase "in
accordance with GAAP" shall in no way be construed to limit the
foregoing.
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(c) All personal pronouns used in this Agreement, whether used
in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and the plural shall
include the singular. In any circumstance where use of the term "the
Credit Party" as opposed to the term "the Credit Parties," or vice
versa, would limit, diminish or otherwise impair or negatively affect
any of Lenders' rights hereunder, the plural shall be substituted for
the singular, or vice versa, in such manner as will result in the
maintenance or enlargement of Lenders' rights hereunder or pursuant
hereto. By way of example, but not in limitation, if a reference to
"the Credit Parties' property" would otherwise be construed as
referring only to property which is jointly owned by all the Credit
Parties, such reference shall instead be construed as referring to the
aggregate total of each Credit Party's property.
(d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provisions of this
Agreement.
(e) Titles of Articles and Sections in this Agreement are for
convenience only, do not constitute part of this Agreement and neither
limit nor amplify the provisions of this Agreement, and all references
in this Agreement to Articles, Sections, Subsections, paragraphs,
clauses, subclauses, Schedules or Exhibits shall refer to the
corresponding Article, Section, Subsection, paragraph, clause or
subclause of, or Schedule or Exhibit attached to, this Agreement,
unless specific reference is made to the articles, sections or other
subdivisions or divisions of, or to schedules or exhibits to, another
document or instrument.
(f) Each definition of a document in this Agreement shall
include such document as amended, modified, supplemented or restated
from time to time in accordance with the terms of this Agreement.
(g) Except where specifically restricted, reference to a party
to a Loan Document includes that party and its permitted successors and
assigns permitted hereunder or under such Loan Document.
(h) Unless otherwise specifically stated, whenever a time is
referred to in this Agreement or in any other Loan Document, such time
shall be the local time in the city in which the principal office of
Agent is located.
(i) Whenever the phrase "to the knowledge of Borrower" or
words of similar import relating to the knowledge of Borrower are used
herein, such phrase shall mean and refer to (i) the actual knowledge of
the President, chief executive officer, chief operating officer, chief
financial officer or other executive officer, or (ii) the knowledge
that such officers would have obtained if they had engaged in good
faith in the diligent performance of their duties, including the making
of such reasonable specific inquiries as may be necessary in the
reasonable credit judgment of such officers to ascertain the accuracy
of the matter to which such phrase relates.
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(j) The term "including" shall not be limiting or exclusive,
unless specifically indicated to the contrary. The terms "reasonable,"
"reasonably" and the like, when used in reference to a decision,
conduct or the discretion of the Agent or a Lender, shall mean and
refer to the reasonableness of the conduct, decision or discretion at
issue of an agent or a lender in a position equivalent to that of the
Agent or Lender, including without limitation the normal and customary
concerns of an agent or a lender, including, without limitation,
impairment of collateral, and the timeliness of a borrower's compliance
with payment obligations.
(k) The terms "accounts," "chattel paper," "deposit accounts,"
"documents," "equipment," "fixtures," "general intangibles," "goods,"
"instruments," "inventory," "investment property," "letter of credit
rights," "software," and "supporting obligations," as and when used
(without being capitalized) in this Agreement or the Security
Documents, shall have the meanings given those terms in the Uniform
Commercial Code.
SECTION 1.3 Exhibits and Schedules. All Exhibits and Schedules
attached hereto are by reference made a part hereof.
ARTICLE II.
REVOLVING CREDIT LOANS
SECTION 2.1 Revolving Credit Loans. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, each Lender agrees, severally, but not jointly, to make
Advances to the Borrower from time to time from the Effective Date to but not
including the Termination Date, as requested or deemed requested by the Borrower
in accordance with the terms of SECTION 2.2, in amounts equal to such Lender's
Commitment Percentage of each such Advance requested or deemed requested
hereunder up to an aggregate amount at any one time outstanding equal to such
Lender's Commitment Percentage of the Borrowing Base; provided, however, that
the aggregate principal amount of all outstanding Revolving Credit Loans (after
giving effect to the Advances requested) shall not exceed the Borrowing Base. It
is expressly understood and agreed that the Lenders may and at present intend to
use the Borrowing Base as a maximum ceiling on Revolving Credit Loans to the
Borrower; provided, however, that the parties agree that, should the Revolving
Credit Loans exceed the ceiling so determined or any other limitation set forth
in this Agreement, such Revolving Credit Loans shall nevertheless constitute
Secured Obligations and, as such, shall be entitled to all benefits thereof and
security therefor. The principal amount of any Advance which is repaid pursuant
to SECTION 2.3(C) may be reborrowed by the Borrower, subject to the terms and
conditions of this Agreement, in accordance with the terms of this SECTION 2.1.
The Agent's and each Lender's books and records reflecting the date and the
amount of each Advance and each repayment of principal thereof shall constitute
prima facie evidence of the accuracy of the information contained therein,
subject to the provisions of SECTION 4.7.
SECTION 2.2 Manner of Borrowing Revolving Credit Loans. Borrowings
under the Revolving Credit Facility shall be made as follows:
34
(a) Requests for Advances. A request for an Advance shall be made, or
shall be deemed to be made, in the following manner:
(i) a Financial Officer of the Borrower (or another authorized
officer designated by a Financial Officer of the Borrower and listed on
SCHEDULE 2.2 hereto) shall deliver to the Agent a Notice of Proposed
Advance/Conversion/Continuation, in the form of EXHIBIT B hereto (the
"Borrowing Notice") with respect to a Prime Advance, not later than
11:00 a.m. (New York time) on the Business Day of the proposed Prime
Advance, and with respect to a LIBOR Advance, so long as no Default or
Event of Default exists or would occur as a result of such an Advance,
not later than 11:00 a.m. (New York time) on the third (3rd) Business
Day prior to the Business Day of the proposed LIBOR Advance. The
Borrowing Notice shall contain the information requested therein,
including, without limitation, a statement that an Advance is
requested, the amount of the proposed Advance, the date of the proposed
Advance and whether it is a Prime Advance or a LIBOR Advance or a
combination thereof and, if a LIBOR Advance, the LIBOR Period selected;
PROVIDED, HOWEVER, that Borrower may not select a particular LIBOR
Period if the last day of such period is later than the Termination
Date. Unless the Agent has received notice in accordance with the
provisions of SECTION 4.6(C) that a Lender will not make available to
the Agent such Lender's ratable portion because of a Default or Event
of Default, the Agent shall use commercially reasonable efforts to
disburse the proceeds of each Advance not later than 3:30 p.m. (New
York time) on the Business Day a Borrowing Notice is received with
respect to a Prime Advance and not later than 3:30 p.m. (New York time)
on the second (2nd) Business Day following the receipt of a Borrowing
Notice with respect to a LIBOR Advance. The Borrowing Notice shall be
given in accordance with the provisions of this SECTION 2.2 hereof;
provided, however, that upon written notice from Agent, the Borrower
shall thereafter include in each Borrowing Notice the amount of Excess
Availability after giving effect to such requested Advance,
(ii) unless payment is otherwise made by the Borrower, the
becoming due of any amount required to be paid under this Agreement or
any of the Notes as interest shall be deemed to be a request for an
Advance on the due date in the amount required to pay such interest,
(iii) unless payment is otherwise made by the Borrower, the
becoming due of any other Secured Obligation shall be deemed to be a
request for an Advance on the due date in the amount then so due, and
such request shall be irrevocable,
(iv) the receipt by the Agent of notification from an Issuing
Bank to the effect that a drawing has been made under a Letter of
Credit and that Borrower has failed to reimburse the Issuing Bank
therefor in accordance with the terms of the Letter of Credit, the
Reimbursement Agreement and ARTICLE 3 shall be deemed to be a request
for an Advance on the date such notification is received in the amount
of such drawing which is so unreimbursed; and
35
(v) unless payment is otherwise made by the Borrower, the
receipt by Agent of a demand for reimbursement by a Clearing Bank
pursuant to the provisions of any Blocked Account Agreement shall be
deemed to be a request for an Advance on the date any such demand is
received by Agent in the amount set forth therein.
(b) Notification to Lenders. Unless the Agent has elected periodic
settlements pursuant to SECTION 4.7, the Agent shall promptly notify the Lenders
of any Borrowing Notice delivered or deemed given pursuant to this SECTION
2.2(A) by 12:00 noon (New York time) on the proposed Advance date with respect
to any Advance. The notice from the Agent to the Lenders shall set forth the
information contained in the applicable Borrowing Notice. Not later than 1:30
p.m. (New York time) on the proposed Advance date, each Lender will make
available to the Agent, for the account of the Borrower, at the Agent's Office
in funds immediately available to the Agent, an amount equal to such Lender's
Commitment Percentage of the Advance to be made on such Advance date.
(c) Conversion/Continuation of Advances. Prime Advances shall continue
as Prime Advances unless and until such Prime Advances are converted into LIBOR
Advances pursuant to a Borrowing Notice, provided that, at such time, no Event
of Default exists. Each LIBOR Advance shall continue as a LIBOR Advance until
the end of the LIBOR Period, at which time such LIBOR Advance shall be
automatically converted into a Prime Advance unless the Borrower shall have
given the Agent a Borrowing Notice requesting that, at the end of the LIBOR
Period, such LIBOR Advance either be converted into a Prime Advance or, so long
as no Event of Default exists or will occur from the extension thereof, continue
as a LIBOR Advance for the next LIBOR Period. Any conversion of any LIBOR
Advance shall be made on, and only on, the last day of the LIBOR Period
applicable thereto and the Borrower shall give Agent a Borrowing Notice prior to
the date of the requested conversion or continuation complying with the timing
and informational requirements set forth in SECTION 2.2(A) hereof and, in
addition, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation,
(ii) the aggregate amount and type of converted or continued
Advance, and
(iii) the amount and type(s) of Advance(s) into which such
Advance is to be converted or continued and, in the case of a
conversion or continuation of a LIBOR Advance, the duration of the new
LIBOR Period.
(d) Disbursement of Loans. Borrower hereby irrevocably authorizes the
Agent to disburse the proceeds of each Advance requested, or deemed to be
requested, pursuant to this SECTION 2.2 as follows:
(i) the proceeds of each Advance requested under SECTION
2.2(A)(I) shall be disbursed by the Agent in Dollars in immediately
available funds (A) in
36
the case of the initial Advance, in accordance with notice
from the Borrower to the Agent referred to in SECTION
5.1(B)(XIII) and (B) in the case of each subsequent Advance,
by wire transfer to the Disbursement Account, or by wire
transfer to such other account as designated in writing by the
Borrower at least two (2) Business Days prior to the borrowing
date of such proposed Advance,
(ii) the proceeds of each Advance deemed requested
under SECTION 2.2 (A)(II) OR (III) or (IV) shall be disbursed
by the Agent by way of direct payment of the relevant interest
or Secured Obligation, as the case may be, and
(iii) the proceeds of each Advance deemed requested
under SECTION 2.2(A)(V) shall be disbursed by the Agent
directly to the Clearing Bank on behalf of the Borrower.
SECTION 2.3 Repayment of Revolving Credit Loans. The Revolving Credit
Loans will be repaid as follows:
(a) Whether or not any Default or Event of Default has
occurred, the outstanding principal amount of all the Revolving Credit
Loans is due and payable, and shall be repaid by the Borrower in full,
not later than the Termination Date;
(b) If at any time the aggregate outstanding unpaid principal
amount of the Revolving Credit Loans exceeds the Borrowing Base in
effect at such time (such excess referred to herein as an
"Overextension"), the Borrower shall repay the Revolving Credit Loans
in an amount sufficient to reduce the aggregate unpaid principal amount
of such Revolving Credit Loans by an amount equal to the Overextension,
together with accrued and unpaid interest on the amount of the
Overextension to the date of repayment; and
(c) The Borrower hereby instructs the Agent to repay the
Revolving Credit Loans outstanding on any day in an amount equal to the
amount received by the Agent on such day pursuant to SECTION 8.1(B).
SECTION 2.4 Revolving Credit Note. Each Lender's Revolving Credit Loans
and the obligation of the Borrower to repay such Revolving Credit Loans shall
also be evidenced by a Revolving Credit Note payable to the order of such
Lender. Each Revolving Credit Note shall be dated the Effective Date and be duly
and validly executed and delivered by the Borrower.
ARTICLE III.
LETTER OF CREDIT FACILITY SECTION
SECTION 3.1 Issuance. Subject to the terms and conditions of this
Agreement, Agent and the Lenders agree to incur, from time to time prior to the
Termination Date, upon the request of the Borrower and for the Borrower's
account, Letter of Credit Obligations by causing Letters of Credit to be issued
(by Agent or an affiliate thereof reasonably acceptable to Borrower, or a bank
or other legally authorized Person selected by and acceptable to Agent and
reasonably acceptable to Borrower (each, an "Issuing Bank")) for the Borrower's
account and guaranteed by Agent; provided, however, that if the Issuing Bank is
a Lender, then
37
such Letters of Credit shall not be guaranteed by Agent but rather each Lender
shall, subject to the terms and conditions hereinafter set forth, purchase (or
be deemed to have purchased) risk participations in all such Letters of Credit
issued with the written consent of Agent, as more fully described in SECTION
3.2(B)(II) below. The aggregate amount of all such Letter of Credit Obligations
shall not at any time exceed the lesser of (i) the Letter of Credit Facility
Amount or (ii) the Borrowing Base less the aggregate outstanding principal
balance of the Revolving Credit Loans. No such Letter of Credit shall have an
expiry date which is more than one year following the date of issuance thereof,
and neither Agent nor the Lenders shall be under any obligation to incur Letter
of Credit Obligations in respect of, or purchase risk participations in, any
Letter of Credit having an expiry date which is later than five (5) Business
Days prior to the Termination Date.
SECTION 3.2 Advances Automatic; Participations.
(a) In the event that Agent or any Lender shall make any
payment on or pursuant to any Letter of Credit Obligation, such payment
shall then be deemed automatically to constitute an Advance under
SECTION 2.2 of the Agreement regardless of whether a Default or Event
of Default shall have occurred and be continuing and notwithstanding
the Borrower's failure to satisfy the conditions precedent set forth in
ARTICLE 5, and each Lender shall be obligated to pay an amount
calculated by applying such Lender's Commitment Percentage to the
aggregate amount of such payment. The failure of any Lender to make
available to Agent for Agent's own account an amount equivalent to such
Lender's Commitment Percentage as to any such Revolving Credit Loan or
payment by Agent under or in respect of a Letter of Credit shall not
relieve any other Lender of its obligation hereunder to make available
to Agent an amount equivalent to such other Lender's Commitment
Percentage with respect thereto, but no breach by a Lender shall cause
an increase in any other Lender's Commitment Percentage.
(b) If it shall be illegal or unlawful for the Borrower to
incur Revolving Credit Loans in the circumstances contemplated by
PARAGRAPH (A) above or if such Revolving Credit Loans are unavailable
to Borrower because of an Event of Default described in SECTION 12.1(G)
or (H) or otherwise or if it shall be illegal or unlawful for any
Lender to be deemed to have assumed a ratable share of the
Reimbursement Obligations owed to an Issuing Bank, then (i) immediately
and without further action whatsoever, each Lender shall be deemed to
have irrevocably and unconditionally purchased from Agent (or such
Issuing Bank, as the case may be) an undivided interest and
participation in an amount equivalent to such Lender's Commitment
Percentage (based on the Commitments) of the Letter of Credit
Obligations in respect of all Letters of Credit then outstanding and
(ii) thereafter, immediately upon issuance of any Letter of Credit,
each Lender shall be deemed to have irrevocably and unconditionally
purchased from Agent (or such Issuing Bank, as the case may be) an
undivided interest and participation in an amount equivalent to such
Lender's Commitment Percentage (based on the Commitments) of the Letter
of Credit Obligations with respect to such Letter of Credit on the date
of such issuance. Each Lender shall fund its participation in all
payments or disbursements made under the Letters of Credit in the same
manner as provided in the Agreement with respect to Advances as set out
in SECTION 2.2(B) hereof.
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SECTION 3.3 Cash Collateral.
(a) If any Letter of Credit Obligations, whether or not then
due and payable, shall for any reason be outstanding on the Termination
Date (or, solely with respect to Standby Letters of Credit, an Event of
Default shall have occurred), the Borrower shall, at the request of the
Agent, either (i) provide cash collateral for any Standby Letter of
Credit in the manner described below, (ii) cause all such Letters of
Credit and guaranties thereof to be canceled and returned or (iii)
deliver a stand-by letter (or letters) of credit in guarantee of such
Letter of Credit Obligations, which stand-by letter (or letters) of
credit shall be of like tenor and duration as, and be in an amount
equal to one hundred five percent (105%) of the aggregate then
available to be drawn under, the Letters of Credit to which such
outstanding Letter of Credit Obligations relate and shall be issued by
a Person, and shall be subject to such terms and conditions,
satisfactory to Agent in its sole discretion (the "Replacement Letters
of Credit"). If the Borrower is required to provide cash collateral for
any Letter of Credit Obligations pursuant to the Agreement prior to the
Termination Date, the Borrower will pay to Agent, for the benefit of
the Lenders, cash or Cash Equivalents in an amount equal to one hundred
five percent (105%) of the maximum amount then available to be drawn
under each Standby Letter of Credit outstanding. Such funds or Cash
Equivalents shall be held by Agent in a cash collateral account (the
"Cash Collateral Account") maintained at a bank or financial
institution acceptable to Agent. The Cash Collateral Account shall be
in the name of the Borrower and shall be pledged to, and subject to the
control of, Agent, for the benefit of Agent and the Lenders, in a
manner satisfactory to Agent. Borrower hereby pledges and grants to
Agent, on behalf of itself and the Lenders, a security interest in all
such funds and Cash Equivalents held in any Cash Collateral Account
from time to time and all proceeds thereof, as security for the payment
of all amounts due in respect of the Letter of Credit Obligations and
other Secured Obligations, whether or not then due. This Agreement
shall constitute a security agreement under applicable law.
(b) From time to time after funds are deposited in the Cash
Collateral Account by the Borrower, whether before or after the
Termination Date, Agent may apply such funds or Cash Equivalents then
held in the Cash Collateral Account to the payment of any amounts, in
such order as Agent may elect, as shall be or shall become due and
payable by the Borrower to Lenders with respect to such Letter of
Credit Obligations of the Borrower and, upon the satisfaction in full
of all Letter of Credit Obligations, to any other Secured Obligations
then due and payable.
(c) Neither Borrower nor any other Person claiming on behalf
of or through Borrower shall have any right to withdraw any of the
funds or Cash Equivalents held in the Cash Collateral Account, except
that upon the termination or satisfaction in full of all Letter of
Credit Obligations and the payment of all amounts payable by the
Borrower to Lenders in respect thereof, any funds remaining in the Cash
Collateral Account shall be held and applied to other Secured
Obligations then due and owing and upon payment in full of all Secured
Obligations, any remaining amount shall be paid to the Borrower or as
otherwise required by law.
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SECTION 3.4 Fees and Expenses. The Borrower agrees to pay to
Agent, for the benefit of the Lenders, as compensation to such Lenders for
Letter of Credit Obligations incurred hereunder, (a) all costs and expenses
incurred by Agent or any Lender on account of such Letter of Credit Obligations
and (b) for each month during which any Letter of Credit Obligation shall remain
outstanding, an amount equal to the fee set forth in SECTION 4.2(B) hereof. Such
fee shall be paid to Agent, for the benefit of the Lenders, in accordance with
the terms of SECTION 4.2(B). In addition, the Borrower shall pay to any Issuing
Bank, on demand, such fees, charges and expenses of such Issuing Bank in respect
of the issuance, negotiation, acceptance, amendment, transfer and payment of
such Letter of Credit or as are otherwise payable pursuant to the application
and related documentation under which such Letter of Credit is issued; provided,
however, that no such fee or charge shall be charged for the same purpose as the
Letter of Credit Fee.
SECTION 3.5 Request for Incurrence of Letter of Credit
Obligations. The Borrower shall give Agent at least three (3) Business Days
prior written notice requesting approval of the issuance, or a guarantee, of any
Letter of Credit, specifying the date such Letter of Credit Obligation is to be
incurred, identifying the beneficiary to which such Letter of Credit Obligation
relates and describing the nature of the transactions proposed to be supported
thereby. The notice shall be accompanied by the form of the Letter of Credit
(which shall be acceptable to the Issuing Bank) to be guaranteed and a completed
application for the Standby Letter of Credit or the Documentary Letter of Credit
in form and substance satisfactory to Borrower, Agent and the Issuing Bank.
Notwithstanding anything contained herein to the contrary, Letter of Credit
applications by the Borrower and approvals by Agent may be made and transmitted
pursuant to electronic codes and security measures mutually agreed upon and
established by and among Borrower, Agent and the Issuing Bank.
SECTION 3.6 Obligation Absolute. The obligation of the
Borrower to reimburse Agent and the Lenders for payments made with respect to
any Letter of Credit Obligation shall be absolute, unconditional and
irrevocable, without necessity of presentment, demand, protest or other
formalities, and the obligations of each Lender to make payments to Agent with
respect to Letters of Credit shall be unconditional and irrevocable. Such
obligations of the Borrower and the Lenders to Agent shall be paid strictly in
accordance with the terms hereof under all circumstances, including the
following circumstances:
(a) any lack of validity or enforceability of any Letter of
Credit, this Agreement, the other Loan Documents or any other
agreement;
(b) the existence of any claim, set-off, defense or other
right which Borrower or any of its Affiliates or any Lender may at any
time have against a beneficiary or any transferee of any Letter of
Credit (or any Persons or entities for whom any such transferee may be
acting), Agent, any Lender, or any other Person, whether in connection
with this Agreement, the Letter of Credit, the transactions
contemplated herein or therein or any unrelated transaction (including
any underlying transaction between Borrower or any of its Affiliates
and the beneficiary for which the Letter of Credit was procured);
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(c) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(d) except as expressly provided in SECTION 3.7(B)(III)
hereof, payment by Agent or any Issuing Bank under any Letter of Credit
or guaranty thereof against presentation of a demand, draft or
certificate or other document which does not comply with the terms of
such Letter of Credit or such guaranty;
(e) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(f) the fact that a Default or an Event of Default shall have
occurred and be continuing.
SECTION 3.7 Indemnification; Nature of Lenders' Duties.
(a) In addition to amounts payable by the Borrower to
Agent and Lenders as elsewhere provided in this Agreement, the Borrower
hereby agrees to pay and to protect, indemnify and save harmless Agent
and each Lender (and the officers, directors, agents and attorneys of
Agent and each Lender) from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) which Agent or any Lender (and the
officers, directors, agents and attorneys of Agent and each Lender) may
incur or be subject to as a consequence, direct or indirect, of (i) the
issuance of any Letter of Credit or guaranty thereof or (ii) the
failure of Agent or any Lender (and the officers, directors, agents and
attorneys of Agent and each Lender) seeking indemnification or of any
Issuing Bank to honor a demand for payment under any Letter of Credit
or guaranty thereof as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto
government or Governmental Authority, in each case other than to the
extent solely as a result of the gross negligence or willful misconduct
of Agent or such Lender (or the applicable officers, directors, agents
and attorneys of Agent and each Lender) as finally determined by a
court of competent jurisdiction.
(b) Except as expressly provided below, as between Agent and
any Lender and the Borrower, the Borrower hereby assumes all risks of
the acts and omissions of, or misuse of any Letter of Credit by,
beneficiaries of any Letter of Credit. In furtherance and not in
limitation of the foregoing, to the fullest extent permitted by law,
neither Agent nor any Lender shall be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document issued by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be
in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (ii) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) for failure of the beneficiary of any
Letter of Credit to comply fully with conditions required in order to
demand payment under such Letter of Credit; provided
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that, in the case of any payment by Agent under any Letter of Credit or
guaranty thereof, Agent shall be liable to the extent such payment was
made solely as a result of its gross negligence or willful misconduct
(as finally determined by a court of competent jurisdiction) in
determining that the demand for payment under such Letter of Credit or
guaranty thereof complies on its face with any applicable requirements
for a demand for payment under such Letter of Credit or guaranty
thereof; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; provided that
Agent shall be liable to the extent any such error, omission,
interruption or delay occurred solely as a result of its gross
negligence or willful misconduct (as finally determined by a court of
competent jurisdiction); (v) for errors in interpretation of technical
terms; provided that Agent shall be liable to the extent any such error
occurred solely as a result of its gross negligence or willful
misconduct (as finally determined by a court of competent
jurisdiction); (vi) for any loss or delay in the transmission or
otherwise of any document required in order to make a payment under any
Letter of Credit or guaranty thereof or of the proceeds thereof;
provided that Agent shall be liable to the extent any such loss or
delay occurred solely as a result of its gross negligence or willful
misconduct (as finally determined by a court of competent
jurisdiction); (vii) for the application of the proceeds of any drawing
under any Letter of Credit or guaranty thereof; and (viii) for any
consequences arising from causes beyond the control of Agent or any
Lender. None of the above shall affect, impair, or prevent the vesting
of any of Agent's or any Lender's rights or powers hereunder or under
the other Loan Documents.
(c) Nothing contained herein shall be deemed to limit or to expand any
waivers, covenants or indemnities made by Borrower in favor of any Issuing Bank
in any letter of credit application, reimbursement agreement or similar
document, instrument or agreement between Borrower and such Issuing Bank.
ARTICLE IV.
GENERAL LOAN PROVISIONS
SECTION 4.1 Interest.
(a) General Interest Provisions.
(i) Interest. The Borrower agrees to pay interest to
Agent on the aggregate amount of the Revolving Credit Loans
from time to time outstanding, for the ratable benefit of
Lenders, in accordance with the type of Advance being made by
each Lender, in arrears on each applicable Interest Payment
Date, for the relevant period at a rate equal to (A) for Prime
Advances, the Prime Option, or (B) for LIBOR Advances, the
LIBOR Option. Subject to SECTION 4.1(A)(II), the LIBOR Option
may be exercised by Borrower for all, or any portion, of the
Revolving Credit Loans pursuant to SECTION 2.2 hereof. The
Borrower shall not be entitled to select, convert to or
continue to a new LIBOR Period any LIBOR Option Advances under
the Revolving Credit Facility if a Default or Event of Default
exists hereunder. In the event of any change in the Chase Bank
Rate, the rate of the Prime Option shall change as of the
first day of the first month
42
following such change and shall be based on the Chase Bank
Rate in effect on the last day of the immediately preceding
month.
(ii) LIBOR Advance Limitations. The LIBOR elections
must be for $1,000,000 or whole multiples of $500,000 in
excess thereof. In no event may the Borrower have in the
aggregate more than seven (7) LIBOR Advances outstanding at
any one time. If a LIBOR election is not timely made or cannot
be made, or if LIBOR cannot be determined, then the Agent
shall use the Prime Option to compute interest.
(iii) LIBOR Breakage Costs. The Borrower shall be
liable for, and shall pay to the Agent, for the benefit of the
Lenders, upon the request of the Agent, such amount or amounts
as shall reimburse the Agent and/or the Lenders for any loss,
costs or expenses incurred by the Agent, the Lenders or both
as a result of: (A) any payment or prepayment on a date other
than the last day of a LIBOR Period for such LIBOR Advance or
(B) any failure of the Borrower to borrow a LIBOR Advance on
the date for such borrowing specified in the relevant
Borrowing Notice, such reimbursement to include, without
limitation, an amount equal to any loss, cost or expense
suffered by the Agent, the Lenders or both during the period
from the date of receipt of such payment or prepayment, or the
date of such failure to borrow, to the last day of such LIBOR
Period, if the rate of interest obtained by the Agent, the
Lenders or both upon the reemployment of an amount of funds
equal to the amount of such payment, prepayment or failure to
borrow is less than the rate of interest applicable to such
LIBOR Advance for such LIBOR Period (the "Breakage Fee"). The
determination by the Agent, the Lenders or both of the
Breakage Fee, when set forth in a written notice to the
Borrower, containing their respective calculations thereof in
reasonable detail, shall be conclusive on the Borrower, in the
absence of manifest error. Calculation of all amounts payable
to the Agent, the Lenders or both under this paragraph with
regard to LIBOR Advances shall be made as though the Agent,
the Lenders or both had actually funded the LIBOR Advances
through the purchase of deposits in the relevant market and
currency, as the case may be, bearing interest at the rate
applicable to such LIBOR Advances in an amount equal to the
amount of the LIBOR Advances and having a maturity comparable
to the relevant interest period; provided, however, that the
Agent and the Lenders may fund each of the LIBOR Advances in
any manner the Agent and the Lenders determine in their
discretion and the foregoing assumption shall be used only for
calculation of amounts payable under this paragraph.
(b) Application of Proceeds to Loans. Notwithstanding anything
to the contrary herein, the Agent and the Lenders shall apply all
receipts with respect to payments on Revolving Credit Loans and
proceeds of Collateral and all other amounts received by it from, or on
behalf of, the Borrower (i) first, to the Agent to pay all costs and
expenses, including, without limitation, indemnified amounts that have
not been reimbursed to Agent by the Borrower, including interest
thereon, if any; (ii) second, to the Agent to pay any fees due the
Agent from the Credit Parties hereunder, including interest thereon, if
any; (iii) third, to the Lenders for any indemnified amounts and costs
43
and expenses paid to or reimbursed to the Agent (to the extent that the
Credit Parties are obligated to reimburse or otherwise pay such amounts
under this Agreement or any other Loan Documents); (iv) fourth, to the
Lenders to pay any unpaid principal and accrued interest on the
Revolving Credit Loans and to the other Secured Obligations then
outstanding which payments shall be applied (A) initially to the Prime
Advances outstanding to the Borrower, (B) next to LIBOR Advances
outstanding to the Borrower and (C) finally to all other Secured
Obligations in such order and manner as Agent may elect; PROVIDED,
HOWEVER, in the event that (x) the aggregate amount of outstanding
Advances exceeds the Borrowing Base, (y) the aggregate amount of
outstanding LIBOR Advances exceeds the applicable maximum levels set
therefor or (z) upon the occurrence of an Event of Default, the Agent
and the Lenders may apply all such amounts received by it to the
payment of Secured Obligations in such manner and in such order as the
Agent may elect in its reasonable credit judgment; and (v) fifth, the
balance to Borrower, subject to any obligations that Agent may have
under applicable law to deliver such balance to third parties. In the
event that any such amounts are applied to Revolving Credit Loans which
are LIBOR Advances, such application shall be treated as a prepayment
of such loans and the Agent and the Lenders shall be entitled to
indemnification pursuant to SECTION 4.1(A)(III).
(c) Non-Business Day Payments. If any payment on the Revolving
Credit Loans becomes due and payable on a day other than a Business
Day, the maturity thereof will be extended to the next succeeding
Business Day and, with respect to payments of principal, interest
thereon shall be payable at the applicable rate during any such
extension.
(d) Default Interest. From and after the occurrence of an
Event of Default, the unpaid principal amount of each Secured
Obligation shall bear interest while such Event of Default is
continuing at a rate per annum equal to the Default Margin plus the
Prime Option, payable on demand. The interest rate provided for in this
SECTION 4.1(D) shall to the extent permitted by applicable law also
apply to and accrue on the amount of any judgment entered with respect
to any Secured Obligation and shall continue to accrue at such rate
during any proceeding described in SECTION 12.1(G) or (H).
(e) Computation. The interest rates provided for in this
SECTION 4.1 shall be computed on the basis of a year of three hundred
sixty (360) days and the actual number of days elapsed.
(f) Maximum Rate. It is not intended by the Lenders, and
nothing contained in this Agreement or any Note shall be deemed, to
establish or require the payment of a rate of interest in excess of the
maximum rate permitted by applicable law (the "Maximum Rate"). If, in
any month, the Effective Interest Rate, absent such limitation, would
have exceeded the Maximum Rate, then the Effective Interest Rate for
that month shall be the Maximum Rate, and if, in future months, the
Effective Interest Rate would otherwise be less than the Maximum Rate,
then the Effective Interest Rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the amount of
interest which would have been paid if the same had not been limited by
the Maximum Rate. In this connection, in the event that, upon payment
in full of the Secured
44
Obligations, the total amount of interest paid or accrued under the
terms of this Agreement is less than the total amount of interest which
would have been paid or accrued if the Effective Interest Rate had at
all times been in effect, then the Borrower shall, to the extent
permitted by applicable law, pay to the Lenders an amount equal to the
difference between (i) the lesser of (A) the amount of interest which
would have been charged if the Maximum Rate had, at all times, been in
effect and (B) the amount of interest which would have accrued had the
Effective Interest Rate, at all times, been in effect, and (ii) the
amount of interest actually paid or accrued under this Agreement. In
the event the Lenders receive, collect or apply as interest any sum in
excess of the Maximum Rate, such excess amount shall be applied to the
reduction of the principal balance of the applicable Secured
Obligation, and, if no such principal is then outstanding, such excess
or part thereof remaining shall be paid to the Borrower.
SECTION 4.2 Fees.
(a) Unused Line Fee. As additional compensation for the costs
and risks in making the Revolving Credit Facility available to the
Borrower, the Borrower agrees to pay to the Agent, for the ratable
benefit of the Lenders, in arrears, on the first (1st) Business Day of
each month with respect to the immediately prior month, during the term
hereof or any extension thereof, a fee of one-quarter of one percent
(0.25%) per annum (the "Unused Line Fee") of the difference between (i)
the Revolving Credit Facility Amount and (ii) the sum of the average
daily outstanding balances of the Revolving Credit Loans and the Letter
of Credit Obligations (with Letter of Credit Obligations, for this
purpose, not to include Reimbursement Obligations constituting
Revolving Credit Loans) during the period for which the Unused Line Fee
is due.
(b) Letter of Credit Charges and Fees. The Borrower agrees to
pay to Agent, (i) subject to SECTION 3.4 hereof, all charges imposed on
the Agent or any Lender by the Issuing Bank in connection with any
Letter of Credit or guaranty thereof and (ii) for each month during
which any Letter of Credit Obligation is outstanding, a fee in an
amount equal to (A) one and one-half percent (1.50%) per annum of the
maximum amount available to be drawn under each Documentary Letter of
Credit and (B) one and one-half percent (1.50%) per annum of the
maximum amount available to be drawn under each Standby Letter of
Credit (each fee in CLAUSE (II) a "Letter of Credit Fee" and
collectively the "Letter of Credit Fees"). Such Letter of Credit Fees
shall be paid to Agent, for the benefit of the Lenders, in arrears on
the first (1st) Business Day of each month with respect to the
immediately preceding month and on the Termination Date or until all
such Letter of Credit Obligations have been paid or otherwise
satisfied. Upon the occurrence and during the continuation of an Event
of Default, the foregoing Letter of Credit Fees shall be increased by
an amount equal to the Letter of Credit Default Margin.
(c) Early Termination Fee. Except as otherwise expressly
provided in this Agreement, if this Agreement is terminated or the
Revolving Credit Facility and Letter of Credit Facility are repaid at
the option of Borrower (excluding Revolving Credit Loan payments in the
ordinary course of business) on an Early Termination Date, in view of
the impracticality and extreme difficulty of ascertaining actual
damages and by mutual agreement of the parties as to a reasonable
calculation of Lenders' lost profits as a result
45
thereof, the Borrower agrees to pay to Agent, for the ratable benefit
of the Lenders, upon the effective date of such termination or
prepayment of all of the Revolving Credit Loans, the Early Termination
Fee.
SECTION 4.3 Manner of Payment.
(a) Each payment (including prepayments) by the Borrower on
account of the principal of or interest on the Revolving Credit Loans
or of any other amounts payable to the Lenders under this Agreement or
any Note shall be made not later than 1:00 p.m. (New York time) on the
date specified for payment under this Agreement to the Agent, for the
account of the Lenders, at the Agent's Office, in Dollars, in
immediately available funds and shall be made without any setoff,
counterclaim or deduction whatsoever and, for purposes of calculating
interest on Secured Obligations, shall be applied to the Secured
Obligations as set forth in SECTION 8.1(B) hereof. Any payment received
after 1:00 p.m. (New York time) on such day shall be deemed to have
been made on the next succeeding Business Day.
(b) The Borrower hereby irrevocably authorizes each Lender to
charge any account of the Borrower maintained with such Lender with
such amounts as may be necessary from time to time to pay any Secured
Obligations (whether or not owed to such Lender) which are not paid
when due, and the proceeds thereof shall be applied as set forth in
SECTION 4.1(B).
SECTION 4.4 Loan Accounts; Statements of Account.
(a) Each Lender shall open and maintain on its books a loan
account in the Borrower's name (each, a "Loan Account"). Each Loan
Account shall show as debits thereto each Advance made under this
Agreement by such Lender to the Borrower and as credits thereto all
payments received by such Lender and applied to the principal of such
Revolving Credit Loans outstanding to the Borrower, so that the balance
of the loan account at all times reflects the aggregate principal
amount of Revolving Credit Loans due such Lender from the Borrower.
(b) The Agent shall maintain on its books a control account
for the Borrower in which shall be recorded (i) the amount of each
Advance made hereunder to the Borrower, (ii) the amount of any
principal or interest due or to become due from the Borrower hereunder,
and (iii) the amount of any sum received by the Agent hereunder from
the Borrower and each Lender's ratable share therein.
(c) The entries made in the accounts pursuant to SUBSECTIONS
(A) and (B) shall be prima facie evidence, in the absence of manifest
error, of the existence and amounts of the obligations of the Borrower
therein recorded and in case of discrepancy between such accounts, in
the absence of manifest error, the accounts maintained pursuant to
SUBSECTION (B) shall be controlling.
(d) The Agent will account to the Borrower monthly with a
statement of Revolving Credit Loans, charges and payments made to and
by the Borrower pursuant to this Agreement, and such accounts rendered
by the Agent shall be deemed final, binding
46
and conclusive, save for manifest error, unless the Agent is notified
by the Borrower in writing to the contrary within thirty (30) days of
the date the account was so rendered. Such notice by the Borrower shall
be deemed an objection to only those items specifically objected to
therein. Failure of the Agent to render such account shall in no way
affect the rights of the Agent or of the Lenders hereunder.
SECTION 4.5 Termination of Agreement. On the Termination Date,
the Borrower shall pay to the Agent, for the account of the Lenders, in same day
funds, an amount equal to all Secured Obligations then outstanding, including,
without limitation, all (i) accrued interest thereon, (ii) all accrued fees
provided for hereunder and in the Fee Letter, and (iii) any amounts payable to
the Agent and the Lenders pursuant to SECTIONS 4.1, 4.2, 4.8, 15.2, 15.3, 15.12
and 15.13, and, in addition thereto, shall deliver to the Agent, in respect of
each outstanding Letter of Credit, either the Replacement Letter of Credit or
the Cash Collateral as provided in SECTION 3.3. Upon payment in full of the
amounts specified in this SECTION 4.5, this Agreement shall be terminated and
the Agent, the Lenders and the Borrower shall have no further obligations to any
other party hereto except for the obligations to the Agent and the Lenders
pursuant to SECTIONS 15.12 and 15.13 hereof and those which survive according to
their express terms.
SECTION 4.6 Making of Advances.
(a) Nature of Obligations of Lenders to Make Advances. The obligations
of the Lenders under this Agreement to make Advances are several and are not
joint or joint and several.
(b) Assumption by Agent. Subject to the provisions of SECTION 4.7 and
notwithstanding the occurrence or continuance of a Default or Event of Default
or other failure of any condition to the making of Advances hereunder subsequent
to the Advances to be made on the Effective Date, unless the Agent shall have
received notice from a Lender in accordance with the provisions of SECTION
4.6(C) prior to a proposed borrowing date that such Lender will not make
available to the Agent such Lender's ratable portion of the amount to be
borrowed on such date, the Agent may assume that such Lender will make such
portion available to the Agent in accordance with SECTION 2.2(B), and the Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent such Lender shall not make
such ratable portion available to the Agent, such Lender and the Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount (the "Make-Whole Amount"), together with interest thereon for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent at the Effective Interest Rate or, if lower,
subject to SECTION 4.1(C), the Maximum Rate. If such Lender shall repay to the
Agent such corresponding amount, the amount so repaid shall constitute such
Lender's Commitment Percentage of the Advance made on such borrowing date for
purposes of this Agreement. The failure of any Lender to make available its
Commitment Percentage of any Advance shall not (without regard to whether the
Borrower shall have returned the amount thereof to the Agent in accordance with
this SECTION 4.6) relieve it or any other Lender of its obligation, if any,
hereunder to make its Commitment Percentage of such Advance available on such
borrowing date, but no Lender shall be responsible for the failure of any other
Lender to make available its Commitment Percentage of such Advance on the
borrowing date.
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(c) Delegation of Authority to Agent.
(i) Without limiting the generality of SECTION 14.1, each
Lender expressly authorizes the Agent to determine on behalf of such
Lender (A) any reduction or increase of advance rates applicable to the
Borrowing Base, so long as such advance rates do not at any time exceed
the rates set forth in the Borrowing Base definition, (B) the creation
or elimination of any reserves (other than the Letter of Credit
Reserve) against the Revolving Credit Facility and the Borrowing Base
and (C) whether or not Inventory shall be deemed to constitute Eligible
Inventory and Accounts shall be deemed to constitute Eligible Credit
Card Accounts. Such authorization may be withdrawn by the Required
Lenders by giving the Agent written notice of such withdrawal signed by
the Required Lenders; provided, however, that unless otherwise agreed
by the Agent, such withdrawal of authorization shall not become
effective until the thirtieth (30th) Business Day after receipt of such
notice by the Agent. Thereafter, the Required Lenders shall jointly
instruct the Agent in writing regarding such matters with such
frequency as the Required Lenders shall jointly determine.
(ii) Unless and until the Agent shall have received written
notice from the Required Lenders that because of a Default or Event of
Default the Required Lenders do not intend to make available to the
Agent such Lenders' ratable share of Advances made after the effective
date of such notice, the Agent shall be entitled to continue to make
the assumptions described in SECTION 4.6(B). After receipt of the
notice described in the preceding sentence, which shall become
effective on the third (3rd) Business Day after receipt of such notice
by the Agent unless otherwise agreed by the Agent, the Agent shall be
entitled to make the assumptions described in SECTION 4.6(B) as to any
Advances as to which it has not received a written notice to the
contrary prior to 11:00 a.m. (New York time) on the Business Day next
preceding the day on which the Advance is to be made. The Agent shall
not be required to make any Advance as to which it shall have received
notice from a Lender of such Lender's intention not to make its ratable
portion of such Advance available to the Agent. Any withdrawal of
authorization under this SECTION 4.6(C) shall not affect the validity
of any Advances made prior to the effectiveness thereof.
SECTION 4.7 Settlement Among Lenders.
(a) Revolving Credit Loans. It is agreed that each Lender's
Net Outstandings are intended by the Lenders to be equal at all times
to such Lender's Commitment Percentage of the aggregate principal
amount of all Revolving Credit Loans outstanding. Notwithstanding such
agreement, the several and not joint obligation of each Lender to fund
Advances made in accordance with the terms of this Agreement ratably in
accordance with such Lender's Commitment Percentage and each Lender's
right to receive its ratable share of principal payments on Revolving
Credit Loans in accordance with its Commitment Percentage, the Lenders
agree that in order to facilitate the administration of this Agreement
and the Loan Documents that settlement among them as
48
to Revolving Credit Loans may take place on a periodic basis in
accordance with the provisions of this SECTION 4.7.
(b) Settlement Procedures as to Revolving Credit Loans. To the
extent and in the manner hereinafter provided in this SECTION 4.7,
settlement among the Lenders as to Revolving Credit Loans may occur
periodically on Settlement Dates determined from time to time by the
Agent, which may occur before or after the occurrence or during the
continuance of a Default or Event of Default and whether or not all of
the conditions set forth in SECTION 5.2 have been met. On each
Settlement Date payments shall be made by or to the Settlement Lender
and the other Lenders in the manner provided in this SECTION 4.7 in
accordance with the Settlement Report delivered by the Agent pursuant
to the provisions of this SECTION 4.7 in respect of such Settlement
Date so that as of each Settlement Date, and after giving effect to the
transactions to take place on such Settlement Date, each Lender's Net
Outstandings shall equal such Lender's Commitment Percentage of the
Revolving Credit Loans outstanding.
(i) Selection of Settlement Dates. If the Agent
elects, in its discretion, but subject to the consent of the
Settlement Lender, to settle accounts among the Lenders with
respect to principal amounts of Revolving Credit Loans less
frequently than each Business Day, then the Agent shall
designate periodic Settlement Dates which may occur on any
Business Day after the Effective Date; provided, however, that
the Agent shall designate as a Settlement Date any Business
Day which is an Interest Payment Date; and provided further,
that a Settlement Date shall occur at least once during each
seven-day period. The Agent shall designate a Settlement Date
by delivering to each Lender a Settlement Report not later
than 12:00 noon (New York time) on the proposed Settlement
Date, which Settlement Report shall be with respect to the
period beginning on the next preceding Settlement Date and
ending on such designated Settlement Date.
(ii) Non-Ratable Loans and Payments. Between
Settlement Dates, the Agent shall request and the Settlement
Lender may (but shall not be obligated to) advance to the
Borrower out of the Settlement Lender's own funds, the entire
principal amount of any Advance requested or deemed requested
pursuant to SECTION 2.2(A) (any such Advance being referred to
as a "Non-Ratable Loan"). The making of each Non-Ratable Loan
by the Settlement Lender shall be deemed to be a purchase by
the Settlement Lender of a one hundred percent (100%)
participation in each other Lender's Commitment Percentage of
the amount of such Non-Ratable Loan. All payments of
principal, interest and any other amount with respect to such
Non-Ratable Loan shall be payable to and received by the Agent
for the account of the Settlement Lender. Upon demand by the
Settlement Lender, with notice thereof to the Agent, each
other Lender shall pay to the Settlement Lender, as the
repurchase of such participation, an amount equal to one
hundred percent (100%) of such Lender's Commitment Percentage
of the principal amount of such Non-Ratable Loan. Any payments
received by the Agent between Settlement Dates which in
accordance with the terms of this Agreement are to be applied
to the reduction of the outstanding principal balance
49
of Revolving Credit Loans, shall be paid over to and retained
by the Settlement Lender for such application, and such
payment to and retention by the Settlement Lender shall be
deemed, to the extent of each other Lender's Commitment
Percentage of such payment, to be a purchase by each such
other Lender of a participation in the Revolving Credit Loans
(including the repurchase of participations in Non-Ratable
Loans) held by the Settlement Lender. Upon demand by another
Lender, with notice thereof to the Agent, the Settlement
Lender shall pay to the Agent, for the account of such other
Lender, as a repurchase of such participation, an amount equal
to such other Lender's Commitment Percentage of any such
amounts (after application thereof to the repurchase of any
participations of the Settlement Lender in such other Lender's
Commitment Percentage of any Non-Ratable Loans) paid only to
the Settlement Lender by the Agent.
(iii) Decrease in Net Outstandings. If on any
Settlement Date the increase, if any, in the dollar amount of
any Lender's Net Outstandings which is required to comply with
the first sentence of SECTION 4.7(A) is less than such
Lender's Commitment Percentage of amounts received by the
Agent but paid only to the Settlement Lender since the next
preceding Settlement Date, such Lender and the Agent, in their
respective records, shall apply such Lender's Commitment
Percentage of such amounts to the increase in such Lender's
Net Outstandings, and the Settlement Lender shall pay to the
Agent, for the account of such Lender, the excess allocable to
such Lender.
(iv) Increase in Net Outstandings. If on any
Settlement Date the increase, if any, in the dollar amount of
any Lender's Net Outstandings which is required to comply with
the first sentence of SECTION 4.7(A) exceeds such Lender's
Commitment Percentage of amounts received by the Agent but
paid only to the Settlement Lender since the next preceding
Settlement Date, such Lender and the Agent, in their
respective records, shall apply such Lender's Commitment
Percentage of such amounts to the increase in such Lender's
Net Outstandings, and such Lender shall pay to the Agent, for
the account of the Settlement Lender, any excess.
(v) No Change in Outstandings. If a Settlement Report
indicates that no Revolving Credit Loans have been made during
the period since the next preceding Settlement Date, then such
Lender's Commitment Percentage of any amounts received by the
Agent in respect of Revolving Credit Loans but paid only to
the Settlement Lender shall be paid by the Settlement Lender
to the Agent, for the account of such Lender. If a Settlement
Report indicates that the increase in the dollar amount of a
Lender's Net Outstandings which is required to comply with the
first sentence of SECTION 4.7(A) is exactly equal to such
Lender's Commitment Percentage of amounts received by the
Agent in respect of Revolving Credit Loans but paid only to
the Settlement Lender since the next preceding Settlement
Date, such Lender and the Agent, in their respective records,
shall apply such Lender's Commitment Percentage of such
amounts to the increase in such Lender's Net Outstandings.
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(vi) Return of Payments. If any amounts received by
the Settlement Lender in respect of the Secured Obligations
are later required to be returned or repaid by the Settlement
Lender to the Borrower or any other obligor or their
respective representatives or successors in interest, whether
by court order, settlement or otherwise, in excess of the
Settlement Lender's Commitment Percentage of all such amounts
required to be returned by all Lenders, each other Lender
shall, upon demand by the Settlement Lender with notice to the
Agent, pay to the Agent for the account of the Settlement
Lender, an amount equal to the excess of such Lender's
Commitment Percentage of all such amounts required to be
returned by all Lenders over the amount, if any, returned
directly by such Lender.
(vii) Payments to Agent, Lenders.
(A) Payment by any Lender to the Agent shall
be made not later than 1:00 p.m. (New York time) on
the Business Day such payment is due, provided that
if such payment is due on demand by another Lender,
such demand is made on the paying Lender not later
than 11:00 a.m. (New York time) on such Business Day.
Payment by the Agent to any Lender shall be made by
wire transfer, promptly following the Agent's receipt
of funds for the account of such Lender and in the
type of funds received by the Agent, provided that if
the Agent receives such funds at or prior to 1:00
p.m. (New York time), the Agent shall pay such funds
to such Lender by 2:00 p.m. (New York time) on such
Business Day. If a demand for payment is made after
the applicable time set forth above, the payment due
shall be made by 2:00 p.m. (New York time) on the
first Business Day following the date of such demand.
(B) If a Lender shall, at any time, fail to
make any payment to the Agent required hereunder, the
Agent may, but shall not be required to, retain
payments that would otherwise be made to such Lender
hereunder and apply such payments to such Lender's
defaulted obligations hereunder, at such time, and in
such order, as the Agent may elect in its sole
discretion.
(C) With respect to the payment of any funds
under this SECTION 4.7(B), whether from the Agent to
a Lender or from a Lender to the Agent, the party
failing to make full payment when due pursuant to the
terms hereof shall, upon demand by the other party,
pay such amount together with interest on such amount
at the Prime Option.
(c) Settlement of Other Secured Obligations. All other amounts
received by the Agent on account of, or applied by the Agent to the
payment of, any Secured Obligation owed to the Lenders (including,
without limitation, fees payable to the Lenders pursuant to SECTIONS
4.2(A) and (B) and Net Proceeds from the sale of, or other realization
upon, all or any part of the Collateral following an Event of Default)
that are received by the Agent on or prior to 1:00 p.m. (New York time)
on a Business Day will be paid by the Agent to each Lender on the same
Business Day, and any such amounts that are received by the Agent after
1:00 p.m. (New York time) will be paid by the Agent
51
to each Lender on the following Business Day. Unless otherwise stated
herein, the Agent shall distribute fees payable to the Lenders pursuant
to SECTIONS 4.2(A) and (B) ratably to the Lenders based on each
Lender's Commitment Percentage and shall distribute proceeds from the
sale of, or other realization upon, all or any part of the Collateral
following an Event of Default ratably to the Lenders based on the
amount of the Secured Obligations then owing to each Lender.
SECTION 4.8 Changed Circumstances.
(a) Borrower agrees that if (i) any law hereafter in effect or
(ii) any request, guideline or directive of any Governmental Authority
(whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) not in effect as of the Effective
Date with respect to any law now or hereafter in effect (and whether or
not any such law is presently applicable to any Lender) or the
interpretation or administration thereof by any Governmental Authority,
shall either (A) (1) impose, affect, modify or deem applicable any
reserve, special deposit, capital maintenance or similar requirement
against any Advance, (2) impose on such Lender any other condition
regarding any Advance, this Agreement, any Note or the facilities
provided hereunder or (3) result in any requirement regarding capital
adequacy (including any risk-based capital guidelines) affecting such
Lender being imposed or modified or deemed applicable to such Lender or
(B) subject such Lender to any taxes on the recording, registration,
notarization or other formalization of the Revolving Credit Loans or
any Note, and the result of any event referred to in CLAUSE (I) or (II)
above shall be to increase the cost to such Lender of making, funding
or maintaining any Advance or to reduce the amount of any sum
receivable by such Lender or such Lender's rate of return on capital
with respect to any Advance to a level below that which such Lender
could have achieved but for such imposition, modification or deemed
applicability (taking into consideration such Lender's policies with
respect to capital adequacy) by an amount deemed by such Lender to be
material, then, upon demand by such Lender, Borrower shall immediately
pay to such Lender additional amounts which shall be sufficient to
compensate such Lender for such increased cost, tax or reduced rate of
return. A certificate of such Lender to the Borrower claiming
compensation under this SECTION 4.8 shall be final, conclusive and
binding on all parties for all purposes in the absence of manifest
error. Such certificate shall set forth the nature of the occurrence
giving rise to such compensation, the additional amount or amounts to
be paid to it hereunder and the method by which such amounts were
determined. In determining such amount, such Lender may use any
reasonable averaging and attribution methods.
(b) If the introduction of or any change in or in the
interpretation of (in each case, after the date hereof) any law or
regulation makes it unlawful, or any Governmental Authority asserts,
after the date hereof, that it is unlawful, for any Lender to perform
its obligations hereunder to make LIBOR Advances or to fund or maintain
LIBOR Advances hereunder, such Lender shall notify the Agent of such
event and the Agent shall notify the Borrower of such event, and the
right of the Borrower to select LIBOR Advances for any subsequent
Interest Period or in connection with any subsequent conversion of any
Advance shall be suspended until the Agent shall notify the Borrower
that the circumstances causing such suspension no longer exist, and the
Borrower shall
52
forthwith prepay in full all LIBOR Advances then outstanding and shall
pay all interest accrued thereon through the date of such prepayment or
conversion, unless the Borrower, within three (3) Business Days after
such notice from the Agent, requests the conversion of all outstanding
LIBOR Advances into Prime Advances; provided that, if the date of such
repayment or proposed conversion is not the last day of the Interest
Period applicable to such LIBOR Advances, the Borrower shall also pay
any amount due pursuant to SECTION 4.1(A)(III).
(c) If the Agent shall, at least one (1) Business Day before
the date of any requested Advance or the effective date of any
conversion or continuation of an existing Advance to be made or
continued as or converted into a LIBOR Advance (each such requested
Advance made and/or to be converted or continued, a "Pending Advance"),
notify the Borrower that the LIBOR Advance will not adequately reflect
the cost to the Lenders of making or funding such Pending Advance as a
LIBOR Advance or that LIBOR is not determinable from any interest rate
reporting service of recognized standing, then the right of the
Borrower to select LIBOR Advances for such Pending Advance, or any
subsequent Advances in connection with any subsequent conversion or
continuation of any Advance shall be suspended until the Agent shall
notify the Borrower that the circumstances causing such suspension no
longer exist, and Pending Advances and each such subsequent Advance
requested to be made, continued or converted shall be made or continued
as, or converted into a Prime Advance.
SECTION 4.9 Obligations Absolute. Borrower agrees that the
Secured Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent or any Lender with respect thereto. All Secured Obligations shall be
conclusively presumed to have been created in reliance hereon. The liabilities
of Borrower under this Agreement shall be absolute and unconditional
irrespective of:
(a) any change in the time, manner or place of payment of, or
in any other term of, all or any part of the Secured Obligations;
(b) any taking, exchange, release or non-perfection of any
Collateral or any other collateral securing the Secured Obligations, or
any release, amendment or waiver of, or consent to or departure from,
the Secured Obligations, or any guaranty for all or any of the Secured
Obligations;
(c) any change, restructuring or termination of the corporate
structure or existence of Borrower; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Borrower or any Guarantor,
other than payment or satisfaction of the Secured Obligations or to the
extent of any loss resulting from the gross negligence or willful
misconduct of the Agent, any Lender or the Issuing Bank, as determined
by the final non-appealable judgment of a court of competent
jurisdiction.
SECTION 4.10 Agent Advances.
53
(a) The Agent hereby is authorized by the Borrower and the
Lenders, from time to time in the Agent's sole discretion, (i) after
the occurrence of a Default or an Event of Default (but without
constituting a waiver of such Default or Event of Default) or (ii) at
any time that any of the other applicable conditions precedent set
forth in SECTION 5.2 have not been satisfied, to make Advances to the
Borrower on behalf of the Lenders which the Agent, in good faith,
determines is necessary (A) to preserve or protect the Collateral, or
any portion thereof, (B) to enhance the likelihood of repayment of the
Secured Obligations or (C) to pay any other amount chargeable to the
Borrower pursuant to the terms of this Agreement, including costs,
fees, and expenses (any of the Advances described in this SECTION 4.10
being hereinafter referred to as "Agent Advances").
(b) The Agent Advances shall be repayable on demand and
secured by the Collateral, shall constitute Revolving Credit Loans and
Secured Obligations hereunder, and shall bear interest at the Prime
Option.
SECTION 4.11 Overadvances.
(a) The Agent may make voluntary Overadvances without the
written consent of the Required Lenders for interest, fees or expenses
due to Lenders in accordance with the provisions hereof. If the
conditions for borrowing under SECTION 5.2 cannot be fulfilled, the
Agent may, but is not obligated to, knowingly and intentionally
continue to make Advances (including Agent Advances) to the Borrower,
at the request of Borrower, notwithstanding such failure of
condition(s), so long as, at any time, either (i) the aggregate amount
of then outstanding Revolving Credit Loans would not exceed the
Borrowing Base by more than an amount equal to ten percent (10%) of the
Revolving Credit Facility Amount or (ii) (A) the aggregate amount of
outstanding Revolving Credit Loans would not exceed the Borrowing Base
by more than the amount proposed by the Agent and agreed to by the
Required Lenders and (B) such Overadvances are made pursuant to a plan
(proposed by the Agent and agreed to by the Required Lenders) for the
elimination of such Overadvances. The foregoing provisions are for the
sole and exclusive benefit of the Agent and the Lenders and are not
intended to, and shall not be construed to, create any obligations of
the Agent or any Lender to the Borrower with respect to Overadvances or
otherwise benefit the Borrower in any way. The Overadvances and Agent
Advances, as applicable, that are made pursuant to this Agreement shall
be subject to the same terms and conditions as any other Advance,
except that the rate of interest applicable thereto shall be the Prime
Option; provided, however, that the making of any Overadvance shall not
constitute a waiver of any Default or Event of Default then in
existence or arising therefrom.
(b) In the event the Agent obtains actual knowledge that the
aggregate amount of outstanding Revolving Credit Loans exceeds the
amount permitted by the preceding paragraph, regardless of the amount
of or reason for such excess, the Agent shall notify the Lenders as
soon as practicable (and prior to making any (or any further)
intentional Overadvances (except for and excluding amounts charged to
the applicable Loan Account for interest, fees or expenses) unless the
Agent determines that prior notice would result in imminent harm to the
Collateral or its value), and the Lenders thereupon
54
shall, together with the Agent, jointly determine the terms of
arrangements that shall be implemented with the Borrower intended to
reduce, within a reasonable time, the outstanding principal amount of
the Revolving Credit Loans of the Borrower to an amount permitted by
the preceding paragraph. In the event any Lender disagrees over the
terms of reduction and/or repayment of any Overadvance, the terms of
reduction and/or repayment thereof shall be implemented according to
the determination of the Required Lenders.
(c) Each Lender shall be obligated to settle with the Agent as
provided in SECTION 4.7 for the amount of such Lender's ratable share
of any Overextension reported to such Lender, any Overadvances made as
permitted under this SECTION 4.11 and any Overextension resulting from
the charging to the applicable Loan Account interest, fees or expenses.
(d) Any and all Overadvances made by the Agent (i) shall be
repaid upon the demand of the Agent (except as set forth in SECTION
4.11(A)(II) which amounts shall be repaid pursuant to a plan for
repayment as described in SECTION 4.11(A)(II) above), (ii) be secured
by the Collateral and (iii) constitute Revolving Credit Loans and
Secured Obligations hereunder.
SECTION 4.12 Funding Losses. The Borrower shall compensate
each Lender, upon written demand (which demand shall set forth in reasonable
detail the basis for requesting such amounts, and which demand shall, absent
demonstrable or manifest error, be final, conclusive and binding on all
parties), for all losses, expenses and liabilities which such Lender may
sustain:
(a) if the Borrower fails to fulfill on or before the date
specified in any Borrowing Notice given pursuant to SECTION 2.2 the
applicable conditions set forth in ARTICLE 5 and, as a result, a
requested LIBOR Advance is not made on the date specified in such
notice of borrowing, or if the Borrower fails to continue or convert a
LIBOR Borrowing after giving notice thereof pursuant to SECTION 2.2; or
(b) if any conversion, repayment or prepayment of a LIBOR
Advance occurs on a date which is not the last day of the LIBOR Period
applicable thereto.
Notwithstanding the foregoing, nothing in this SECTION 4.12 is intended to
require Borrower to further compensate Lenders for losses or other amounts that
Borrower is obligated to pay to Lenders pursuant to other provisions of this
Agreement.
SECTION 4.13 Waiver of Suretyship Defenses. The liability of
Borrower is direct and unconditional as to all of the Secured Obligations, and
may be enforced without requiring the Agent first to resort to any other right,
remedy or security. Borrower consents and agrees that the Agent shall be under
no obligation to marshal any assets in favor of Borrower or against or in
payment of any or all of the Secured Obligations. Borrower hereby expressly
waives promptness, diligence, notice of acceptance and any other notice with
respect to any of the Secured Obligations, the Revolving Credit Notes, this
Agreement or any other Loan Document, and any requirement that the Agent
protect, secure, marshal, perfect or insure any
55
lien or any property subject thereto (except to the extent required by
Applicable Law or this Agreement) or exhaust any right or take any action
against Borrower or any other Person or any collateral, including any rights
which may be conferred under applicable law permitting any Person after the
Secured Obligations become due to demand that the Agent first commence
proceedings against any other obligor to collect such amounts, the failure of
which by the Agent to commence such proceedings would discharge such Person from
its obligations.
SECTION 4.14 Change of Control.
Upon the occurrence of a Change of Control, Agent shall have the right
to take either of the following actions at its option: (i) Agent may impose a
$5,000,000 Availability Reserve against the Borrowing Base or (ii) Agent may,
within thirty (30) days of its receipt of actual knowledge of such Change of
Control, give notice to the Credit Parties that Agent and Lenders are
terminating this Agreement one hundred eighty (180) days from the date of such
notice. In the event that, upon the occurrence of a Change of Control, Agent
takes action in accordance with CLAUSES (I) or (II) above, then, if Credit
Parties fully pay in cash all of the Secured Obligations to Agent's satisfaction
within such one hundred eighty (180) day period or within one hundred eighty
(180) days after the institution of such $5,000,000 Availability Reserve, no
Early Termination Fee (if applicable) shall be required.
ARTICLE V.
CONDITIONS PRECEDENT
SECTION 5.1 Conditions Precedent to Revolving Credit Loans and
Letters of Credit. Notwithstanding any other provision of this Agreement, the
initial Advance will not be made, nor will any initial Letter of Credit be
issued or Letter of Credit Obligations be incurred, until the fulfillment of
each of the following conditions prior to or contemporaneously with the making
of the first to be made of such Advances or issuances (unless waived by the
Agent):
(a) Fees and Expenses. The Borrower shall have paid all of the
fees and all expenses payable on the Effective Date referred to herein,
including, without limitation, all out-of-pocket costs and expenses
incurred in connection with the preparation, negotiation, execution and
closing of this Agreement and the transactions contemplated herein.
(b) Closing Documents. The Agent shall have received each of
the following documents, all of which shall be satisfactory in form and
substance to the Agent and its counsel and to the Lenders:
(i) Loan Agreement. This Agreement, duly executed and
delivered by each Credit Party and each Lender;
(ii) Secretary's Certificate. A certificate of the
Secretary or Assistant Secretary of each Credit Party,
substantially in the form attached hereto as EXHIBIT G, which
shall include each Credit Party's (A) articles or certificate
of incorporation, together with any and all amendments
thereto, (B) bylaws, together
56
with any and all amendments thereto, (C) Board of Director
(and if required, stockholder) resolutions, approving and
authorizing the transactions to be consummated in connection
herewith and (D) the signature and incumbency certificates of
its officers executing any of the Loan Documents, all
certified as of the Effective Date as being true, accurate,
correct and complete;
(iii) Good Standing Certificates. A certificate
evidencing the good standing (including verification of tax
status) of each Credit Party in the jurisdiction of its
incorporation and each other foreign jurisdiction where it is
authorized to do business, dated as of a date not more than
thirty (30) days prior to the Effective Date and certified by
the applicable Secretary of State or other authorized
Governmental Authority;
(iv) Financial Statements; Projections. Copies of all
financial statements and Projections referred to in SECTION
6.1(L) and meeting the requirements thereof;
(v) Legal Opinions. A signed opinion of the Credit
Parties' outside counsel substantially in the form attached
hereto as EXHIBIT D;
(vi) Payoff Letters. A Payoff Letter executed by the
Existing Lender, in connection with the Borrower's existing
credit facility, in form and substance reasonably satisfactory
to the Agent, together with (A) UCC and other appropriate
termination statements, in form and substance reasonably
satisfactory to the Agent, releasing all liens of the Existing
Lender upon any of the assets and properties of each Credit
Party and (B) termination of all blocked account agreements,
control agreements and other similar agreements and
arrangements relating to the Collateral and other assets and
properties of each Credit Party in favor of the Existing
Lender or relating to the existing credit facility;
(vii) Security Interests and UCC Filings. (A)
Evidence satisfactory to Agent that Agent (for the benefit of
itself and Lenders) has a valid and perfected first priority
security interest in the Collateral (excluding Deposit
Accounts that are not Blocked Accounts; provided, however,
that the foregoing exclusion shall not affect the security
interest of the Agent in any proceeds of Collateral),
including, without limitation, (1) such documents duly
executed by Borrower (including UCC financing statements and
other applicable documents under the laws of any jurisdiction
with respect to the perfection of Liens) as Agent may request
in order to perfect its security interests in the Collateral
and (2) copies of UCC search reports listing all effective
financing statements that name Borrower as debtor, together
with copies of such financing statements, none of which shall
cover the Collateral, except for those relating to the
Existing Lender's credit facility (the security interest with
respect to which shall be terminated on the Effective Date
(and such financing statements shall be terminated shortly
thereafter)); (B) Evidence satisfactory to Agent, including
copies, of all UCC-1 and other financing statements filed in
favor of Borrower with respect to each location, if any, at
which Inventory may be consigned; and (C) fully executed
57
Control Agreements from (i) all issuers of uncertificated
securities and financial assets held by Borrower, (ii) all
securities intermediaries with respect to all Securities
Accounts and other Investment Accounts of Borrower and any
securities entitlements of Borrower, and (iii) all futures
commission agents and clearing houses with respect to all
commodities contracts and commodities accounts held by
Borrower;
(viii) Insurance. Certificates or binders of
insurance relating to each of the policies of insurance
covering any of the Collateral together with a loss payable
endorsement, substantially in the form of EXHIBIT K hereto,
and/or additional insured clauses or endorsements, which
comply with the terms of SECTION 8.6;
(ix) Officer's Certificate. A certificate of the
Chief Executive Officer, Chief Operating Officer or a
Financial Officer of the Borrower, substantially in the form
attached hereto as EXHIBIT F;
(x) Borrowing Base Certificate. Certified originals
of a Borrowing Base Certificate, substantially in the form
attached hereto as EXHIBIT C;
(xi) Cash Management Agreements. Evidence
satisfactory to the Agent of the existence, as of the
Effective Date, of a cash management system that complies with
SECTION 8.1(A) hereof and that is otherwise satisfactory to
the Agent, it is sole discretion, including, without
limitation, Blocked Account Agreements with respect to
Borrower's Deposit Accounts as determined by Agent in its
discretion, duly executed by the Borrower and the applicable
Clearing Banks;
(xii) Initial Borrowing Notice. An initial Borrowing
Notice from the Borrower to the Agent requesting the initial
Advance, substantially in the form of EXHIBIT B hereto, and
written notice from the Borrower to the Agent requesting the
initial Letters of Credit, each specifying the method of
disbursement;
(xiii) Schedules of Accounts and Inventory. A
Schedule of Accounts and a Schedule of Inventory prepared as
of the Effective Date or a recent prior date in accordance
with SECTIONS 8.10(A) AND (C);
(xiv) Ancillary Documents. Copies of each of the
other Loan Documents duly executed by the parties thereto,
together with evidence satisfactory to the Agent of the due
authorization and binding effect of each such Loan Document on
such party;
(xv) Waivers and Consents. Subject to SECTION 8.12,
Waivers and Consents duly executed on behalf of (y) each
landlord of Real Estate and any other real property on which
any Collateral is located, and (z) each bailee (with respect
to any warehouse, processor, converter or other storage
facility) where any Collateral is located;
58
(xvi) Inventory Appraisal. An appraisal of all
Inventory, including the Eligible Inventory, prepared at the
Borrower's cost and expense by Great American Group,
establishing an appraisal value for Inventory that indicates
an Appraised GOB Value of such Inventory at levels
satisfactory to the Agent;
(xvii) General. Such other documents and instruments
as the Agent or any Lender may reasonably request.
(c) Notes. Each Lender shall have received a Revolving Credit
Note duly executed and delivered by Borrower, in the form attached
hereto as EXHIBIT A, and complying with the terms of SECTION 2.4.
(d) Other Security Documents. The Agent shall have received
each other Security Document, all in form and substance satisfactory to
the Agent, together with all share certificates, securities,
instruments, agreements and other documents required to be delivered
and/or relating thereto, duly executed by the Credit Parties and such
other parties thereto.
(e) Excess Availability. The Agent shall be provided with
evidence satisfactory to it, confirmed by a certificate of a Financial
Officer of the Borrower, that as of the Effective Date, after giving
effect to the initial Advance and the issuance of any Letters of Credit
on the Effective Date, Excess Availability is not less than $30,000,000
and that Borrower's Indebtedness and trade payables are being paid in a
manner consistent with its usual business practices.
(f) No Injunctions, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any court, governmental agency or legislative body to
enjoin, restrain or prohibit, or to obtain damages in respect of, or
which is related to or arises out of this Agreement or the consummation
of the transactions contemplated hereby or which, in the Agent's
reasonable discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement.
(g) Material Adverse Change. As of the Effective Date, and
except as disclosed in the unaudited financial statements described in
SECTION 6.1(L), there shall not have occurred any change which is
materially adverse, in the Lenders' reasonable credit judgment, to the
assets, liabilities, businesses, operations, condition (financial or
otherwise) or prospects of the Credit Parties taken as a whole from
those presented by the unaudited financial statements described in
SECTION 6.1(L), it being understood that any material adverse change in
the projections supplied by the Credit Parties may, in their
commercially reasonable discretion, be construed by the Agent and the
Lenders as a material adverse change.
(h) Release of Security Interests. The Agent shall have
received evidence satisfactory to it of the release and termination of,
or with respect to the Existing Lender a commitment to release and
terminate upon payment in full of all amounts due under the existing
credit facility, all Liens other than Permitted Liens.
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(i) Vendor Line of Credit. The Agent shall have received each
of the Vendor Line of Credit Documents, in form and substance
satisfactory to the Agent, duly executed by the Borrower.
(j) Due Diligence. The Agent shall have completed, with
results satisfactory to it in its sole discretion, its legal, credit
and business due diligence in respect of Borrower.
SECTION 5.2 All Advances; Letters of Credit. At the time of
making of each Advance, including the initial Advance and all subsequent
Advances, and the issuance of each Letter of Credit:
(a) all of the representations and warranties made or deemed
to be made under this Agreement shall be true and correct in all
material respects at such time both with and without giving effect to
the Advance to be made at such time and the application of the proceeds
thereof, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and correct on and
as of such earlier date);
(b) no event shall have occurred and be continuing, or would
result from the making of any Advance or the incurrence of any Letter
of Credit Obligation, as the case may be, which constitutes a Default
or an Event of Default; and
(c) the corporate actions of the Credit Parties, including
shareholder approval if necessary, to authorize the execution, delivery
and performance of this Agreement, the other Loan Documents and the
borrowings hereunder shall remain in full force and effect and the
incumbency of officers shall be as stated in the certificates of
incumbency delivered pursuant to SECTION 5.1(B)(II) or as subsequently
modified and reflected in a certificate of incumbency delivered to the
Agent.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES
SECTION 6.1 Representations and Warranties. Borrower and/or
each Credit Party, as applicable, represents and warrants to the Agent and to
the Lenders as follows:
(a) Organization; Power; Qualification; FEIN. SCHEDULE 6.1(A)
lists for each Credit Party as of the Effective Date (i) the exact name
of the entity as it appears in the official filings relating thereto,
the type of entity, and the jurisdiction in which each Credit Party is
incorporated, (ii) the jurisdictions in which they are qualified to do
business as foreign entities, (iii) the organization or registration
number of each Credit Party as fixed by their respective jurisdictions
of incorporation and (iv) the federal employer identification number of
such Credit Party. Each Credit Party is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, has the legal power and authority to own
its properties and to carry on its business as now being and hereafter
proposed to be conducted and is duly
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qualified and authorized to do business in each jurisdiction in which
failure to be so qualified and authorized would have a Materially
Adverse Effect.
(b) Subsidiaries and Ownership of each Credit Party. Subject
to SECTION 9.1 of this Agreement, each Credit Party's Subsidiaries, and
its ownership interests therein, are set forth on SCHEDULE 6.1(B).
Except as set forth on SCHEDULE 6.1(B), each Credit Party owns 100% of
all such Subsidiaries. The outstanding stock of each Credit Party and
each of its Subsidiaries has been duly and validly issued and is fully
paid and non-assessable by each Credit Party and such Subsidiary and
the number and owners of such shares of capital stock of each Credit
Party (other than Parent) are set forth on SCHEDULE 6.1(B). Except as
set forth on SCHEDULE 6.1(B), there are no outstanding rights to
purchase, options, warrants or similar rights or agreements pursuant to
which any Credit Party (other than Parent) may be required to issue,
sell, repurchase or redeem any of its stock or other equity securities
or (including Parent) any stock or other equity securities of its
Subsidiaries. No Credit Party has any Subsidiaries that are not also
Credit Parties.
(c) Authorization of Agreement, Notes, Loan Documents and
Borrowing. Each Credit Party has the right and power and has taken all
necessary action to authorize the execution, delivery and performance
of each of the Loan Documents to which it is a party in accordance with
their respective terms. Each of the Loan Documents to which it is a
party have been duly executed and delivered by the duly authorized
officers of each Credit Party, and each is, or when executed and
delivered in accordance with this Agreement will be, a legal, valid and
binding obligation of such Credit Party, enforceable in accordance with
its terms.
(d) Compliance of Agreement, Notes, Loan Documents and
Borrowing with Laws, Etc. The execution, delivery and performance of
each of the Loan Documents to which each Credit Party is a party in
accordance with its respective terms and the borrowings hereunder do
not and will not, by the passage of time, the giving of notice or
otherwise,
(i) require any Governmental Approval (other than
such as have been duly obtained, made or given, and are in
full force and effect) or violate any applicable law relating
to such Credit Party,
(ii) conflict with, result in a breach of or
constitute a default under (A) the articles or certificate of
incorporation or by-laws of such Credit Party, (B) any
indenture, material agreement or other instrument to which
such Credit Party is a party or by which any of its property
may be bound, except where such conflict, breach or default
with respect to such indenture, material agreement or other
instrument would not reasonably be expected to have a
Materially Adverse Effect or (C) any Governmental Approval
relating to such Credit Party, or,
(iii) result in or require the creation or imposition
of any Lien upon or with respect to any property now owned or
hereafter acquired by such Credit Party other than the
Security Interest.
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(e) Business. As of the Effective Date, each Credit
Party is engaged principally in the business described on
SCHEDULE 6.1(E).
(f) Compliance with Law; Governmental Approvals.
(i) Except as set forth in SCHEDULE 6.1(F),
each Credit Party
(A) has all material Governmental
Approvals, including permits relating to
federal, state and local Environmental Laws,
ordinances and regulations, required by any
Applicable Law for it to conduct its
business, each of which is in full force and
effect, is final and not subject to review
on appeal and is not the subject of any
pending or, to the knowledge of such Credit
Party, threatened attack by direct or
collateral proceeding, and
(B) is in compliance with each
material Governmental Approval applicable to
it and in compliance with all other material
Applicable Laws relating to it, including,
without being limited to, all material
Environmental Laws and all material
occupational health and safety laws
applicable to such Credit Party or its
properties,
except in the case of CLAUSES (A) and (B) above, for instances of noncompliance
which would not have a Materially Adverse Effect.
(ii) Without limiting the generality of the above,
except with respect to matters which could not reasonably be
expected to have a Materially Adverse Effect:
(A) the operations of such Credit Party
comply in all material respects with all applicable
environmental, health and safety requirements of
Applicable Law;
(B) such Credit Party has obtained all
environmental, health and safety permits necessary
for its operation and all permits are in good
standing and such Credit Party is in compliance in
all material respects with all terms and conditions
of such permits;
(C) neither such Credit Party nor any of its
present or past property or operations are subject to
any order from or agreement with any public authority
or private party applicable to such Credit Party or
its present or past property or operations and
respecting (x) any environmental, health or safety
requirements of Applicable Law, (y) any Remedial
Action, or (z) any liabilities and costs arising from
the Release or threatened Release of a Contaminant
into the environment;
(D) none of the operations of such Credit
Party is subject to any judicial or administrative
proceeding alleging a violation of any environmental,
health or safety requirement of Applicable Law;
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(E) none of the present nor past operations
of such Credit Party is the subject of any
investigation by any public authority evaluating
whether any Remedial Action is needed to respond to a
Release or threatened Release of a Contaminant into
the environment;
(F) such Credit Party has not filed any
notice under any requirement of Applicable Law
indicating past or present treatment, storage or
disposal of a hazardous waste, as that term is
defined under 40 CFR Part 261 or any state
equivalent;
(G) such Credit Party has not filed any
notice under any requirement of Applicable Law
reporting a Release of a Contaminant into the
environment;
(H) except in compliance in all material
respects with applicable Environmental Laws, during
the course of such Credit Party's ownership of or
operations on the Real Estate there have been, to
such Credit Party's knowledge, no (1) generation,
treatment, recycling, storage or disposal of
hazardous waste, as that term is defined under 40 CFR
Part 261 or any state equivalent, (2) use of
underground storage tanks or surface impoundments,
(3) use of asbestos-containing materials or (4) use
of polychlorinated biphenyls (PCB) used in hydraulic
oils, electrical transformers or other equipment on
the Real Estate;
(I) such Credit Party has not entered into
any negotiations or agreements with any Person
(including, without limitation, any prior owner of
any of the Real Estate or other property of such
Credit Party) relating to any Remedial Action or
environmentally-related claim;
(J) such Credit Party has not received any
notice or claim to the effect that it is or may be
liable to any Person as a result of the Release or
threatened Release of a Contaminant into the
environment;
(K) such Credit Party does not, to its
knowledge, have any material contingent liability in
connection with any Release or threatened Release of
any Contaminant into the environment;
(L) no Environmental Lien has attached to
any of the owned Real Estate (if any) or other
personal property of such Credit Party, or, to the
knowledge of any Credit Party, any of the leased Real
Estate;
(M) the presence and condition of all
asbestos-containing material which is to the
knowledge of any Credit Party, on or part of any of
the Real Estate (excluding any raw materials used in
the manufacture of products or products themselves)
do not violate in any material respect any currently
applicable requirement of Applicable Law;
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(N) such Credit Party does not manufacture,
distribute or sell, and has not, in the past twenty
(20) years, manufactured, distributed or sold,
products which contain asbestos-containing material;
and
(O) such Credit Party hereby acknowledges
and agrees that Agent (i) is not now, and has not
ever been, in control of any of the Real Estate or
any of such Credit Party's affairs, and (ii) does not
have the capacity through the provisions of the Loan
Documents or otherwise to influence such Credit
Party's conduct with respect to the ownership,
operation or management of any of its Real Estate or
compliance with Environmental Laws or Environmental
Permits.
(iii) SCHEDULE 6.1(F) sets forth, as of the Effective
Date, each notice received by any Credit Party from a
Governmental Authority or pursuant to any legal proceeding
during the last five (5) years of a material violation of any
Environmental Laws and occupational health and safety laws
applicable to such Credit Party or any of their respective
properties.
(g) Real Estate; Leases. SCHEDULE 6.1(G) sets forth, as of the
Effective Date, a correct and complete list of all Real Estate leases
and subleases (and leases and subleases of personal property each with
a value (determined by aggregating all payments to be made during the
term of such lease) of $100,000 or more) held by the Credit Parties as
lessee or sublessee, and all Real Estate leases and subleases (and
leases and subleases of personal property each with a value (determined
by aggregating all payments to be made during the term of such lease)
of $100,000 or more) held by the Credit Parties as lessor or sublessor.
As of the Effective Date, each of such leases and subleases is valid
and enforceable in accordance with its terms and is in full force and
effect, and no material default by any Credit Party to any such lease
or sublease exists. As of the Effective Date, the Credit Parties have
valid leasehold interests in all Real Estate listed on SCHEDULE 6.1(G)
and the Credit Parties have good, indefeasible, and merchantable title
to all of their other property reflected on the Financial Statements
delivered to the Agent and the Lenders, except as disposed of in the
ordinary course of business since the date thereof, free of all Liens
except the Security Interest and Permitted Liens. To the best knowledge
of the Credit Parties, except as listed on SCHEDULE 6.1(G), there are
no existing reports from any environmental engineering firms or any
other consultants with respect to environmental investigations and
audits of any Real Estate. As of the Effective Date, no Credit Party
owns any Real Estate in fee simple.
(h) Liens. Except as set forth in SCHEDULE 6.1(H), none of the
properties and assets owned by any Credit Party, including, without
limitation, the Collateral, is subject to any Lien, except the Security
Interest and Permitted Liens. Other than the Financing Statements, no
financing statement under the UCC of any state which names any Credit
Party as debtor and which has not been terminated or is being
terminated in connection with the closing under the Loan Documents has
been filed in any state or other jurisdiction, and no Credit Party has
signed any such financing statement or any security agreement
authorizing any secured party thereunder to file any such financing
statement, except to perfect the Security Interest and Permitted Liens.
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(i) Indebtedness and Guaranties. Set forth on SCHEDULE 6.1(I)
is a complete and correct listing as of the Effective Date of all of
each Credit Party's (i) Indebtedness for Money Borrowed and (ii)
Guaranties. Each Credit Party has performed and is in compliance in all
material respects with all of the terms and provisions of such
Indebtedness and Guaranties and all instruments and agreements relating
thereto and no event of default or, to their knowledge, event or
condition which, with notice or lapse of time or both, would constitute
such a default or event of default, exists with respect to such
Indebtedness or Guaranties.
(j) Litigation. Except as set forth on SCHEDULE 6.1(J), as of
the Effective Date, there are no actions, suits or proceedings pending
(nor, to the knowledge of any Credit Party, are there any actions,
suits or proceedings threatened) against any Credit Party or any of
their respective properties, or which challenge any Credit Party's
right or power to enter into or perform any of its obligations under
the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, in
any court or before any arbitrator of any kind or before or by any
governmental body, which, individually or in the aggregate, could
reasonably be expected to have a Materially Adverse Effect.
(k) Tax Returns and Payments. Except as set forth on SCHEDULE
6.1(K), as of the Effective Date, all United States federal, state and
local as well as foreign national, provincial and local and other tax
returns of each Credit Party required by Applicable Law to be filed
(after taking into account all applicable extensions) have been duly
filed, and all United States federal, state and local and foreign
national, provincial and local and other taxes, assessments and other
governmental charges or levies upon such Credit Party and such Credit
Party's property, income, profits and assets which are due and payable
have been paid, except any such nonpayment which is at the time
permitted under SECTION 9.6. The charges, accruals and reserves on the
books of each Credit Party in respect of United States federal, state
and local and foreign national, provincial and local taxes for all
fiscal years and portions thereof during the last three (3) Fiscal
Years of such Credit Party are in the judgment of such Credit Party
adequate, and such Credit Party knows of no reason to anticipate any
additional assessments for any of such years which, singly or in the
aggregate, could reasonably be expected to have a Materially Adverse
Effect. Proper and accurate amounts have been withheld by each Credit
Party from its respective employees during its last three (3) Fiscal
Years in full compliance with all applicable federal, state, local and
foreign law and such withholdings have been timely paid to the
respective Governmental Authorities, in each case except where the
failure to do so would not have a Materially Adverse Effect. SCHEDULE
6.1(K) sets forth as of the Effective Date those taxable years for
which any Credit Party's tax returns are currently being audited by the
IRS or any other applicable Governmental Authority and any assessments
or threatened assessments in connection with such audit, or otherwise
currently outstanding. Except as described on SCHEDULE 6.1(K), as of
the Effective Date, no Credit Party has executed or filed with the IRS
or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment
or collection of any Charges. Except as disclosed in SCHEDULE 6.1(K)
hereto, as of the Effective Date, no Credit Party or any of its
respective predecessors are liable for any Charges: (a) under any tax
sharing agreement or similar agreement or (b) to
65
any Credit Party's knowledge, as a transferee. As of the Effective
Date, no Credit Party has agreed or been requested to make any
adjustment under Code Section 481(a), by reason of a change in
accounting method or otherwise, which would have a Materially Adverse
Effect.
(l) Financial Statements.
(i) The Credit Parties have furnished to the Agent
and the Lenders a copy of (A) Parent's Form 10-K containing
the Consolidated Balance Sheet as at February 2, 2003, and the
related statements of income, cash flow and retained earnings
for the Fiscal Year then ended, and (B) Parent's Form 10-Q as
at August 2, 2003, and the related unaudited statement of
income for the six (6) Fiscal Months then ended. Such
financial statements are prepared in accordance with GAAP and
present fairly and in all material respects the consolidated
financial position of the Credit Parties, as at the dates
thereof and the results of operations thereof, for the periods
then ended on a consolidated basis (except with respect to
interim financial statements, for the omission of footnotes
and normal year-end adjustments). Except as disclosed or
reflected in such financial statements, no Credit Party has
any material liabilities, contingent or otherwise, and there
were no material unrealized or anticipated losses of such
Credit Party required to be accrued, reserved for, or
disclosed in the foregoing financial statements.
(ii) The Parent has furnished to the Agent and the
Lenders copies of the projections, dated November 20, 2003,
for the period through and including January 31, 2005 (the
"Projections"). The Projections have been prepared by the
Parent in light of the past operations of the business of the
Credit Parties and were, at the time furnished, (i) believed
to be reasonable, and (ii) prepared on a reasonable and good
faith basis based on assumptions believed to be reasonable,
using the best information then available, concerning the most
probable course of the business of the Credit Parties.
(m) Adverse Change. Since the date of the financial statements
described in CLAUSE (I) of SECTION 6.1(L) and other than as disclosed
in the unaudited financial statements described in CLAUSE (II) of
SECTION 6.1(L), as of the Effective Date (i) no change in the business,
assets, liabilities, condition (financial or otherwise), results of
operations or business prospects of any Credit Party has occurred that
has had, or is reasonably likely to have, a Materially Adverse Effect
and (ii) no event has occurred or failed to occur which has had, or is
reasonably likely to have, a Materially Adverse Effect.
(n) Benefit Plans; ERISA. No Credit Party or any Related
Company maintains or contributes to any Benefit Plan other than those
listed on SCHEDULE 6.1(N). Except as set forth on SCHEDULE 6.1(N), each
Benefit Plan has been in substantial compliance with ERISA and the Code
to the extent that ERISA and/or the Code is applicable thereto, except,
to the extent that any Benefit Plan is not in such compliance with
ERISA and the Code, such failure to comply is not reasonably expected
to have a Materially Adverse Effect. No Credit Party or any Related
Company has received any
66
notice asserting that a Benefit Plan is not in compliance with ERISA or
the Code to the extent that any such noncompliance could reasonably be
expected to have a Materially Adverse Effect. No material liability to
the PBGC or to a Multiemployer Plan has been incurred by any Credit
Party or any Related Company for which there is any current or expected
liability or which has not otherwise been satisfied or discharged under
applicable law. No material liability to the PBGC or to a Multiemployer
Plan is expected by any Credit Party to be incurred by such Credit
Party or any Related Company. No Credit Party or any Related Company
has failed to make any contribution or pay any amount due as required
by either Section 412 of the Code or Section 302 of ERISA for which
there is any current or expected liability or which has not otherwise
been satisfied or discharged under applicable law. No Credit Party or
any Related Company has failed to make any contribution or pay any
amount due as required by the terms of any such Benefit Plan which
could reasonably be expected to have a Materially Adverse Effect on any
Credit Party. No Credit Party or any Related Company has engaged in a
prohibited transaction, as defined in Section 4975 of the Code, in
connection with any Benefit Plan, which would subject such Credit Party
to a tax that would have a Materially Adverse Effect. Except as set
forth in SCHEDULE 6.1(N): (i) no Title IV Plan has any Unfunded Vested
Accrued Benefits. (ii) no ERISA Event or event described in Section
4062(e) of ERISA with respect to any Title IV Plan has occurred in the
last six years before the Closing Date or is reasonably expected to
occur; (iii) there are no pending, or to the knowledge of any Credit
Party, threatened claims (other than claims for benefits in the normal
course), sanctions, actions or lawsuits, asserted or instituted against
any Benefit Plan or any Person as fiduciary or sponsor of any Benefit
Plan which could reasonably be expected to have a Materially Adverse
Effect; (iv) no Credit Party or any Related Company has incurred or
reasonably expects to incur any liability as a result of a complete or
partial withdrawal from a Multiemployer Plan; (v) within the last five
years, no Title IV Plan with Unfunded Vested Accrued Benefits has been
transferred outside of the "controlled group" (within the meaning of
Section 4001(a)(14) of ERISA) of such Credit Party or any Related
Company; and (vi) no liability under any Title IV Plan has been
satisfied with the purchase of a contract from an insurance company
that is not rated AAA by the Standard & Poor's Corporation or the
equivalent by another nationally recognized rating agency.
(o) Absence of Defaults. No Credit Party is in default under
its articles or certificate of incorporation or, under its by-laws and,
as of the Effective Date, no event has occurred, which has not been
remedied, cured or waived, which constitutes a Default or an Event of
Default, or which constitutes, or which with the passage of time or
giving of notice or both would constitute, an event of default by any
Credit Party under any material agreement (other than this Agreement)
or judgment, decree or order to which any Credit Party is a party or by
which any Credit Party or any Credit Party's properties may be bound or
which would require any Credit Party to make any payment under any of
the foregoing prior to the scheduled maturity date therefor.
(p) Accuracy and Completeness of Information. All Schedules
hereto and all material written information, reports and other papers
and data produced by or on behalf of each Credit Party and furnished to
the Agent or any Lender were, at the time the same were so furnished,
complete and correct in all material respects, to the extent necessary
to
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give the recipient a true and accurate knowledge of the subject matter.
No document furnished or written statement made to the Agent or any
Lender by any Credit Party in connection with the negotiation,
preparation or execution of this Agreement or any of the Loan Documents
contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make
the statements contained therein not misleading.
(q) Solvency. In each case after giving effect to the
Indebtedness represented by the Revolving Credit Loans outstanding to
Borrower and to be incurred by Borrower pursuant to the transactions
contemplated by this Agreement, Borrower is solvent, having assets of a
fair salable value which exceeds the amount required to pay its debts
as they become absolute and matured (including contingent,
subordinated, unmatured and unliquidated liabilities) and Borrower is
able to and anticipates that it will be able to meet its debts as they
mature and has adequate capital to conduct the business in which it is
or proposes to be engaged.
(r) Inventory. All Inventory included in any Borrowing Base
Certificate delivered to the Agent pursuant to SECTION 8.10(D) meets
the criteria enumerated in the definition of Eligible Inventory, except
as disclosed in such Borrowing Base Certificate or in a subsequent
Borrowing Base Certificate (with respect to a change in Cost value of
$500,000 or more) or as otherwise specifically and promptly disclosed
in writing to the Agent. All Eligible Inventory is in good condition,
meets all material standards imposed by any governmental agency or
department or division thereof having regulatory authority over such
goods, their use or sale, and is currently either usable or saleable in
the normal course of Borrower's business, except to the extent reserved
against in the financial statements delivered pursuant to SECTION
6.1(L) and ARTICLE 10 or as disclosed on a Schedule of Inventory
delivered to the Agent pursuant to SECTION 8.10(C). The Agent may rely
on all statements, warranties or representations made in any Schedule
of Inventory in determining which items of Inventory listed in such
Schedule are to be deemed Eligible Inventory. Set forth on SCHEDULE
6.1(R) as of the Effective Date is the (i) address (including street,
city, county and state) of each facility at which Inventory is located,
(ii) the approximate Cost value of the Inventory located at each such
facility, (iii) if the facility is leased or is a third party warehouse
or processor location, the name of the landlord or such third party
warehouseman or processor and (iv) if the Inventory is consigned, all
outstanding consignment and memo contract agreements to which Borrower
is a party (provided that Credit Parties shall provide Agent with
prompt written notice of any change in (A) the approximate Cost value
of $500,000 or more of the Inventory located at any facility listed on
SCHEDULE 6.1(R) or (B) any information on SCHEDULE 6.1(R) with respect
to CLAUSES (I), (III) and (IV) hereof). All Inventory is located on the
premises set forth on SCHEDULE 6.1(R) or is in transit to one of such
locations, except as otherwise promptly disclosed in writing to the
Agent; Borrower has not had Inventory located at premises other than
those set forth on SCHEDULE 6.1(R) at any time during the four months
immediately preceding the Effective Date. No Inventory is subject to
any Liens other than the Security Interest and Permitted Liens
described in CLAUSES (A) and (E) of the definition thereof.
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(s) Accounts. Each Account reflected in the computations
included in any Borrowing Base Certificate meets the criteria
enumerated in the definition "Eligible Credit Card Accounts," except as
disclosed in such Borrowing Base Certificate or as disclosed in a
timely manner in a subsequent Borrowing Base Certificate or otherwise
in writing to the Agent.
(t) Chief Executive Office. The chief executive office and
principal place of business of each Credit Party and the books and
records relating to the Collateral are located at the address or
addresses set forth on SCHEDULE 6.1(T). Except as set forth on SCHEDULE
6.1(T) no Credit Party has maintained its chief executive office or
books and records relating to the Collateral at any other address at
any time during the five years immediately preceding the Effective
Date.
(u) Transfer Pricing Between Affiliates. Each Credit Party is
in compliance with and utilizes the arms-length standard for course of
dealing transactions applicable to Affiliates as contemplated in
Section 482 of the Code, as amended and the regulations promulgated
thereunder, such that no material amount of taxes are due and owing and
unpaid as a result of any such transaction or series of transactions.
(v) Corporate and Fictitious Names. Except as otherwise
disclosed on SCHEDULE 6.1(V), during the five-year period preceding the
Effective Date, no Credit Party or any predecessor thereof has been
known as or used any corporate or fictitious name other than the
corporate name of each Credit Party on the Effective Date.
(w) Use of Proceeds; Federal Reserve Regulations. The proceeds
of the Loans are to be used solely to repay in full the Parent Notes
and all of the obligations of the Borrower to the Existing Lender, for
Borrower's working capital purposes, Borrower's capital expenditures,
and Borrower's other lawful general corporate purposes not prohibited
hereunder or under any of the other Loan Documents. No Credit Party is
engaged and none will engage, principally or as one of its important
activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" (as each of the quoted
terms is defined or used in Regulation U of the Board of Governors of
the Federal Reserve System). No Credit Party owns any Margin Stock and
no part of the proceeds of any of the Advances will be used for so
purchasing or carrying margin stock or, in any event, for any purpose
which violates, or which would be inconsistent with, the provisions of
Regulation T, U or X of such Board of Governors. If requested by the
Agent or any Lender, each Credit Party will furnish to the Agent and
the Lenders a statement or statements in conformity with the
requirements of said Regulation T, U or X to the foregoing effect.
(x) Government Regulation. No Credit Party is an "investment
company" or a company "controlled" by an "investment company" (as each
of the quoted terms is defined or used in the Investment Company Act of
1940, as amended). No Credit Party is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, or
any other federal or state statute that restricts or limits its ability
to incur Indebtedness or to perform its obligations hereunder. Assuming
the accuracy of the representations set forth in SECTION 13.2
hereunder, the making of the Revolving Credit
69
Loans and the Advances by Lenders to Borrower, the incurrence of the
Letter of Credit Obligations on behalf of Borrower, the application of
the proceeds thereof and repayment thereof and the consummation of the
related transactions will not cause any Credit Party to violate any
provision of any such statute or any rule, regulation or order issued
by the Securities and Exchange Commission.
(y) Employee Relations. As of the Effective Date, each Credit
Party has adequate relations with its employees and is not party to any
collective bargaining agreement nor has any labor union been recognized
as the representative of any Credit Party's employees, and no Credit
Party is aware of any pending, threatened or contemplated strikes, work
stoppage or other material labor disputes involving such Credit Party's
employees.
(z) Intellectual Property. SCHEDULE 6.1(Z) sets forth, as of
the Effective Date, a correct and complete list of all Intellectual
Property owned by each Credit Party or which any Credit Party has the
right to use, in each case in respect of which a registration or filing
has been made with any Governmental Authority in the United States of
America. Each Credit Party owns or possesses the right to use all
Intellectual Property required to conduct its business as now and
presently planned to be conducted. As of the Effective Date, none of
the Intellectual Property used by the Credit Parties is subject to any
licensing agreement or similar arrangement except as set forth on
SCHEDULE 6.1(Z). To the best of each Credit Party's knowledge, none of
the Intellectual Property listed on SCHEDULE 6.1(Z) infringes on or
conflicts with any other Person's property, and no other Person's
property infringes on or conflicts with such Intellectual Property.
(aa) Trade Names. All trade names under which Borrower sells
Inventory, creates Accounts, to which instruments in payment of
Accounts are made payable, or under which it owns or leases the other
Collateral (collectively, "Trade Names") as of the Effective Date are
listed on SCHEDULE 6.1(AA). The Trade Names are merely trade names or
divisions of Borrower. All Inventory and other Collateral held under
the Trade Names is owned solely and exclusively by Borrower, and no
other Person has any Lien or other interest in any of the Inventory or
other Collateral, including, without limitation, any sales or proceeds
thereof, whether such sales of Inventory are made in the name of
Borrower or in the name of any of the Trade Names except for Permitted
Liens and Liens under the Loan Documents.
(bb) Brokers. Except as disclosed on SCHEDULE 6.1 (BB), no
broker or finder acting on behalf of any Credit Party brought about the
obtaining, making or closing of the Revolving Credit Facility or any
Advances hereunder or the related transactions, and no Credit Party has
any obligation to any Person in respect of any finder's or brokerage
fees in connection herewith.
(cc) Insurance. SCHEDULE 6.1(CC) lists all insurance policies
of any nature maintained, as of the Effective Date, for current
occurrences by each Credit Party, as well as a summary of the material
terms of each such policy.
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(dd) Deposit and Disbursement Accounts. SCHEDULE 6.1(DD) lists
all banks and other financial institutions at which any Credit Party
maintains deposits and/or other accounts as of the Effective Date,
including any Disbursement Accounts, and such Schedule correctly
identifies the name, address and telephone number of each depository,
the name in which the account is held, a description of the purpose of
the account, and the complete account number.
(ee) Government Contracts. As of the Effective Date, no Credit
Party is a party to any contract or agreement with the federal
government or any state or municipal government and the Accounts are
not subject to the Federal Assignment of Claims Act, as amended (31
U.S.C. Section 3727) or any similar state or local law.
(ff) Trade Relations. As of the Effective Date, there exists
no actual or, to the knowledge of Borrower, threatened termination or
cancellation of, or any material adverse modification or change in the
business relationship of Borrower with any supplier material to its
operations.
(gg) Agreements and Other Documents.
(i) As of the Effective Date, each Credit Party has
made available to the Agent or its counsel, on behalf of
Lenders, for their review, accurate and complete copies (or
summaries) of all of the following agreements or documents to
which it is subject and each of which are listed on SCHEDULE
6.1(gg): supply agreements and purchase agreements not
terminable by the applicable Credit Party within sixty (60)
days following written notice issued by such Credit Party and
involving transactions in excess of $500,000 per annum; and
any lease of equipment or Real Estate having a remaining term
of one year or longer and requiring aggregate rental and other
payments in excess of $250,000 per annum; and
(ii) as of the Effective Date, each Credit Party has
made available to the Agent or its counsel, on behalf of
Lenders, accurate and complete copies of (A) licenses and
permits held by such Credit Party, the absence of which could
be reasonably likely to have a Materially Adverse Effect; (B)
instruments or documents evidencing Indebtedness of such
Credit Party and any security interest granted by such Credit
Party with respect thereto; and (C) instruments and agreements
evidencing the issuance of any equity securities, warrants,
rights or options to purchase equity securities of such Credit
Party (other than Parent).
(hh) Collateral. The exclusion from Collateral of the Real
Estate leases and certain general intangibles (collectively, the
"Excluded Assets") described in the last sentence of the definition of
Collateral does not, and will not, materially and adversely affect the
ability of Agent and Lenders to exercise their remedies under this
Agreement and the other Loan Documents with respect to any material
portion of the Collateral or realize upon such material portion of the
Collateral. The fair market value of the Excluded Assets (other than
the Real Estate leases) is not, and will not be, material to the
business of the Credit Parties.
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(ii) Full Disclosure. None of the representations or
warranties made by any Credit Party in the Loan Documents as of the
date such representations and warranties are made or deemed made, and
none of the statements contained in any exhibit, report, statement or
certificate furnished by or on behalf of any Credit Party in connection
with the Loan Documents (including the materials delivered by or on
behalf of the Credit Parties to the Lenders prior to the Closing Date),
contains any untrue statement of a material fact or omits any material
fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made,
not misleading as of the time when made or delivered.
SECTION 6.2 Survival of Representation and Warranties, Etc.
All (a) representations and warranties set forth in this ARTICLE 6, (b)
statements contained in any certificate (including any certificate with respect
to financial statements) or other agreements or documents delivered on or after
the Effective Date by or on behalf of any Credit Party pursuant to or in
connection with this Agreement or any of the Loan Documents and (c)
representations, warranties, statements or other information (excluding
financial statements) made or provided by or on behalf of any Credit Party in or
in connection with any amendment to this Agreement or any of the Loan Documents
shall constitute representations and warranties made under this Agreement. All
representations and warranties made under this Agreement shall be made or deemed
to be made at and as of the Effective Date and at and as of the date of each
Advance, except that representations and warranties which, by their terms are
applicable only to one such date shall be deemed to be made only at and as of
such date. All representations and warranties made or deemed to be made under
this Agreement shall survive and not be waived by the execution and delivery of
this Agreement, any investigation made by or on behalf of the Lenders or any
borrowing hereunder.
ARTICLE VII.
SECURITY INTEREST
SECTION 7.1 Security Interest.
(a) To secure the payment, observance and performance of the
Secured Obligations, Borrower hereby mortgages, pledges and assigns all
of the Collateral to the Agent, for the benefit of itself as Agent and
the Lenders, and grants to the Agent, for the benefit of itself as
Agent and the Lenders, a continuing first priority security interest
in, and a continuing Lien upon, the Collateral, in each case as
collateral security for the Secured Obligations.
(b) As additional security for all of the Secured Obligations,
Borrower grants to the Agent, for the benefit of itself and the
Lenders, a security interest in, and assigns to the Agent, for the
benefit of itself as Agent and the Lenders, all of its right, title and
interest in and to, any deposits or other sums at any time credited by
or due from each Lender to Borrower with the same rights therein as if
the deposits or other sums were credited by or due from such Lender.
Borrower hereby authorizes each Lender to pay or deliver to the Agent,
for the account of the Lenders, without any necessity on the Agent's or
any Lender's part to resort to other security or sources of
reimbursement for the Secured Obligations, at any time during the
continuation of any Event of Default and
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without further notice to Borrower (such notice being expressly
waived), any of the aforesaid deposits (general or special, time or
demand, provisional or final) or other sums for application to any
Secured Obligation, irrespective of whether any demand has been made or
whether such Secured Obligation is mature, and the rights given the
Agent and the Lenders hereunder are cumulative with such Person's other
rights and remedies, including other rights of set-off. The Agent will
promptly notify the Borrower of its receipt of any such funds for
application to the Secured Obligations, but failure to do so will not
affect the validity or enforceability thereof. The Agent may give
notice of the above grant of a security interest in and assignment of
the aforesaid deposits and other sums, and authorization, to, and make
any suitable arrangements with, any Lender for effectuation thereof,
and Borrower hereby irrevocably appoints Agent as its attorney to
collect any and all such deposits or other sums to the extent any such
payment is not made to the Agent or any Lender by such Lender in
accordance with the terms of this SECTION 7.1(B).
SECTION 7.2 Continued Priority of Security Interest.
(a) The Security Interest granted by Borrower shall at all
times be valid, perfected and enforceable against Borrower and all
third parties in accordance with the terms of this Agreement, as
security for the Secured Obligations, and the Collateral shall not at
any time be subject to any Liens that are prior to, on a parity with or
junior to the Security Interest, other than Permitted Liens.
(b) Borrower shall, at its cost and expense, take all action
that may be necessary or desirable, or that the Agent may reasonably
request, so as at all times to maintain the validity, perfection,
enforceability and rank of the Security Interest in the Collateral in
conformity with the requirements of SECTION 7.2(a), to enable the Agent
and the Lenders to exercise or enforce their rights hereunder, and to
obtain the full benefits of this Agreement including, but not limited
to:
(i) paying all taxes, assessments and other claims
lawfully levied or assessed on any of the Collateral, except
to the extent that such taxes, assessments and other claims
constitute Permitted Liens, subject to Borrower's rights set
forth in SECTION 9.6 hereof,
(ii) using all reasonable efforts to obtain the
Waivers and Consents and any other Lien releases,
subordinations or waivers, including, without limitation, any
mechanic's lien releases, if required pursuant to the terms
hereof and subject to Borrower's rights set forth in SECTION
9.6 hereof,
(iii) delivering to the Agent, for the benefit of the
Lenders, endorsed or accompanied by such instruments of
assignment as the Agent may specify, and stamping or marking,
in such manner as the Agent may specify, any and all Chattel
Paper, Instruments, Supporting Obligations and Documents
evidencing or forming a part of the Collateral,
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(iv) executing and delivering financing statements,
pledges, designations, hypothecations, notices and assignments
requested by and in each case in form and substance
satisfactory to the Agent relating to the creation, validity,
perfection, maintenance or continuation of the Security
Interest under the Uniform Commercial Code or other Applicable
Law; and
(v) using its best efforts to secure all consents and
approvals necessary or appropriate for the assignment to or
for the benefit of Agent of any material license or Contract
held by Borrower
(c) The Agent is hereby authorized to file one or more
financing or continuation statements or amendments thereto without the
signature of or in the name of Borrower for any purpose described in
SECTION 7.2(B), including, without limitation, any such financing or
continuation statements as Agent deems necessary in its sole discretion
in order to comply with the Uniform Commercial Code. The Agent will
give the Borrower notice of the filing of any such statements or
amendments, which notice shall specify the locations where such
statements or amendments were filed. A carbon, photographic,
xerographic or other reproduction of this Agreement or of any of the
Security Documents or of any financing statement filed in connection
with this Agreement is sufficient as a financing statement.
(d) Borrower shall xxxx its books and records as directed by
the Agent and as may be necessary or appropriate to evidence, protect
and perfect the Security Interest and shall cause its financial
statements to reflect the Security Interest if required under GAAP.
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SECTION 7.3 The UCC.(a) Perfection by Filing. Agent may at any
time and from time to time, pursuant to the provisions of this
Agreement and the other Loan Documents, file financing statements,
continuation statements and amendments thereto that (i) indicate the
Collateral (A) as all assets of Borrower or words of similar effect,
regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the UCC, or (B) as being of an
equal or lesser scope or with greater detail, and (ii) contain any
other information required by part 5 of Article 9 of the UCC for the
sufficiency or filing office acceptance of any financing statement or
amendment, including (A) whether Borrower is an organization, the type
of organization and any organization identification number issued to
Borrower and (B) in the case of a financing statement filed as a
fixture filing or indicating Collateral as as-extracted collateral or
timber to be cut, a sufficient description of the real property to
which the Collateral relates. Borrower agrees to furnish any such
information to the Agent promptly upon request. Borrower also agrees
that any such financing statements, continuation statements or
amendments may (if the signature of Borrower is required in the
applicable jurisdiction) be signed by Agent on behalf of Borrower, as
provided in this Agreement and the other Loan Documents, and ratifies
its authorization for the Agent to have filed in any jurisdiction any
like initial financing statements or amendments thereto if filed prior
to the date hereof.
(b) Other Perfection Etc. Borrower shall at any time and from
time to time take such steps as Agent may reasonably request for Agent
(i) to obtain an acknowledgment, in form and substance satisfactory to
Agent, of any bailee having possession of any of the Collateral that
the bailee holds such Collateral for Agent, (ii) to obtain "control" of
any Investment Property, Letter-of-Credit Rights, electronic Chattel
Paper, or transferable records (as such terms are defined in the UCC
relating to what constitutes "control" for such items of Collateral and
as "transferable records" is defined in the Uniform Electronic
Transactions Act), with any agreements establishing control to be in
form and substance satisfactory to Agent, (iii) to enter into a
tri-party agreement with Agent and the issuer and/or confirmation bank
with respect to any Letter-of Credit Rights that Borrower has acquired,
and thereby directing all payments under such Letter-of Credit Rights
to the Collection Account, (iv) to promptly notify Agent, in a writing
signed by Borrower, of any commercial tort claim (as defined in the
UCC) acquired by it and unless otherwise consented by Agent, to enter
into a supplement to this Agreement, granting to Agent a Lien in such
commercial tort claim and in the proceeds thereof and (v) otherwise to
insure the continued perfection and priority of Agent's security
interest in any of the Collateral and of the preservation of its rights
therein.
(c) Savings Clause. Nothing contained in this SECTION 7.3
shall be construed to narrow the scope of Agent's security interest in
any of the Collateral or the perfection or priority thereof or to
impair or otherwise limit any of the rights, powers, privileges or
remedies of Agent or any other Lender hereunder.
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ARTICLE VIII.
COLLATERAL COVENANTS
Until this Agreement has been terminated and all the Secured
Obligations have been paid in full, unless the Required Lenders shall otherwise
consent in the manner provided in SECTION 15.10:
SECTION 8.1 Collections; Payments.
(a) Blocked Accounts.
(i) Borrower shall establish and maintain, at its
sole cost and expense, blocked accounts with respect to the
following Deposit Accounts of the Borrower (each, a "Blocked
Account"): account numbers 2000001100334 and 2000017266055
maintained with Wachovia Bank, National Association and
account number 4758373468 maintained with Xxxxx Fargo Bank,
National Association. Borrower shall promptly deposit into
such Blocked Accounts, or at Agent's request, direct their
Account Debtors to directly remit for deposit therein, all
payments on Accounts and all payments constituting proceeds of
Inventory and other Collateral (collectively, "Receipts");
provided, however, that except during the continuance of an
Event of Default, Borrower shall not be required to deposit
into such Blocked Accounts di minimus amounts of Receipts for
use by Borrower as xxxxx cash in the operation of Borrower's
business. All such Receipts shall be held in trust for the
Agent as the property of the Agent, for the ratable benefit of
the Lenders, and shall be remitted to the Collection Account
pursuant to the requirements of CLAUSE (II) below.
Notwithstanding anything contained in this Agreement to the
contrary, the only Deposit Accounts of the Credit Parties as
to which any Credit Party shall be required to establish or
maintain as a blocked account shall be the Blocked Accounts.
(ii) On or before the Effective Date, at Borrower's
sole cost and expense, each bank where any of the Blocked
Accounts identified in the first sentence of SECTION 8.1(A)(I)
hereof is maintained shall have entered into a Blocked Account
Agreement regarding such Blocked Account(s) with the Borrower
and Agent, for the benefit of itself and the Lenders,
satisfactory in form and substance to Agent, which shall
become operative on the Effective Date. Each Blocked Account
Agreement shall provide, among other things, (A) that the
Receipts and any and all other funds on deposit in such
Blocked Account(s) are the collateral of Agent and are held by
such bank as agent or bailee-in-possession for Agent, on
behalf of itself and Lenders, and (B) that such bank has no
lien upon, or right to setoff against, such Blocked
Account(s), the Receipts, or any other funds from time to time
on deposit therein, other than for its service fees and other
charges relating to such account(s) and for returned checks or
other items of payment. Upon the occurrence of an Availability
Shortfall, such bank will wire, or otherwise transfer, in next
day funds on a daily basis, all Receipts and other funds on
deposit in such Blocked Account(s) pursuant to the
instructions of Agent. In such event, the Agent shall direct
that such Receipts and funds be
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remitted to the Collection Account for application on account
of the Secured Obligations; provided, however, that, prior to
the occurrence of an Availability Shortfall or (if an
Availability Shortfall shall have occurred) if an Availability
Shortfall shall not have existed for a period of at least
ninety (90) consecutive days subsequent to such Availability
Shortfall, and if no Event of Default shall have occurred and
been continuing, then (x) each bank maintaining Blocked
Account(s) will wire, or otherwise transfer, all Receipts and
other funds on deposit in such Blocked Account(s) pursuant to
the written instructions of Borrower and (y) Agent shall not
send any notice or instructions to any such Blocked Account
bank to transfer any Receipts or other funds on deposit in
such Blocked Account(s) into the Collection Account. Subject
to the rights of the Borrower hereunder, Borrower agrees that
all deposits made in, and payments made to, a Blocked Account
and other funds received and collected by Agent, whether on
the Accounts or as proceeds of Inventory or other Collateral
or otherwise shall be the collateral of Agent, subject to the
sole dominion and control of the Agent. If the Borrower is
unable to obtain Blocked Account Agreements with respect to a
Blocked Account of Borrower, then Agent may, at its option,
establish a reasonable reserve against the Borrowing Base
sufficient, based upon the determination of the Agent in its
sole discretion, to insure that there will be no impairment of
the Collateral.
(b) For purposes of (i) calculating the amount of Excess
Availability and (ii) calculating interest on the Secured Obligations,
all Receipts and other payments and funds received in the Collection
Account will be applied (conditioned upon final collection) to the
Secured Obligations one (1) Business Day following the date of receipt
of good and immediately available funds in the Collection Account (the
"Collection Period"), provided that the Collection Account Receipts and
notice thereof are received in accordance with Agent's usual and
customary practices as in effect from time to time and by 1:00 p.m.
(New York time) or, at Agent's discretion, within sufficient time to
credit Borrower's loan account on such day, and if not, then on the
second (2nd) succeeding Business Day after receipt in the Collection
Account. If at any time (I) there are any Revolving Credit Loans
outstanding and (II) any funds in any Blocked Account or any other
Deposit Account of Borrower (excluding disbursement accounts) are not
transferred to the Collection Account for application to the Secured
Obligations, then Agent shall be entitled to charge Borrower an
administrative fee equivalent to the interest Agent would have earned
and received for the Collection Period had the funds deposited in the
Blocked Accounts or any other Deposit Accounts of Borrower (excluding
disbursement accounts) on such day been transferred from the Blocked
Accounts or such other Deposit Accounts (excluding disbursement
accounts) to the Collection Account on such day, which fee shall be
equal to (A) the actual collections that were not so transferred, as
reported in the monthly financial statements required to be delivered
to the Agent pursuant to SECTION 10.1(B) hereof, for each such Fiscal
Month during the term hereof, multiplied by (B) a rate equal to the
LIBOR Option, and divided by (C) 360.
(c) Except as otherwise expressly provided in this Agreement,
Borrower and all of its subsidiaries, employees or agents shall, acting
as trustee for Agent, receive, as the property of Agent, any monies,
checks, notes, drafts, credit card sales drafts, credit
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card sales or charge slips or receipts, or any other payment relating
to and/or proceeds of Accounts or other Collateral which come into
their possession or under their control and, immediately upon receipt
thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind,
to Agent. In no event shall the same be commingled with Borrower's own
funds. Borrower agrees to reimburse Agent on demand for any amounts
owed or paid to any Clearing Bank or any other bank or person involved
in the transfer of funds to or from the Blocked Accounts arising out of
Agent's payments to or indemnification of such bank or person. The
obligation of Borrower to reimburse Agent for such amounts pursuant to
this SECTION 8.1 shall survive the termination or non-renewal of this
Agreement.
(d) It is expressly agreed by Borrower that, anything herein
to the contrary notwithstanding, Borrower shall remain liable under
each of its Contracts, licenses and other agreements, documents and
instruments evidencing Inventory, Accounts or the other Collateral to
observe and perform all the conditions and obligations to be observed
and performed by it thereunder. Neither Agent nor any Lender shall have
any obligation or liability under any such Contract, license or
agreement by reason of or arising out of this Agreement or the granting
herein of a security interest therein or the receipt by Agent or any
Lender of any payment relating to any such Contract, license or
agreement pursuant hereto. Neither Agent nor any Lender shall be
required or obligated in any manner to perform or fulfill any of the
obligations of Borrower under or pursuant to any such Contract, license
or agreement, or to make any payment, or to make any inquiry as to the
nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any such Contract,
license or agreement, or to present or file any claims, or to take any
action to collect or enforce any performance or the payment of any
amounts which may have been assigned to it or to which it may be
entitled at any time or times.
SECTION 8.2 Inspection, Verification and Notification.Subject
to SECTION 15.2(D) and (G) hereof, the Agent and each Lender (by any of their
officers, employees or agents) shall have the right at any time or times (so
long as no Event of Default is in existence, with reasonable prior notice) to
(a) visit the properties and facilities of each Credit Party, inspect the
Collateral and the other assets of each Credit Party and inspect and make
extracts from the books and records of each Credit Party, including but not
limited to management letters, prepared by independent accountants, all during
customary business hours at such premises; (b) discuss each Credit Party's
business, assets, liabilities, financial condition, results of operations and
business prospects, insofar as the same are reasonably related to the rights of
the Agent or the Lenders hereunder or under any of the Loan Documents, with each
Credit Party's (i) principal officers, (ii) independent accountants, and (iii)
any other Person (except that any such discussion with any third parties shall
be conducted in accordance with the Agent's or such Lender's standard operating
procedures relating to the maintenance of the confidentiality of confidential
information of borrowers); (c) verify the validity, amount, quantity, value and
condition of, or any other matter relating to, the Accounts, Inventory or any of
the other Collateral in person or by mail, telephone, telegraph or otherwise and
in this connection to review, audit and make extracts from all records and files
related to any of the Collateral; and (d) on and after an Event of Default, to
notify the Account Debtors or obligors under any Accounts, of the assignment of
such Collateral to the Agent, for the benefit of the Lenders, and to direct such
Account Debtor or
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obligors to make payment of all amounts due or to become due thereunder directly
to the Agent, for the account of the Lenders, and, upon such notification and at
the expense of Borrower, to enforce collection of any such Accounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as Borrower might have done. Borrower will deliver to the
Agent, for the benefit of the Lenders, any instrument necessary for it or any
Lender to obtain records from any service bureau maintaining records on behalf
of Borrower.
SECTION 8.3 Inventory Covenants.
(a) All sales of Inventory will be made in compliance with all
material requirements of Applicable Law.
(b) Borrower shall notify the Agent in writing promptly upon,
but in no event later than three (3) Business Days after, learning of
any Eligible Inventory included in the last provided Borrowing Base
Certificate with a value in excess of $500,000 that becomes, or the
Borrower believes will become, ineligible, and of the cause of such
ineligibility.
(c) Borrower shall not consign Inventory to any Person except
as disclosed in the Schedule of Inventory delivered immediately after
such consignment.
(d) Subject to SECTION 15.2(G) hereof, Borrower shall permit
the Agent or an agent or representative thereof (who shall meet the
requirements set forth in the definition of Appraised GOB Value) to
conduct appraisals of the Inventory at such times as Agent determines
to be necessary in its discretion.
SECTION 8.4 Returned Inventory. The Security Interest in the
Inventory shall, without further act, attach to the cash and non-cash proceeds
resulting from the sale or other disposition thereof and to all Inventory which
is returned to Borrower by customers or is otherwise recovered.
SECTION 8.5 Ownership and Defense of Title.
(a) Except for the Security Interest and Permitted Liens,
Borrower shall at all times be the sole owner or lessee of each and
every item of Collateral and shall not create any lien on, or sell,
lease, exchange, assign, transfer, pledge, hypothecate, grant a
security interest or security title in or otherwise dispose of, any of
the Collateral or any interest therein, except for (i) sales of
Inventory in the ordinary course of business, for cash or on open
account or on terms of payment ordinarily extended to its customers,
(ii) dispositions of Real Estate leases in its discretion, including
terminating, sub-leasing or assigning its interest in all or any
portion of such leases, (iii) dispositions of items of the Collateral
no longer used or useful in its business and (iv) except as otherwise
expressly permitted under this Agreement. The inclusion of "proceeds"
of the Collateral under the Security Interest shall not be deemed a
consent by the Agent or the Lenders to any other sale or other
disposition of any part or all of the Collateral.
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(b) Borrower shall defend its title, and use commercially
reasonable efforts to defend its leasehold interest in and to, and the
Security Interest in, the Collateral against the claims and demands of
all Persons.
(c) In addition to, and not in derogation of, the foregoing
and the requirements of any of the Security Documents, Borrower shall
(i) protect and preserve all properties material to its business,
including Intellectual Property and maintain all tangible property
useful in its business in good and workable condition in all material
respects, with reasonable allowance for wear and tear, and (ii) from
time to time make or cause to be made all needed and appropriate
repairs, renewals, replacements and additions to such properties
necessary for the conduct of its business, so that the business carried
on in connection therewith may be properly and advantageously conducted
at all times.
SECTION 8.6 Insurance.
(a) The Borrower shall maintain insurance against loss or
damage by fire with extended coverage; theft, burglary, pilferage and
loss in transit; public liability and third party property damage;
product liability; larceny, embezzlement or other criminal liability;
business interruption; and such other hazards or of such other types as
is customary for Persons engaged in the same or similar business, as
the Agent, in its discretion, shall specify, in amounts, and under
policies reasonably acceptable to Agent.
(b) All insurance policies required under SECTION 8.6(A) shall
be maintained with financially sound and reputable insurers having at
least an A- or better rating from A.M. Best Rating Guide, and shall
name the Agent, for the benefit of the Lenders, as an additional
insured and shall contain loss payable clauses in the form submitted to
Borrower by the Agent, or otherwise in form and substance satisfactory
to the Agent, naming the Agent, for the benefit of the Lenders, as loss
payee, as its interests may appear, and providing that:
(i) all proceeds thereunder relating to Collateral
shall be payable to the Agent, for the benefit of the Lenders;
(ii) no such insurance shall be affected by any act
or neglect of the insurer or owner of the property described
in such policy, and
(iii) such policy and loss payable clauses may not be
canceled, amended or terminated unless at least thirty (30)
days prior written notice is given to the Agent (or such
lesser notice period with respect to non-payment of premiums,
but in no event less than ten (10) days).
(c) Any proceeds of insurance referred to in this SECTION 8.6
which are paid to the Agent in connection with the Collateral for the
account of the Lenders shall be applied by Agent to the repayment of
the Revolving Credit Loans, with any excess to be released to Borrower
subject to any obligations that Agent may have under applicable law to
deliver such balance to third parties; provided, however, that to the
extent that an Event of Default shall be in existence, such excess
shall first be applied by Agent to the repayment of any other Secured
Obligations, in Agent's discretion, and, to the extent that
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Borrower shall be required to furnish Cash Collateral pursuant to
Section 3.3, any excess shall be applied by Agent to such Cash
Collateral equal to one-hundred and five percent (105%) of the Letter
of Credit Obligations.
(d) Borrower irrevocably makes, constitutes and appoints Agent
(and all officers, employees or agents designated by Agent), so long as
any Event of Default shall have occurred and be continuing as
Borrower's true and lawful agent and attorney-in-fact for the purpose
of making, settling and adjusting claims under such "All Risk" policies
of insurance, endorsing the name of Borrower on any check or other item
of payment for the proceeds of such "All Risk" policies of insurance
and for making all determinations and decisions with respect to such
"All Risk" policies of insurance. Prior to the occurrence and
continuation of an Event of Default, in the event that any claim which
is or could be made under any of such insurance policies exceeds
$500,000, no such claim shall be settled, compromised or finally
determined, except with the prior notice to Agent. Agent shall have no
duty to exercise any rights or powers granted to it pursuant to the
foregoing power-of-attorney. Borrower shall promptly notify Agent of
any loss, damage, or destruction to the Collateral in the amount of
$500,000 or more, whether or not covered by insurance. After deducting
from such insurance proceeds the expenses, if any, incurred by Agent in
the collection or handling thereof, Agent shall apply such proceeds as
set forth in SUBSECTION (C) of this SECTION 8.6.
SECTION 8.7 Location of Offices and Collateral.
(a) Borrower will not change its jurisdiction of
incorporation, registration or formation, the location of its chief
executive office or the place where it keeps its books and records
relating to the Collateral or change its name, its identity or
corporate structure in any manner which might make any Financing
Statement or other UCC amendment, assignment or continuation statement
filed in connection herewith seriously misleading within the meaning of
Sections 9-506 and 9-507 of the UCC or any other applicable provision
of the Uniform Commercial Code, without giving the Agent sixty (60)
days prior written notice thereof and complying with the requirements
and conditions of SECTION 8.7(D).
(b) All Inventory, other than Inventory in transit to any such
location, will at all times be kept by Borrower at one of the locations
set forth in SCHEDULE 6.1(R) and shall not, without giving the Agent at
least thirty (30) days prior written notice and complying with the
requirements and conditions of SECTION 8.7(D) hereof, be removed
therefrom except (i) to another location on SCHEDULE 6.1(R) or (ii) for
sales of Inventory permitted under SECTION 8.5(A).
(c) If any Inventory is in the possession or control of any of
Borrower's agents or processors, Borrower shall notify such agents or
processors of the Security Interest and, upon the occurrence of an
Event of Default, shall instruct them (and cause them to acknowledge
such instruction) to hold all such Inventory for the account of the
Agent, for the benefit of the Lenders, subject to the instructions of
the Agent.
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(d) After Agent's written acknowledgment that any reasonable
action requested by Agent in connection with any changes covered by
SECTIONS 8.7(A) OR (B), including continuation of the perfection of any
Liens in favor of Agent, on behalf of the Agent and the Lenders, in any
Collateral, has been completed or taken, Borrower may change its
jurisdiction of incorporation, registration or formation, the location
of its Collateral or the location where it keeps its books and records
relating to the Collateral, provided that any such new location shall
be in the continental United States, or change its name, its identity
or its corporate structure. Borrower shall not, without prior notice to
Agent, change its fiscal year to a year ending in any day other than
the Fiscal Year end of the Borrower.
SECTION 8.8 Records Relating to Collateral.
(a) Borrower will at all times (i) keep complete and accurate
records of Borrower's Inventory on a basis consistent with past
practices of Borrower, itemizing and describing the kind, type and
quantity of Inventory and Borrower's actual cost therefor and (ii) keep
complete and accurate records of all other Collateral.
(b) Borrower will take a physical audit of all Inventory,
wherever located, at least annually.
SECTION 8.9 Maintenance of Equipment. Borrower shall maintain
all physical property that constitutes Equipment in good and workable condition
in all material respects, with reasonable allowance for wear and tear, and shall
exercise proper custody over all such property, provided that Borrower may
dispose of such property no longer used or useful in its business. SECTION 8.10
Information and Reports.
(a) Schedule of Accounts: The Borrower shall deliver to the
Agent and each Lender on or before the Effective Date and no later than
ten (10) Business Days after the end of each Fiscal Month thereafter a
Schedule of Accounts which (i) shall be as of the last day of the
immediately preceding retail month; (ii) shall be reconciled to the
Borrowing Base Certificate as of such last day; and (iii) shall set
forth a summary aged trial balance of all then existing Accounts of
Borrower.
(b) Collection Reports. Borrower shall deliver to the Agent
and each Lender no later than ten (10) days after the end of each
Fiscal Month of Borrower, as of the last Business Day of Borrower's
immediately preceding Fiscal Month, a Collection Report containing
information regarding Receipts, deposits and expenditures on and with
respect to each Business Day and such other information as the Agent
may request. Upon request of the Agent, Borrower shall deliver to the
Agent and each Lender copies (including electronic copies) of bank
statements and checks deposited by or on behalf of Borrower in any
Deposit Account, including, without limitation, the Disbursement
Account, and such other information regarding Receipts, expenditures
and Deposit Account balances as the Agent may reasonably request.
Borrower shall immediately (i) notify the Agent and each Lender of any
changes, additions or deletions to SCHEDULE
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6.1(DD) and (ii) prepare and deliver a new SCHEDULE 6.1(DD) reflecting
such changes, additions and deletions.
(c) Schedule of Inventory. Borrower shall maintain a perpetual
method of Inventory control. Borrower shall deliver to the Agent and
each Lender (i) at least three (3) Business Days prior to the Effective
Date a Schedule of Inventory as of the last day of the immediately
preceding Fiscal Month of Borrower, itemizing and describing the kind,
type, quantity and location of Inventory and the cost thereof,
reconciled to the balance of Inventory as set forth in the Consolidated
Balance Sheet as of such date and (ii) no later than ten (10) Business
Days after the end of each Fiscal Month of Borrower thereafter a
Schedule of Inventory as of the last day of the immediately preceding
Fiscal Month of Borrower, itemizing and describing the kind, type,
quantity and location of Inventory and the cost thereof, reconciled to
the balance of Inventory as set forth in the Consolidated Balance Sheet
as of such date. Borrower's Inventory records shall be based upon and
evidence the results of physical Inventory counts conducted no less
frequently than annually. Upon the request of the Agent, Borrower shall
deliver to the Agent and each Lender, copies of the results of any
physical Inventory count showing in reasonable detail the locations of
and values for specific items of Inventory and such other information
and supporting documents regarding Inventory that the Agent deems
necessary.
(d) Borrowing Base Certificate. The Borrower shall deliver to
the Agent, (i) on each Tuesday, a weekly Borrowing Base Certificate
prepared as of the close of business of the last day of the immediately
preceding week, (ii) not later than ten (10) Business Days after the
end of each Fiscal Month of the Borrower, a Borrowing Base Certificate
prepared as of the close of business of the last day of such Fiscal
Month and (iii) if Excess Availability is less than $10,000,000 or a
Default or Event of Default shall have occurred and be continuing, upon
the Agent's request from time to time on any Business Day, a Borrowing
Base Certificate as of the third (3rd) preceding Business Day.
(e) Notice of Diminution of Value. Borrower shall give prompt
notice to the Agent of any matter or event which has resulted in the
diminution in fair market value in excess of $500,000 in the aggregate
in any month with respect to Inventory and any other Collateral (other
than Real Estate leases), except for any such diminution in the value
of any Accounts or Inventory in the ordinary course of business which
has been appropriately reserved against, as reflected in financial
statements previously delivered to the Agent and the Lenders pursuant
to SECTION 6.1(L) or ARTICLE 10 and/or financial statements or reports
otherwise permitted under this Agreement.
(f) Additional Information. The Agent may in its reasonable
discretion from time to time request that the Borrower deliver (i) the
schedules, certificates or reports described in SECTIONS 8.10(A)
THROUGH (D) more or less often and on different schedules than
specified in such sections and (ii) the following reports with respect
to the Borrower: (a) an analysis and reconciliation of Inventory or any
other Collateral; (b) an aging and test verification of Accounts; (c)
an aging of accounts payable; and (d) trial balances. The Borrower
shall also furnish to the Agent and each Lender such other information
with respect to the Collateral as the Agent may from time to time
reasonably request.
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(g) Certification. Each of the schedules delivered to the
Lender pursuant to this SECTION 8.10 shall be certified by a Financial
Officer of the Borrower to be true, correct and complete in all
material respects as of the date indicated thereon.
SECTION 8.11 Covenants Regarding Intellectual Property
Collateral.
(a) Borrower shall notify Agent immediately if it knows that
any application or registration relating to any Intellectual Property
registered with a Governmental Authority in the United States of
America (now or hereafter existing) may become abandoned, 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, the United States Copyright Office
or any court) regarding Borrower's ownership of any Intellectual
Property registered with a Governmental Authority in the United States
of America, its right to register the same or to keep, use and maintain
the same, except where any such event shall not have a Materially
Adverse Effect (provided, however, anything that affects any
Intellectual Property which includes the name "Xxxxxxxx'x" shall be
deemed to have a Materially Adverse Effect).
(b) Promptly after the date on which Borrower registers with
any Governmental Authority in the United States of America any
Intellectual Property, Borrower shall execute and deliver any and all
security agreements with respect to such Intellectual Property as Agent
may request to evidence Agent's security interest, for the benefit of
itself and the Lenders, in such Intellectual Property, and the General
Intangibles of Borrower relating thereto or represented thereby.
(c) Borrower shall take all actions necessary or requested by
Agent (i) to maintain the registration with respect to all of its
Intellectual Property registered with a Governmental Authority in the
United States of America (now or hereafter existing), including, if
applicable, the filing of applications for renewal, affidavits of use,
affidavits of non-contestability and opposition and interference and
cancellation proceedings, unless any such Intellectual Property is no
longer used or useful in Borrower's business and (ii) to ensure that
none of the Intellectual Property is subject to any licensing agreement
or similar arrangement except as permitted under SECTION 9.3 of this
Agreement.
(d) In the event that any of the Intellectual Property
Collateral that is registered with a Governmental Authority in the
United States of America is infringed upon, or misappropriated or
diluted by a third party, Borrower shall notify Agent promptly after
Borrower learns thereof.
SECTION 8.12 Landlord and Other Waivers. Borrower shall timely
and fully pay and perform its obligations under all leases and other agreements
with respect to each third party location where any Collateral is or may be
located. On or prior to the Effective Date (or, subject to a written consent by
Agent, within a period after the Effective Date to be specified by Agent in its
sole discretion), and after the Effective Date prior to locating Collateral at
any third party location, Borrower shall use its best efforts to obtain from
each landlord of, and bailee (with respect to any warehouse, processor,
converter or other storage facility) at, a location
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where Collateral is, or is to be, stored or held, an agreement or letter which
shall contain a waiver or subordination of all Liens or claims that such
landlord or bailee may assert against the personal property Collateral at such
location, a consent to enter or use such location for sale or removal of the
personal property Collateral, and which shall otherwise be satisfactory in form
and substance to the Agent (each, a "Waiver and Consent"). If the Borrower is
unable to obtain a Waiver and Consent with respect to a location (which location
is in a State that has a statutory or common law landlord's lien or similar
right) where personal property Collateral is stored or held, Agent may establish
a reserve against the Borrowing Base sufficient, based upon the determination of
the Agent in its sole discretion, to insure that there will be no impairment of
the Collateral; provided, however, that any such reserve shall not exceed (a)
with respect to any leased store/retail location, one (1) month's rent under the
applicable lease and (b) with respect to any warehouse location, three (3)
months' rent under the applicable warehouse agreement. Nothing contained in this
SECTION 8.12 shall impair or otherwise modify any of Agent's rights under this
Agreement, including, without limitation, Agent's rights pursuant to the
respective definitions of "Eligible Inventory" and "Borrowing Base."
SECTION 8.13 Control Agreements. On or before the Effective
Date and, after the Effective Date, prior to establishing a securities,
commodities, credit card processing or other financial account (individually, a
"Financial Account", and collectively, "Financial Accounts"), Borrower shall
obtain from each financial institution where a Financial Account is held by
Borrower, a Control Agreement satisfactory in form and substance to Agent. If
Borrower is unable to obtain a Control Agreement with respect to such account or
program, Agent may, at its option, establish a reasonable reserve against the
Borrowing Base sufficient, based upon the determination of the Agent in its sole
discretion, to insure that there will be no impairment of the Collateral.
Nothing contained in this SECTION 8.13 shall impair or otherwise modify any of
Agent's rights under this Agreement, including, without limitation, Agent's
rights pursuant to the definition of "Borrowing Base."
ARTICLE IX.
AFFIRMATIVE COVENANTS
Until this Agreement has been terminated and all the Secured
Obligations have been paid in full, unless the Required Lenders shall otherwise
consent in the manner provided for in SECTION 15.9, each Credit Party will:
SECTION 9.1 Preservation of Corporate Existence and Similar
Matters Preserve and maintain its corporate existence, rights, franchises,
licenses and privileges in the jurisdiction of its incorporation and qualify and
remain qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except where the failure
to do so would not have a Materially Adverse Effect. Notwithstanding the
foregoing, nothing in this SECTION 9.1 shall preclude, upon reasonable prior
notice to Agent, (a) the dissolution or merger with another Credit Party, with
prior written notice to Agent, of either Sub-Parent or REH or (b) the merger of
Borrower into Parent after the Parent Notes have been repaid in full; provided,
however, in each case, no Default or Event of Default shall result therefrom,
the Security Interest (including the perfection and first priority status
thereof) shall remain in full force and effect and Agent and Lenders shall
continue to have all of their rights with respect thereto.
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SECTION 9.2 Compliance with Applicable Law Comply in all
material respects with all Applicable Laws relating to such Credit Party, except
for instances of noncompliance which would not have a Materially Adverse Effect.
SECTION 9.3 Maintenance of Property In addition to, and not in
derogation of, the requirements of the Security Documents,
(a) protect and preserve all properties material to its
business, and maintain in good repair, working order and condition in
all material respects, with reasonable allowance for wear and tear, all
tangible properties, except that Borrower shall in any event be
permitted to do the following: (i) sell Inventory in the ordinary
course of business, for cash or on open account or on terms of payment
ordinarily extended to its customers, (ii) dispose of Real Estate
leases in its discretion, (iii) dispose of items of the Collateral no
longer used or useful in its business, (iv) license on a non-exclusive
basis (and/or license on an exclusive basis with respect to individual
product lines of other Persons) the name "Xxxxxxxx'x" with reasonable
prior notice to Agent in each instance, so long as Borrower retains the
right to use such name in all aspects of the operation of Borrower's
business, the rights of Borrower under any such license are subject to
a first priority security interest in favor of Agent pursuant to
documentation satisfactory to Agent and any proceeds from any such
licensing arrangement are used to repay the Secured Obligations in
accordance with this Agreement and (v) make dispositions otherwise
expressly permitted under this Agreement;
(b) from time to time make or cause to be made all needed and
appropriate repairs, renewals, replacements and additions to such
properties necessary for the conduct of its business, so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; and
(c) obtain and maintain all patents, trademarks, licenses,
permits, franchises, and governmental authorizations necessary to own
its property and to conduct its business as conducted on the Effective
Date or as otherwise permitted under SECTION 9.4.
SECTION 9.4 Conduct of Business At all times engage only in
the businesses of Credit Parties as conducted on the Effective Date, and any
businesses reasonably related or complimentary thereto.
SECTION 9.5 Insurance From time to time deliver to the Agent
or any Lender upon its request a detailed list of the insurance then in effect,
stating the names of the insurance companies, the amounts and rates of the
insurance, the dates of the expiration thereof and the properties and risks
covered thereby.
SECTION 9.6 Payment of Taxes and Claims (a) Pay or discharge
when due (i) all Charges and other taxes, assessments and governmental
levies imposed upon it or upon its income or profits or upon any
properties belonging to it, except that real property ad valorem taxes
shall be deemed to have been so paid or discharged if the same are paid
before they become delinquent, and (ii) all lawful claims of
materialmen,
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mechanics, carriers, warehousemen and landlords for labor, materials,
supplies and rentals which, if unpaid, might become a Lien on any
properties of such Credit Party; except that this SECTION 9.6(A) shall
not require the payment or discharge of any Charge or claim (including
claims of materialmen) which is being contested in good faith by
appropriate proceedings and for which reserves in respect of the
reasonably anticipated liability therefor have been appropriately
established, so long as the enforcement of such Lien shall have been
stayed; and
(b) File when due all United States federal, state and local
as well as foreign national, provincial and local and other tax returns
required by Applicable Law to be filed (after taking into account all
applicable extensions).
SECTION 9.7 Accounting Methods and Financial Records Maintain
a system of accounting, and keep such books, records and accounts (which shall
be true and complete), as may be required or as may be necessary to permit the
preparation of financial statements in accordance with GAAP.
SECTION 9.8 Use of Proceeds.
(a) Cause the Borrower to use the proceeds of (i) the initial
Advance under the Revolving Credit Facility for its working capital
purposes, to refinance and pay off Borrower's Indebtedness to the
Existing Lender and other outstanding amounts due as indicated on
SCHEDULE 9.8 and to fund the fees and expenses associated with the
extension of the Revolving Credit Facility and (ii) all subsequent
Advances only to repay the Parent Notes in full (to the extent
permitted under SECTION 11.5), to make capital expenditures, for its
working capital purposes and for its general corporate purposes not
prohibited by applicable law or under any of the Loan Documents; and
(b) Not use any part of such proceeds to purchase or to carry
or reduce or retire or refinance any credit incurred to purchase or
carry, any margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System) or, in any event, for
any purpose which would involve a violation of such Regulation U or of
Regulation T or X of such Board of Governors, or for any purpose
prohibited by law or by the terms and conditions of this Agreement.
SECTION 9.9 Hazardous Waste and Substances; Environmental
Requirements.
(a) In addition to, and not in derogation of, the requirements
of SECTION 9.2 and of the Security Documents, comply in all material
respects with all Environmental Laws and all Applicable Laws relating
to occupational health and safety (except for instances of
noncompliance that are being contested in good faith by appropriate
proceedings if reserves in respect of such Credit Party's reasonably
anticipated liability therefor have been appropriately established),
promptly notify the Agent of its receipt of any written notice from any
Governmental Authority or pursuant to any legal proceeding of a
violation of any such Environmental Laws or other such Applicable Laws
that could
87
reasonably be expected to have a Materially Adverse Effect and
indemnify and hold the Agent and the Lenders harmless from all
Environmental Liabilities incurred by or imposed upon the Agent or any
Lender on account of such Credit Party's failure to perform its
obligations under this SECTION 9.9.
(b) Not cause or permit a Release of any Contaminant on, at,
in, under, above, to, from or about any of the Real Estate where such
Release would (a) violate in any respect, or form the basis for any
Environmental Liabilities under, any Environmental Laws or
Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other
than such violations or impacts which could not reasonably be expected
to have a Materially Adverse Effect.
SECTION 9.10 Further Assurances. Upon the request of the
Agent, to duly execute and deliver, or cause to be duly executed and delivered,
to the Agent such further instruments and do and cause to be done such further
acts as may be necessary in the reasonable opinion of the Agent to carry out the
express provisions of this Agreement or any other Loan Document.
ARTICLE X.
INFORMATION
Until this Agreement has been terminated and all the Secured Obligations
have been paid in full, unless the Required Lenders shall otherwise consent in
the manner set forth in SECTION 15.9, the Borrower will furnish to the Agent and
to each Lender at the offices then designated for such notices pursuant to
SECTION 15.1:
SECTION 10.1 Financial Statements.
(a) Audited Year-End-Statements. As soon as available, but in
any event within ninety (90) days after the end of each Fiscal Year,
copies of the Parent's Form 10-K containing the Consolidated Balance
Sheet as at the end of such Fiscal Year and the related statements of
income, shareholders' equity and cash flow for such Fiscal Year setting
forth in comparative form the figures for the previous Fiscal Year and
which financial statements shall include an unqualified opinion of the
independent certified public accountants that such financial statements
present fairly the financial position of the Credit Parties as at the
end of and for such Fiscal Year (the "Audited Financial Statements").
(b) Monthly Financial Statements. As soon as available, but in
any event within thirty (30) days after the end of each Fiscal Month,
copies of the unaudited Consolidated Balance Sheet as at the end of
such Fiscal Month and the related unaudited income statement for such
Fiscal Month and for the portion of the Fiscal Year through such Fiscal
Month, setting forth in comparative form the figures for the previous
Fiscal Year (including, without limitation, a comparison to the then
current projected budget figures for the current Fiscal Year),
certified by the Financial Officer as presenting fairly the financial
condition and results of operations of the Credit Parties as at the
date thereof and for the periods ended on such date, subject to normal
quarterly and year end
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adjustments. Such financial statements shall be complete and correct in
all material respects and prepared in accordance with GAAP (except for
the omission of footnotes and normal year-end adjustments).
(c) Quarterly Financial Statements. As soon as available, but
in any event within forty-five (45) days after the end of each Fiscal
Quarter other than the fourth Fiscal Quarter, copies of the Parent's
Form 10-Q containing the unaudited Consolidated Balance Sheet as at the
end of such Fiscal Quarter and the related unaudited income statement
for such Fiscal Quarter and for the portion of the Fiscal Year through
such Fiscal Quarter, setting forth in comparative form the figures for
the previous Fiscal Year, certified by the Financial Officer as
presenting fairly the financial condition and results of operations of
the Credit Parties as at the date thereof and for the periods ended on
such date, subject to normal year end adjustments. Such financial
statements shall be complete and correct in all material respects and
prepared in accordance with GAAP (except for the omission of footnotes
and normal year-end adjustments).
(d) Projected Financial Statements. As soon as available, but
in any event prior to the last Business Day of each Fiscal Year during
the term hereof, forecasted financial statements prepared by the
Borrower, consisting of monthly consolidated balance sheets, cash flow
statements and income statements of the Borrower, reflecting projected
borrowings hereunder and setting forth the assumptions on which such
forecasted financial statements were prepared, covering the two (2)
year period commencing on the first day of the next succeeding Fiscal
Year.
(e) Spring and Fall Plans. As soon as available, but in any
event on or before (i) January 15 of each Fiscal Year during the term
hereof, Borrower's business plan for the Spring season of the following
Fiscal Year and (ii) July 15 of each Fiscal Year during the term
hereof, Borrower's business plan for the Fall season of such Fiscal
Year, each in form and substance satisfactory to Agent.
(f) Other Financial Statements. All financial statements,
reports and other information that are provided to The CIT
Group/Commercial Services, Inc. under the Vendor Line of Credit
Documents, in form and substance and within the applicable time periods
required under the Vendor Line of Credit Documents.
SECTION 10.2 Accountants' Certificate. Together with the
Audited Financial Statements referred to in SECTION 10.1(A), a certificate of
the independent certified public accountants addressed to the Agent, stating
that in making the examination necessary for the certification of such financial
statements, nothing has come to their attention to lead them to believe that any
Default or Event of Default exists and, in particular, they have no knowledge of
any Default or Event of Default or, if such is not the case, specifying such
Default or Event of Default and its nature.
SECTION 10.3 Compliance Certificate. Together with each
delivery of financial statements required by SECTION 10.1(A), (B) and (C), a
certificate of the President or Financial Officer of the Borrower (a) stating
that, based on an examination sufficient to enable him to make an informed
statement, no Default or Event of Default exists or, if such is not the
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case, specifying such Default or Event of Default and its nature, when
it occurred, whether it is continuing and the steps being taken by the
Borrower with respect to such Default or Event of Default and (b)
setting forth the calculations necessary to establish whether or not
the Borrower was in compliance with the covenant contained in SECTION
11.4 as of the date of such statements.
SECTION 10.4 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of any management
letters and any other reports disclosing any deficiencies or weaknesses
with respect to any Credit Party submitted to such Credit Party or its
Board of Directors by its independent public accountants.
(b) As soon as practicable, copies of all financial statements
and reports that any Credit Party shall send to its shareholders
generally and of all registration statements and all regular or
periodic reports which any Credit Party shall file with the Securities
and Exchange Commission or any successor commission.
(c) Upon the request of Agent, copies of any schedules
regarding Eligible Credit Card Accounts received by any Credit Party
from any credit card issuer or processor in connection with any credit
card merchant agreement between such Credit Party and any such credit
card issuer or processor.
(d) From time to time and as soon as reasonably practicable
following each request, such forecasts, data, certificates, reports,
statements, documents or further information regarding the business,
assets, liabilities, financial condition, results of operations or
business prospects of the Credit Parties as the Agent or any Lender may
reasonably request. The rights of the Agent and the Lenders under this
SECTION 10.4 are in addition to and not in derogation of their rights
under any other provision of this Agreement or of any other Loan
Document.
(e) If requested by the Agent or any Lender, each Credit Party
will furnish to the Agent and the Lenders statements in conformity with
the requirements of Federal Reserve Form G-3 or U-1 referred to in
Regulation U of the Board of Governors of the Federal Reserve System.
SECTION 10.5 Notice of Litigation and Other Matters. Prompt
notice of:
(a) the commencement, to the extent any Credit Party is aware
of the same, of all proceedings and investigations by or before any
governmental or non-governmental body and all actions and proceedings
in any court or before any arbitrator against or in any other way
relating to or affecting any Credit Party or any of any Credit Party's
properties, assets or businesses, which could reasonably be expected
to, singly or in the aggregate, have a Materially Adverse Effect;
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(b) without in any way limiting SUBSECTION (A) hereof, the
commencement against any Credit Party of any involuntary bankruptcy
proceeding, immediately upon receipt by it of notice of commencement
thereof or pleadings with respect thereto;
(c) any amendment of the articles of incorporation or by-laws
of any Credit Party;
(d) any change in the business, assets, liabilities, financial
condition, results of operations or business prospects of any Credit
Party which has had or is reasonably likely to have a Materially
Adverse Effect, and any change in the Chief Executive Officer,
President or Chief Financial Officer of any Credit Party;
(e) any material change in the standard operating regulations
or procedures of any credit card issuer or processor with whom such
Credit Party has entered into a credit card merchant agreement; and
(f) any Default or Event of Default or any event which
constitutes or which with the passage of time or giving of notice or
both would constitute a default or event of default by any Credit Party
under any material agreement (other than this Agreement) to which such
Credit Party is a party or by which such Credit Party or any of such
Credit Party's properties may be bound.
SECTION 10.6 ERISA. As soon as possible and in any event
within 30 days after any Credit Party knows, or has reason to know, that:
(a) any Termination Event with respect to a Plan has occurred
or will occur, or
(b) the aggregate present value of the Unfunded Vested Accrued
Benefits under all Title IV Plans or Benefit Plans subject to Section
302 of ERISA or Section 412 of the Code is equal to an amount in excess
of $0, or
(c) any Credit Party is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
required by reason of such Credit Party's complete or partial
withdrawal (as described in Section 4203 or 4205 of ERISA) from such
Multiemployer Plan, or a certificate of the President or a Financial
Officer of such Credit Party setting forth the details of such event
and the action which is proposed to be taken with respect thereto,
together with any notice or filing which may be required by the PBGC or
other agency of the United States government with respect to such
event.
(d) The Credit Party will create a new obligation, liability
or sponsorship with respect to, or commence participation in, any
Multiemployer Plan or Title IV Plan.
SECTION 10.7 Accuracy of Information All written information,
reports, statements and other papers and data furnished to the Agent or any
Lender, whether pursuant to this ARTICLE 10 or any other provision of this
Agreement or of any other Loan Document, shall be, at the time the same is so
furnished, complete and correct in all material respects.
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SECTION 10.8 Revisions or Updates to Schedules Should any of
the information or disclosures provided on any of the Schedules originally
attached hereto become outdated or incorrect in any material respect, the Credit
Parties shall deliver to the Agent and the Lenders as part of the certificate
required pursuant to SECTION 10.3 such revisions or updates to such Schedule(s)
as may be necessary or appropriate to update or correct such Schedule(s),
provided that no such revisions or updates to any Schedule(s) shall be deemed to
have amended, modified or superseded such Schedule(s) as originally attached
hereto, or to have cured any breach of warranty or representation resulting from
the inaccuracy or incompleteness of any such Schedule(s), unless and until the
Required Lenders in the exercise of their reasonable credit judgment shall have
accepted in writing such revisions or updates to such Schedule(s), and further
provided that no such Schedule(s) need be revised or updated which were given as
of a specific date unless this Agreement specifically requires otherwise.
ARTICLE XI.
NEGATIVE COVENANTS
Until this Agreement has been terminated and all the Secured
Obligations have been paid in full, unless the Required Lenders shall otherwise
consent in the manner set forth in SECTION 15.10, Credit Parties will not
directly or indirectly:
SECTION 11.1 Indebtedness for Money Borrowed Create, assume,
or otherwise become or remain obligated in respect of, or permit or suffer to
exist or to be created, assumed or incurred or to be outstanding any
Indebtedness for Money Borrowed, except for Permitted Obligations.
SECTION 11.2 Guaranties. Become or remain liable with respect
to any Guaranty of any obligation of any other Person, except for Permitted
Guaranties.
SECTION 11.3 Investments and Acquisitions. Acquire, after the
Effective Date, any Business Unit (other than Inventory of a Person, provided
that no liabilities of the seller are incurred in connection with such
acquisition) or Investment or, after such date, permit any Investment to be
outstanding other than Permitted Investments.
SECTION 11.4 Capital Expenditures. Make any Capital
Expenditures, except that Borrower may make Capital Expenditures (a) up to an
aggregate amount of $14,400,000 in the Fiscal Year ending January 31, 2004 and
(b) in each Fiscal Year thereafter, in amounts to be mutually agreed upon
between Borrower and Agent; provided, however, if any such amounts cannot be
mutually agreed upon for any such Fiscal Year, then the aggregate amount of
Capital Expenditures that Borrower may make in such Fiscal Year shall be
$15,000,000; and, provided, further, any unused amounts of permitted Capital
Expenditures for any Fiscal Year may be carried forward to any succeeding Fiscal
Year.
SECTION 11.5 Restricted Distributions and Payments Declare or
make any Restricted Distribution or Restricted Payment, other than (i) payments
by Borrower to REH to fund amounts owing by REH under Real Estate leases entered
into by REH in connection with Borrower's business, (ii) payments by Borrower to
REH to fund expenses incurred by REH in
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the ordinary course of Borrower's business and (iii) dividends made by REH or
Borrower to Sub-Parent and by Sub-Parent to Parent if all of the foregoing
dividend proceeds are used by Parent to repay all Indebtedness under the Parent
Notes, to fund dividends to Parent's shareholders and/or to fund purchases,
redemptions and other acquisitions of the Parent's capital stock or any options
related to such capital stock, so long as with respect to CLAUSE (III) above (a)
prior to and after giving effect to such payment, dividend and/or redemption by
Borrower, REH, Sub-Parent and/or Parent, there is no Default or Event of
Default, (b) no Availability Shortfall has occurred within ninety (90) days
prior to the date of such payment, dividend and/or redemption or would occur
after giving effect to such payment, dividend and/or redemption and (c) in
Agent's reasonable judgment, no Availability Shortfall is likely to occur within
ninety (90) days after the date of such payment, dividend and/or redemption.
SECTION 11.6 Merger, Consolidation and Sale of AssetsExcept as
permitted under SECTION 9.1 of this Agreement, merge or consolidate with any
other Person or sell, lease or transfer or otherwise dispose of all or a
substantial portion of its assets to any Person, including the capital stock of
any of its Subsidiaries, other than (i) sales of Inventory in the ordinary
course of business; (ii) the issuance or sales by Parent of its capital stock;
and (iii) combinations or mergers of Borrower and another Credit Party, provided
that the Borrower is the surviving entity thereof and that the Agent shall have
received at least thirty (30) days prior written notice thereof.
SECTION 11.7 Transactions with Affiliates. Effect any
transaction with any Affiliate (other than another Credit Party) on a basis less
favorable to Borrower than would be the case if such transaction had been
effected with a Person not an Affiliate without the express prior written
consent of the Agent.
SECTION 11.8 Liens. Create, assume or permit or suffer to
exist or to be created or assumed any Lien on any of the Collateral, other than
the Security Interest and Permitted Liens.
SECTION 11.9 Operating Leases. Enter into any lease other than
a Capitalized Lease (an "Operating Lease"), which would cause the aggregate
amount of the Credit Parties' payment obligations under their Operating Lease
Obligations (other than obligations with respect to leases of Real Estate (and
renewals and substitutions thereof)) and Capitalized Lease Obligations to exceed
$10,000,000 in the aggregate during the period beginning on the Effective Date
and ending on the Initial Anniversary Date, and thereafter in amounts to be
negotiated between the parties hereto for any period thereafter.
SECTION 11.10 Benefit Plans. Permit or take any action which
would result in the aggregate present value of Unfunded Vested Accrued Benefits
under all Title IV Plans or Benefit Plans subject to Section 302 of ERISA or
Section 412 of the Code to exceed $0 or permit any condition to exist in
connection with any Title IV Plan which might constitute grounds for the PBGC to
institute proceedings to have such Title IV Plan terminated or a trustee
appointed to administer such Benefit Plan, and any other condition, event or
transaction with respect to any Benefit Plan which could result in the
incurrence (other than in the ordinary course of operation of such Benefit Plan)
by any Credit Party of any liability, fine or penalty in an amount expected to
result in a Materially Adverse Effect. Notwithstanding anything contained
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in this Agreement to the contrary, the Credit Parties and any Related Company
shall be permitted to create a new obligation, liability or sponsorship with
respect to, or commence participation in, any Multiemployer Plan or Title IV
Plan, so long as the applicable Credit Party or Related Company complies with
the notice provisions of Section 10.6 and such participation would not have a
Materially Adverse Effect.
SECTION 11.11 Sales and Leasebacks. Enter into any synthetic
lease or any arrangement with any Person providing for such Credit Party's
leasing from such Person any real or personal property which has been or is to
be sold, conveyed or transferred, directly or indirectly, by such Credit Party
to such Person.
SECTION 11.12 Capital Structure and Business. (a) Make any
material changes in any of its business objectives, purposes or operations which
could reasonably be expected to materially and adversely affect the repayment of
the Revolving Credit Loans or any of the other Secured Obligations or could
reasonably be expected to result in a Materially Adverse Effect, (b) change its
Fiscal Year without prior written notice to Agent, (c) amend its certificate of
incorporation or bylaws in a manner which would adversely affect Agent or
Lenders or such Credit Party's duty or ability to repay the Secured Obligations
or (d) directly or indirectly create, organize, acquire or permit to exist any
Subsidiary other than those existing on the Effective Date.
SECTION 11.13 No Impairment of Intercompany Transfers.
Directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) which could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to (a) the payment of dividends or
distributions to any Credit Party, (b) the payment of any Indebtedness or other
obligation owed to any Credit Party or (c) the making or repayment of
intercompany loans by a Subsidiary of any Credit Party to such Credit Party.
SECTION 11.14 No Speculative Transactions. Engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
SECTION 11.15 Parent Notes.
(a) Change, amend, modify or supplement (collectively,
"Change") the terms of any of the Parent Notes (or the Senior Note
Indenture or any other agreement executed in connection therewith) if
the effect of such Change is to: (i) increase the interest rate on or
principal or other amount payable with respect to any of the Parent
Notes; or (ii) change any other term if such change would increase the
obligations of the obligor or confer additional rights to holders of
any of the Parent Notes in a manner adverse to any Credit Party, Agent
or any Lender.
(b) Renew, refinance or extend any of the Parent Notes without
the prior written consent of the Agent. Parent shall notify Agent, at
least three (3) months prior to the maturity, expiration or termination
date of any of the Parent Notes, of Parent's intent
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to renew, refinance or extend such indebtedness (collectively, a
"Refinancing"), which notice shall include the proposed terms and
conditions of the Refinancing and the proposed documentation thereof.
SECTION 11.16 Terminations; Amendments Not Authorized. File
any financing statement or amendment or termination statement with respect to
any financing statement in each case relating to the Security Interest in the
Collateral without the prior written consent of Agent, subject to such Credit
Party's rights under Section 9-509(d)(2) of the Uniform Commercial Code.
SECTION 11.17 No Restriction on Payments to Agent. Enter into
any Contract that restricts or prohibits the grant of a security interest in
Inventory, Accounts, Chattel Paper, Instruments, payment intangibles or any of
the other Collateral or the proceeds of any of the foregoing to Agent.
SECTION 11.18 Real Estate; Leases.
(a) Acquire any Real Estate in fee simple using funds provided
under this Agreement (unless Agent shall be granted a first priority
mortgage with respect thereto pursuant to terms reasonably satisfactory
to Agent); or
(b) Fail to provide Agent with prompt written notice of the
termination, invalidity or unenforceability of any Real Estate lease if
(i) such Credit Party has actual knowledge of such termination,
invalidity or unenforceability and (ii) the result of such termination,
invalidity or unenforceability is that (A) Borrower no longer has
access to the Collateral located upon such Real Estate or (B) Agent is
no longer able to exercise its rights and remedies under this Agreement
with respect to such Collateral.
SECTION 11.19 PNC Loans and Accounts. Accept any loans from,
or establish in any manner any deposit and/or other accounts with, PNC Bank,
N.A. or any Affiliate thereof, except for (a) accounts already established with
such bank on the Effective Date and identified on SCHEDULE 6.1(DD) hereof and
(b) accounts, if any, required to be established in connection with the credit
card agreements between PNC Bank, N.A. or any Affiliate thereof and Borrower, if
Agent is a party to such agreement.
SECTION 11.20 Existing Documentary Letters of Credit. Amend,
modify, extend, or renew, other than in the ordinary course of business
consistent with past practices, or increase the amount of, any Existing
Documentary Letter of Credit.
ARTICLE XII.
DEFAULT
SECTION 12.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any governmental or non-governmental body:
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(a) Default in Payment. Borrower shall default in any payment
of principal of or interest on any Revolving Credit Loans or any Note
when and as due (whether at maturity, by reason of acceleration or
otherwise).
(b) Other Payment Default. Borrower shall default in the
payment, as and when due, of principal of or interest on, any other
Secured Obligation, and such default shall continue for a period of ten
(10) days after written notice thereof has been given to Borrower by
the Agent.
(c) Misrepresentation. Any representation or warranty made or
deemed to be made by any Credit Party under this Agreement or any other
Loan Document, or any amendment hereto or thereto, shall at any time
prove to have been incorrect or misleading in any material respect when
made or deemed made.
(d) Default in Performance. Any Credit Party shall default in
the performance or observance of any term, covenant, condition or
agreement to be performed by such Credit Party, contained in,
(i) ARTICLES 7 or 11;
(ii) ARTICLES 8, 9, or 10 and such default, if such
default is capable of being cured, shall continue for a period
of fifteen (15) days after the earlier of (x) the receipt of
actual knowledge thereof by an officer of such Credit Party
and (y) written notice of such default has been given to such
Credit Party by Agent; or
(iii) any other provision of this Agreement (other
than as specifically provided for otherwise in this SECTION
12.1) and such default, if capable of being cured, shall
continue for a period of thirty (30) days after the earlier of
(x) the receipt of actual knowledge thereof by an officer of
such Credit Party and (y) written notice thereof has been
given to such Credit Party by the Agent.
(e) Indebtedness Cross-Default. With respect to Permitted
Indebtedness for Money Borrowed,
(i) the maturity of any such Indebtedness,
individually or in the aggregate with other such Indebtedness,
in a principal amount exceeding $500,000 shall have (A) been
accelerated in accordance with the provisions of any
indenture, contract or instrument providing for the creation
of or concerning such Indebtedness, or (B) been required to be
prepaid prior to the stated maturity thereof, or
(ii) any event shall have occurred and be continuing
which would permit any holder or holders of such Indebtedness,
any trustee or agent acting on behalf of such holder or
holders or any other Person so to accelerate such maturity,
and any Credit Party shall have failed to cure such default
prior to the expiration of any applicable cure or grace
period.
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(f) Other Cross-Defaults. Any Credit Party shall default in
the payment when due, or in the performance or observance, of any
obligation or condition of any agreement, contract or lease (other than
this Agreement, the Security Documents or any such agreement, contract
or lease relating to Permitted Indebtedness for Money Borrowed) if the
existence of any such defaults, singly or in the aggregate, could
reasonably be expected to have a Materially Adverse Effect.
(g) Voluntary Bankruptcy Proceeding. Any Credit Party shall
(i) commence a voluntary case under the federal bankruptcy laws (as now
or hereafter in effect), (ii) file a petition seeking to take advantage
of any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for adjustment of
debts, (iii) consent to or fail to contest in a timely and appropriate
manner any petition filed against it in an involuntary case under such
bankruptcy laws or other laws, (iv) apply for or consent to, or fail to
contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee, or liquidator
of itself or of a substantial part of its property, domestic or
foreign, (v) admit in writing its inability to pay its debts as they
become due, (vi) make a general assignment for the benefit of creditors
or (vii) take any corporate action for the purpose of authorizing any
of the foregoing.
(h) Involuntary Bankruptcy Proceeding. A case or other
proceeding shall be commenced against any Credit Party in any court of
competent jurisdiction seeking (i) relief under the federal bankruptcy
laws (as now or hereafter in effect) or under any other laws, domestic
or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or adjustment of debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of any Credit Party or of all or any
substantial part of the assets, domestic or foreign, of such Credit
Party, and such case or proceeding shall continue undismissed or
unstayed for a period of sixty (60) consecutive calendar days, or an
order granting the relief requested in such case or proceeding against
such Credit Party (including, but not limited to, an order for relief
under such federal bankruptcy laws) shall be entered.
(i) Loan Documents. Any event of default or Event of Default
under any other Loan Document shall occur or any provision of this
Agreement, or of any other Loan Document after delivery thereof
hereunder, shall for any reason cease to be valid and binding, other
than a nonmaterial provision rendered unenforceable by operation of
law, or such Credit Party or other party thereto (other than the Agent
or a Lender) shall so state in writing, or this Agreement or any other
Loan Document, after delivery thereof hereunder, shall for any reason
(other than any action taken independently by the Agent or a Lender and
except to the extent permitted by the terms thereof) cease to create a
valid, perfected and, except as otherwise expressly permitted herein or
therein, first priority Lien on, or security interest in, any item of
the Collateral purported to be covered thereby having a value of at
least $250,000.
(j) Judgment. Any judgment or order for the payment of money
(other than as listed on SCHEDULE 12.1(J) hereto), warrant, writ of
attachment, execution or similar process which exceeds in amount or
value $500,000 individually or in the aggregate shall (after a
reduction for insurance coverage as to which the applicable insurance
company
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has acknowledged such coverage) be entered against any Credit Party by
any court and such judgment, order, warrant, writ of attachment,
execution or similar process shall continue undischarged or unstayed
for thirty (30) days.
(k) ERISA. (i) Any Termination Event with respect to a Title
IV Plan shall occur that, after taking into account the excess, if any,
of (A) the present value on such day of all vested nonforfeitable
benefits under all such Title IV Plans, over (B) the fair market value
of the assets of any Title IV Plans with respect to which a Termination
Event occurs on the same day (but only to the extent that such excess
relates to the property of Borrower), results in an Unfunded Vested
Accrued Benefit in excess of $0, (ii) any Benefit Plan shall incur an
"accumulated funding deficiency" (as defined in Section 412 of the Code
or Section 302 of ERISA) for which a waiver has not been obtained in
accordance with the applicable provisions of the Code and ERISA or
(iii) Borrower is in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan resulting from
Borrower's complete or partial withdrawal (as described in Section 4203
or 4205 of ERISA) from such Multiemployer Plan.
(l) Qualified Audits. The independent certified public
accountants retained by any Credit Party shall refuse to deliver an
opinion in accordance with SECTION 10.1(A) with respect to the annual
financial statements of such Credit Party.
(m) Material Adverse Change. There occurs any act, omission,
event, undertaking or circumstance or series of acts, omissions,
events, undertakings or circumstances which have, or would have, either
individually or in the aggregate, a Materially Adverse Effect.
SECTION 12.2 Remedies.
(a) Automatic Acceleration and Termination of Facilities. Upon
the occurrence of an Event of Default specified in SECTION 12.1(G) or
(H), (i) the principal of and the interest on the Revolving Credit
Loans and any Note at the time outstanding, and all other amounts owed
to the Agent or the Lenders under this Agreement or any of the Loan
Documents and all other Secured Obligations, shall thereupon become
immediately due and payable without presentment, demand, protest, or
other notice of any kind, all of which are expressly waived, anything
in this Agreement or any of the Loan Documents to the contrary
notwithstanding, and (ii) any obligation of the Lenders or the Agent to
make Advances or incur Letter of Credit Obligations, and the right of
Borrower to request Advances or Letters of Credit under this Agreement
shall immediately terminate without notice.
(b) Other Remedies. If any Event of Default shall have
occurred, and during the continuance of any such Event of Default, the
Agent may without notice, and at the direction of the Required Lenders
in their sole and absolute discretion shall, do any of the following:
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(i) declare the principal of and interest on the
Revolving Credit Loans and any Note at the time outstanding,
and all other amounts owed to the Agent or the Lenders under
this Agreement or any of the Loan Documents and all other
Secured Obligations, to be forthwith due and payable,
whereupon the same shall immediately become due and payable
without presentment, demand, protest or other notice of any
kind, all of which are expressly waived, anything in this
Agreement or the Loan Documents to the contrary
notwithstanding;
(ii) terminate any obligation of the Lenders or the
Agent to make Advances or incur Letter of Credit Obligations,
and any other right of the Borrower to request the same
hereunder;
(iii) without prior notice to Borrower, notify, or at
Agent's election, request the Borrower to notify, Account
Debtors and other Persons obligated on the Collateral that
Agent has a security interest therein, and that payments shall
be made directly to Agent. Once any such notice has been given
to any Account Debtor or other Person obligated on the
Collateral, the Borrower shall not give any contrary
instructions to such Account Debtor or other Person without
Agent's prior written consent. If, notwithstanding the giving
of any notice, any Account Debtor or other such obligor shall
make payments to Borrower, Borrower shall hold all such
payments it receives in trust for the Agent, for the account
of the Lenders, without commingling the same with other funds
or property of, or held by, Borrower, and shall deliver the
same to the Agent or any such agent or designee of the Agent
immediately upon receipt by Borrower in the identical form
received, together with any necessary endorsements.
(iv) settle or adjust disputes and claims directly
with Account Debtors and other obligors on Accounts for
amounts and on terms which the Agent reasonably considers
advisable and in all such cases only the net amounts received
by the Agent, for the account of the Lenders, in payment of
such amounts, after deductions of costs and reasonable
attorneys' fees, shall constitute Collateral and Borrower
shall not have any further right to make any such settlements
or adjustments or to accept any returns of merchandise;
(v) through self-help, without notice, demand or
judicial or other process, enter upon any premises in which
Collateral, including without limitation, any Inventory, may
be located and, without resistance or interference by
Borrower, take physical possession of any or all thereof and
maintain such possession on such premises or move the same or
any part thereof to such other place or places as the Agent
shall choose, without being liable to Borrower on account of
any loss, damage or depreciation that may occur as a result
thereof, so long as the Agent shall act reasonably and in good
faith;
(vi) require Borrower to and Borrower shall, at its
own cost and expense and without charge to the Agent or any
Lender, assemble the Collateral, including, without
limitation, the Inventory, and maintain or deliver it into the
possession of the Agent or any agent or representative of the
Agent at such place
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or places as the Agent may designate and as are reasonably
convenient to both the Agent and Borrower;
(vii) at the expense of Borrower, cause any of the
Collateral to be placed in a public or field warehouse, and
the Agent shall not be liable to Borrower on account of any
loss, damage or depreciation that may occur as a result
thereof, so long as the Agent shall act reasonably and in its
reasonable credit judgment;
(viii) through self-help and without notice, demand
or judicial or other process, and without payment of any rent
or any other charge, enter any or all of Borrower's premises
and, without breach of the peace, until the Agent, on behalf
of the Lenders, completes the enforcement of its rights in the
Collateral, take possession of such premises or place
custodians in exclusive control thereof, remain on such
premises and use the same and any of Borrower's Collateral,
for the purpose of (A) preparing any Inventory for disposition
and disposing thereof and (B) collecting any Account, and the
Agent for the benefit of the Lenders is hereby granted a
license or sublicense and all other rights as may be
necessary, appropriate or desirable to use the proprietary
rights in connection with the foregoing, and the rights of
Borrower under all licenses, sublicenses and franchise
agreements shall inure to the Agent for the benefit of the
Lenders (provided, however, that any use of any federally
registered trademarks as to any goods shall be subject to the
control as to the quality of such goods of the owner of such
trademarks and the goodwill of the business symbolized
thereby);
(ix) exercise any and all of its rights under any and
all of the Security Documents;
(x) apply any Collateral consisting of cash to the
payment of the Secured Obligations in accordance with SECTION
12.3 hereof or in any order in which the Agent, on behalf of
the Lenders, may elect or use such cash in connection with the
exercise of any of its other rights hereunder or under any of
the Security Documents;
(xi) establish or cause to be established one or more
lockboxes or other arrangement for the deposit of proceeds of
Accounts, and, in such case, Borrower shall cause to be
forwarded to the Agent at the Agent's Office, on a daily
basis, copies of all checks and other items of payment and
deposit slips related thereto deposited in such lockboxes,
together with Collection Reports in accordance with SECTION
8.10(B), in form and substance satisfactory to the Agent; and
(xii) exercise all of the rights and remedies of a
secured party under the Uniform Commercial Code and under any
other Applicable Law, including, without limitation, the
right, without notice except as specified below and with or
without taking the possession thereof, to sell the Collateral
or any part thereof in one or more parcels at public or
private sale, at any location chosen by the Agent, for cash,
on credit or for future delivery, and at such price or prices
and upon such
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other terms as are commercially reasonable. Borrower agrees
that, to the extent notice of sale shall be required by law,
at least ten (10) days notice to Borrower of the time and
place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification,
but notice given in any other reasonable manner or at any
other reasonable time shall constitute reasonable
notification. The Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been
given. The Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned.
SECTION 12.3 Application of Proceeds All proceeds from each
sale of, or other realization upon, all or any part of the Collateral following
an Event of Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses
incurred in connection with such sale or other realization,
including attorneys' fees and expenses actually incurred,
(b) Second: to the payment of the Secured
Obligations, in accordance with the priorities set forth in
SECTION 4.1(B) hereof and to the creation of a fund in an
amount equal to the Letter of Credit Reserve, which fund shall
be held by Agent, for the benefit of itself and the Lenders,
as security for and applied to the payment of any amounts
which may thereafter become due under the Letter of Credit
Facility (with Borrower remaining liable for any deficiency),
or any order that Agent may elect and,
(c) Third: the balance (if any) of such proceeds
shall be paid to Borrower, subject to any duty imposed by law,
or otherwise to whomsoever shall be entitled thereto.
BORROWER SHALL REMAIN LIABLE AND WILL PAY, ON DEMAND, ANY DEFICIENCY REMAINING
IN RESPECT OF THE SECURED OBLIGATIONS, TOGETHER WITH INTEREST THEREON AT A RATE
PER ANNUM EQUAL TO THE HIGHEST RATE THEN PAYABLE HEREUNDER ON SUCH SECURED
OBLIGATIONS, WHICH INTEREST SHALL CONSTITUTE PART OF THE SECURED OBLIGATIONS.
SECTION 12.4 Miscellaneous Provision Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of the Agent
and the Lenders under this Agreement, the Notes and each of the Loan
Documents shall be cumulative and not exclusive of any rights or
remedies which it or they would otherwise have. In exercising such
rights and remedies the Agent and the Lenders may be selective and no
failure or delay by the Agent or any Lender in exercising any right
shall operate as a waiver of it, nor shall any single or partial
exercise of any power or right preclude its other or further exercise
or the exercise of any other power or right.
(b) Marshaling. Neither the Agent nor the Lenders shall be
required to marshal the Collateral or any guarantee of any obligation
arising under this Agreement or any other Loan Document or to resort to
the Collateral or any such guarantee in any
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particular order and each Credit Party hereby waives any right to
require any marshaling of assets or any other similar right.
(c) Limitation of Liability. Nothing contained in this ARTICLE
12 or elsewhere in this Agreement or in any of the other Loan Documents
shall be construed as requiring or obligating the Agent, any Lender or
any agent or designee of the Agent or any Lender to (i) make any demand
upon, or pursue or exhaust any of their rights or remedies against, any
Credit Party, any other obligor, guarantor, pledgor or any other Person
with respect to the payment of any Letter of Credit Obligation, Secured
Obligation, or any other obligation arising under this Agreement or any
of the other Loan Documents, or the monies due or to become due
thereunder, including by making an inquiry as to the nature or
sufficiency of any payment received by it, (ii) to pursue or exhaust
any of their rights or remedies, such as by filing a claim or notice,
with respect to any Collateral, the monies due or to become due
thereunder, or any direct or indirect guarantee thereof and (iii) to
take any steps necessary to preserve any rights against prior parties.
To the extent it may lawfully do so, each Credit Party absolutely and
irrevocably waives and relinquishes the benefit and advantage of, and
covenants not to assert against the Agent or any Lender, any valuation,
stay, appraisement, extension, redemption or similar laws and any and
all rights or defenses it may have as a surety now or hereafter
existing which, but for this provision, might be applicable to the sale
of any Collateral made under the judgment, order or decree of any
court, or privately under the power of sale conferred by this
Agreement, or otherwise. Without limiting the generality of the
foregoing, each Credit Party (A) agrees that it will not invoke or
utilize any law which might prevent, cause a delay in or otherwise
impede the enforcement of the rights of the Agent or any Lender in the
Collateral, (B) waives its rights under all such laws and (C) agrees
that it will not invoke or raise as a defense to any enforcement by the
Agent or any Lender of any rights and remedies relating to the
Collateral, the Letter of Credit Obligations, the Secured Obligations
or any other obligations hereunder, any legal or contractual
requirement with which the Agent or any Lender may have in good faith
failed to comply. The Agent, the Lenders and their agents or designees
shall have no liability to any Credit Party for actions taken pursuant
to this ARTICLE 12, any other provision of this Agreement or any of the
other Loan Documents so long as the Agent or such Lender shall act
reasonably and in its reasonable credit judgment.
(d) Appointment of Receiver. In any action under this ARTICLE
12, the Agent shall be entitled during the continuance of an Event of
Default to the appointment of a receiver, without notice of any kind
whatsoever, to take possession of all or any portion of the Collateral
and to exercise such power as the court shall confer upon such
receiver.
(e) Commercially Reasonable Remedies. To the extent that
Applicable Law imposes duties on the Agent to exercise remedies in a
commercially reasonable manner, Borrower acknowledges and agrees that
it is not commercially unreasonable for the Agent (i) to fail to incur
expenses reasonably deemed significant by the Agent to prepare
Collateral for disposition or otherwise to complete raw material or
work in process into finished goods or other finished products for
disposition, (ii) to fail to obtain third party consents for access to
Collateral to be disposed of, or to obtain or, if not required by other
law, to fail to obtain governmental or third party consents for the
collection or disposition
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of Collateral to be collected or disposed of, (iii) to fail to exercise
collection remedies against Account Debtors or other Persons obligated
on Collateral or to remove Liens on or any adverse claims against
Collateral, (iv) to exercise collection remedies against Account
Debtors and other Persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of
general circulation, whether or not the Collateral is of a specialized
nature, (vi) to contact other Persons, whether or not in the same
business as the Borrower, for expressions of interest in acquiring all
or any portion of such Collateral, (vii) to hire one or more
professional auctioneers to assist in the disposition of Collateral,
whether or not the Collateral is of a specialized nature, (viii) to
dispose of Collateral by utilizing internet sites that provide for the
auction of assets of the types included in the Collateral or that have
the reasonable capacity of doing so, or that match buyers and sellers
of assets, (ix) to dispose of assets in wholesale rather than retail
markets, (x) to disclaim disposition warranties, such as title,
possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Agent against risks of loss, collection or
disposition of Collateral or to provide to the Agent a guaranteed
return from the collection or disposition of Collateral or (xii) to the
extent deemed appropriate by the Agent, to obtain the services of other
brokers, investment bankers, consultants and other professionals to
assist the Agent in the collection or disposition of any of the
Collateral. Borrower acknowledges that the purpose of this SECTION
12.4(F) is to provide non-exhaustive indications of what actions or
omissions by the Agent would not be commercially unreasonable in the
Agent's exercise of remedies against the Collateral and that other
actions or omissions by the Agent shall not be deemed commercially
unreasonable solely on account of not being indicated in this SECTION
12.4(F). Without limitation upon the foregoing, nothing contained in
this SECTION 12.4(F) shall be construed to grant any rights to Borrower
or to impose any duties on Agent that would not have been granted or
imposed by this Agreement or by Applicable Law in the absence of this
SECTION 12.4(F).
SECTION 12.5 Trademark License Borrower hereby grants to the
Agent, for the benefit of the Lenders, to the extent of Borrower's rights
therein, the nonexclusive right and license to use the trademarks and tradenames
or other Intellectual Property set forth on SCHEDULES 6.1(Z) and 6.1(AA) and any
other such trademark, tradename or property then owned (or to the extent
permitted, used) by Borrower, for the purposes set forth in SECTION
12.2(B)(VIII) and for the purpose of enabling the Agent to realize on the
Collateral and to permit any purchaser of any portion of the Collateral through
a foreclosure sale or any other exercise of the Agent's rights and remedies
under the Loan Documents to use, sell or otherwise dispose of the Collateral
bearing any such trademark. Such right and license is granted free of charge,
without the requirement that any monetary payment whatsoever be made to Borrower
or any other Person by the Agent. Borrower hereby represents, warrants,
covenants and agrees that it presently has, and shall continue to have, the
right, without the approval or consent of others, to grant the license set forth
in this SECTION 12.5.
SECTION 12.6 Payout Agreement Payments. Agent agrees that any
Required XX Xxxx Collateral or proceeds of Collateral received by Agent from
Deutsche Bank Trust Company America ("DBTC") pursuant to the payout letter dated
on or about the Agreement Date by DBTC to Credit Parties and Agent shall be
applied by Agent to the
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Revolving Credit Loans, with any excess to be released to Borrower subject to
any obligations that Agent may have under applicable law to deliver such balance
to third parties; provided, however, that to the extent that an Event of Default
shall be in existence, such excess shall first be applied by Agent to the
repayment of any other Secured Obligations, in Agent's discretion, and, to the
extent that Borrower shall be required to furnish Cash Collateral pursuant to
Section 3.3, any remaining excess shall be applied by Agent to such Cash
Collateral equal to one-hundred and five percent (105%) of the Letter of Credit
Obligations.
ARTICLE XIII.
ASSIGNMENTS
SECTION 13.1 Successors and Assigns; Participations.
(a) This Agreement shall be binding upon and inure to the
benefit of each Credit Party, the Lenders, the Agent, all future
holders of the Notes, and their respective successors and assigns,
except that no Credit Party may assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of
each Lender, and any such attempted assignment or transfer by any
Credit Party except in strict compliance with the provisions hereof
shall be null and void, and of no force or effect.
(b) Each Lender may assign to one or more Eligible Assignees
all or a portion of its interests, rights and obligations under this
Agreement (including, without limitation, all or a portion of the
Revolving Credit Loans at the time owing to it and the Notes held by
it); provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Lender's
rights and obligations under this Agreement, (ii) the amount of the
Commitment of the assigning Lender that is subject to each such
assignment (determined as of the date the Assignment and Transfer with
respect to such assignment is delivered to the Agent) shall in no event
be less than $10,000,000 (the "Minimum Commitment"), (iii) in the case
of a partial assignment, the amount of the Commitment that is retained
by the assigning Lender (determined as of the date the Assignment and
Transfer with respect to such assignment is delivered to the Agent)
shall in no event be less than the Minimum Commitment, (iv) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register an Assignment and Transfer,
together with any Note or Notes subject to such assignment and such
assignee's commitment percentage of the Agent's syndication expenses,
(v) such assignment shall not, without the consent of Borrower, require
Borrower to file a registration statement with the Securities and
Exchange Commission or apply to or qualify the Revolving Credit Loans
or the Notes under the blue sky laws of any state, (vi) the
representation contained in SECTION 13.2 hereof shall be true with
respect to any such proposed assignee, (vii) such Lender provides
notice to Borrower of the identity of the Eligible Assignee and (viii)
such Eligible Assignee shall pay in cash a $3,500 transfer fee to
Agent. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Transfer,
which effective date shall be at least five (5) Business Days after the
execution thereof, (x) the assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Transfer, have the
rights and obligations of a Lender hereunder, and
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(y) the Lender assignor thereunder shall, to the extent provided in
such assignment, be released from its obligations under this Agreement.
(c) By executing and delivering an Assignment and Transfer,
the Lender assignor thereunder and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (i)
other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, such Lender assignor makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; (ii) such Lender
assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit
Party or the performance or observance by any Credit Party of any of
its obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that
it has received a copy of this Agreement, together with copies of the
financial statements referred to in SECTION 6.1(L) and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Transfer; (iv) such assignee will, independently and without reliance
upon the Agent, such Lender assignor or any other Lender, and based on
such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to
the Agent by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed by it
as a Lender.
(d) The Agent shall maintain a copy of each Assignment and
Transfer delivered to it and a register for the recordation of the
names and addresses of the Lenders and the Commitment Percentage of,
and principal amount of the Revolving Credit Loans owing to, each
Lender from time to time (the "Register"). The entries in the Register
shall be conclusive, in the absence of manifest error, and each Credit
Party, the Agent and the Lenders may treat each person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Transfer executed by
an assigning Lender and an Eligible Assignee together with any Note or
Notes subject to such assignment and the written consent to such
assignment, the Agent shall, if such Assignment and Transfer has been
completed and is in the form of EXHIBIT E, (i) accept such Assignment
and Transfer, (ii) record the information contained therein in the
Register, (iii) give prompt notice thereof to the Lenders and Borrower,
and (iv) promptly deliver a copy of such Assignment and Transfer to
Borrower. Within five (5) Business
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Days after receipt of notice, Borrower shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes, a new Note or
Notes to the order of such Eligible Assignee in amounts equal to the
Commitment Percentage assumed by such Eligible Assignee pursuant to
such Assignment and Transfer and a new Note or Notes to the order of
the assigning Lender in an amount equal to the Commitment retained by
it hereunder. Such new Note or Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note
or Notes, shall be dated the effective date of such Assignment and
Transfer and shall otherwise be in substantially the form of the
assigned Notes delivered to the assignor Lender. Assignor Lenders shall
cancel and return the old Note or Notes to the Borrower promptly after
delivery of the new Note or Notes to the applicable Lenders.
(f) Each Lender may, without the consent of any Credit Party
or other Person, sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its
commitments hereunder and the Revolving Credit Loans owing to it and
the Notes held by it); provided, however, that (i) each such
participation shall be in an amount not less than the Minimum
Commitment, (ii) such Lender's obligations under this Agreement
(including, without limitation, its commitments hereunder) shall remain
unchanged, (iii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iv) such
Lender shall remain the holder of the Notes held by it for all purposes
of this Agreement, (v) each Credit Party, the Agent 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; provided, that such Lender may agree with any participant
that such Lender will not, without such participant's consent, agree to
or approve any waivers or amendments which would reduce the principal
of or the interest rate on any Revolving Credit Loans, extend the term
or increase the amount of the commitments of such participant, reduce
the amount of any fees to which such participant is entitled, extend
any scheduled payment date for principal or release Collateral securing
the Revolving Credit Loans (other than Collateral disposed of pursuant
to the terms of this Agreement or the Security Documents) and (vi) any
such disposition shall not, without the consent of any Credit Party,
require such Credit Party to file a registration statement with the
Securities and Exchange Commission or to apply to qualify the Revolving
Credit Loans or the Notes under the blue sky laws of any state.
(g) Any Lender may, in connection with any assignment,
proposed assignment, participation or proposed participation pursuant
to this SECTION 13.1, disclose to the assignee, participant, proposed
assignee or proposed participant, any information relating to each
Credit Party furnished to such Lender by or on behalf of such Credit
Party; provided that, prior to any such disclosure, each such-assignee,
proposed assignee, participant or proposed participant shall agree with
such Credit Party or such Lender (which in the case of an agreement
with only such Lender, such Credit Party shall be recognized as a third
party beneficiary thereof) to preserve the confidentiality of any
confidential information relating to such Credit Party received from
such Lender.
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(h) Each Credit Party shall assist any Lender permitted to
sell assignments or participations under this SECTION 13.1 as
reasonably required to enable the assigning or selling Lender to effect
any such assignment or participation, including, without limitation,
(i) prompt assistance in the preparation of an information memorandum
and the verification of the completeness and accuracy of the
information contained therein; (ii) preparation of offering materials
and projections by such Credit Party and its advisors; (iii) providing
the Agent with all information reasonably deemed necessary by Agent to
successfully complete the syndication, including, without limitation,
financial information, evaluations and projections; (iv) confirmation
as to the accuracy and completeness of such offering materials,
information and projections; (v) participation of such Credit Party's
senior management in meetings and conference calls with potential
lenders at such times and places as Agent may reasonable request; and
(vi) the execution and delivery of any and all agreements, notes and
other documents and instruments as shall be requested; provided,
however, the Credit Parties shall not be required to incur any material
costs in connection with the foregoing unless such assignment or
participation shall be made in connection with a waiver, amendment or
modification requested by any Credit Party.
SECTION 13.2 Representation of Lenders Each Lender hereby
represents that it will make each Advance hereunder as a commercial loan for its
own account in the ordinary course of its business; provided, however, that
subject to SECTION 13.1 hereof, the disposition of the Notes or other evidence
of the Secured Obligations held by any Lender shall at all times be within its
exclusive control.
ARTICLE XIV.
THE AGENT
SECTION 14.1 Appointment of Agent Each of the Lenders hereby
irrevocably designates and appoints The CIT Group/Business Credit, Inc. as the
Agent of such Lender under this Agreement and the other Loan Documents. Each
such Lender irrevocably authorizes Agent, as the Agent for such Lender to take
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement and such other
Loan Documents, including, without limitation, to make determinations as to the
eligibility of Accounts and Inventory and to adjust the advance ratios contained
in the definition of "Borrowing Base" (so long as such advance ratios, as
adjusted, do not exceed those set forth in the definition of "Borrowing Base"),
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement or
such other Loan Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against the Agent.
SECTION 14.2 Delegation of Duties The Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.
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The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
SECTION 14.3 Exculpatory Provisions Neither the Agent nor any
of its trustees, officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable to any Lender (or any Lender's participants) for
any action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Agreement or the other Loan Documents (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible in
any manner to any Lender (or any Lender's participants) for any recitals,
statements, representations or warranties made by any Credit Party or any
officer thereof contained in this Agreement or the other Loan Documents or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or the
other Loan Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the other Loan Documents or
for any failure of any Credit Party to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of any Credit Party.
SECTION 14.4 Reliance by Agent The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Credit Parties), independent accountants and other experts selected by the
Agent. The Agent may deem and treat the payee of any Note as the owner thereof
for all purposes unless such Note shall have been transferred in accordance with
SECTION 13.1. The Agent shall be fully justified in failing or refusing to take
any action under this Agreement and the other Loan Documents unless it shall
first receive such advice or concurrence of the Required Lenders (or the
unanimous consent of the Lenders with respect to the matters set forth in
SECTION 15.10(B)) as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the Notes in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Notes.
SECTION 14.5 Notice of Default The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Lenders. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders; provided
that unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) continue making Advances to Borrower on
behalf of the Lenders in reliance on the provisions of SECTION
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4.6 and take such other action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
SECTION 14.6 Non-Reliance on Agent and Other Lenders Each
Lender expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of each Credit Party, shall be deemed
to constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of each Credit Party and made its own decision to make its
Advances hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary to inform itself
as to the business, operations, property, financial and other condition and
creditworthiness of each Credit Party. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder or by the other Loan Documents, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of each Credit Party which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
SECTION 14.7 Indemnification The Lenders agree to indemnify
the Agent in its capacity as such (to the extent not reimbursed by a Credit
Party and without limiting the obligation of each Credit Party to do so),
ratably according to their respective Commitment Percentages, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including, without limitation, at any time following the
payment of the Notes) be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of this Agreement or the other Loan
Documents, or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Agent's gross negligence or
willful misconduct or resulting solely from transactions or occurrences that
occur at a time after such Lender has assigned all of its interests, rights and
obligations under this Agreement pursuant to SECTION 13.1 or, in the case of a
Lender to which an assignment is made hereunder pursuant to SECTION 13.1, at a
time before such assignment. The agreements in this subsection shall survive the
payment of the Notes, the Secured Obligations and all other amounts payable
hereunder and the termination of this Agreement.
SECTION 14.8 Agent in Its Individual Capacity The Agent and
its Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with each Credit Party as though it was not the Agent
hereunder. With respect to its
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Commitment, the Advances made or renewed by it and any Note issued to it and any
Letter of Credit issued by it, the Agent shall have and may exercise the same
rights and powers under this Agreement and the other Loan Documents and is
subject to the same obligations and liabilities as and to the extent set forth
herein and in the other Loan Documents for any other Lender. The terms "Lenders"
or "Required Lenders" or any other term shall, unless the context clearly
otherwise indicates, include the Agent in its individual capacity as a Lender or
one of the Required Lenders.
SECTION 14.9 Successor Agent
The Agent may resign as Agent by providing thirty (30) days written notice to
the Lenders. If the Agent shall resign or be removed as Agent under this
Agreement, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall, so long as no
Default or Event of Default shall have occurred, be subject to the approval of
the Borrower (which approval shall not be unreasonably withheld), whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent, and
the term "Agent" shall mean such successor agent effective upon its appointment,
and the former Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement or any holders of the Notes. After any Agent's
resignation or removal hereunder as Agent, the provisions of SECTION 14.7 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
SECTION 14.10 Notices from Agent to Lenders The Agent shall
promptly, upon receipt thereof, forward to each Lender copies of any monthly
Borrowing Base Certificates supplied to it by Borrower pursuant to SECTION
8.10(D)(II) hereof.
SECTION 14.11 Agency for Perfection.
Agent and each Lender hereby appoints each other Lender as agent for the purpose
of perfecting Agent's Liens in assets which, in accordance with Article IX of
the UCC can be perfected only by possession. Should any Lender (other than the
Agent) obtain possession of any such Collateral, such Lender shall notify the
Agent thereof, and, promptly upon the Agent's request therefor shall deliver
such Collateral to the Agent or in accordance with the Agent's instructions.
ARTICLE XV.
MISCELLANEOUS
SECTION 15.1 Notices.
(a) Method of Communication. Except as specifically provided
in this Agreement or in any of the Loan Documents, all notices and the
communications hereunder and thereunder shall be in writing or by
telephone, subsequently confirmed in writing. Notices in writing shall
be delivered personally or sent by e-mail, certified or registered
mail, postage pre-paid, or by overnight courier, telex or facsimile
transmission and shall be deemed received in the case of personal
delivery, when delivered, in the case of mailing, when receipted for,
in the case of overnight delivery, on the next Business Day after
delivery to the courier, and in the case of e-mail, telex and facsimile
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transmission, upon transmittal, provided that in the case of notices to
the Agent, notice shall be deemed to have been given only when such
notice is actually received by the Agent. A telephonic notice to the
Agent, as understood by the Agent, will be deemed to be the controlling
and proper notice in the event of a discrepancy with or failure to
receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at the
following addresses, or any other address of which all the other
parties are notified in writing
If to any Credit Party: c/x Xxxxxxxx'x Operating Co.
0000 Xxxxxx Xx.
Xxxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxx
Titles: Vice President and Controller
Facsimile No.: (000) 000-0000
With a copy to: Xxxxx Xxxx Xxxxxxx, Esq.
General Counsel
Loehmann's Operating Co.
0000 Xxxxxx Xx.
Xxxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
If to the Agent: The CIT Group/Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxxxxx Xxxxx
Title: Vice President
Facsimile No.: (000) 000-0000
With a copy to: Xxxx & Hessen LLP
000 Xxxxxxx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxxxxx Xxx Podair, Esq.
Facsimile: (000) 000-0000
If to a Lender: At the address of such Lender set forth on
the signature page hereof.
(c) Agent's Office. The Agent hereby designates its office
located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or
any subsequent office which shall have been specified for such purpose
by written notice to the Borrower, as the office to which payments due
are to be made and at which Advances will be disbursed.
SECTION 15.2 Expenses Borrower agrees to pay or reimburse on
demand all reasonable costs and expenses incurred by the Agent or, following an
Event of Default, any
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Lender, including, without limitation, the reasonable fees and disbursements of
counsel, in connection with (a) the negotiation, preparation, execution,
delivery, administration, enforcement and termination of this Agreement and each
of the other Loan Documents, whenever the same shall be executed and delivered,
including, without limitation (i) the out-of-pocket costs and expenses incurred
in connection with the administration and interpretation of this Agreement and
each of the other Loan Documents (provided that, before Agent or any Lender
incurs any costs or expenses with respect to any Blocked Account Agreement,
Agent or such Lender shall (if reasonably possible) provide Borrower with
reasonable notice that Agent or such Lender is about to incur such costs or
expenses and provide Borrower with a commercially reasonable opportunity to
directly pay such costs or expenses prior to Agent or such Lender incurring such
costs or expenses); (ii) the costs and expenses of appraisals of the Collateral;
(iii) the costs and expenses of lien and title searches; and (iv) taxes, fees
and other charges for filing the Financing Statements and continuations and the
costs and expenses of taking other actions to perfect, protect, and continue the
Security Interests, including, without limitation, the filing of any such
financing or continuation statements as Agent deems necessary in its sole
discretion in order to comply with the Uniform Commercial Code; (b) the
preparation, execution and delivery of any waiver, amendment, supplement or
consent by the Agent and the Lenders relating to this Agreement or any of the
other Loan Documents; (c) sums paid or incurred to pay any amount or take any
action required of the Credit Parties under this Agreement or any of the other
Loan Documents that any Credit Party fails to pay or take; (d) the reasonable
out-of-pocket costs of field audits, inspections and verifications of the
Collateral by the Agent and the Lenders, including, without limitation, standard
per diem fees charged by the Agent and the Lenders for each auditor and travel,
lodging, and meals in connection with any of the foregoing, provided, however,
if at any time no Default or Event of Default has occurred and is continuing,
then Borrower shall not be required to pay for more than two (2) such audits,
inspections or verifications in the subsequent twelve (12) consecutive months;
(e) costs and expenses of forwarding loan proceeds, collecting checks and other
items of payment, and establishing and maintaining each Disbursement Account,
Blocked Account, lockbox and any other arrangements with third parties relating
to the Collateral; (f) costs and expenses of preserving and protecting the
Collateral; (g) consulting with one or more Persons, including appraisers,
accountants and lawyers, concerning the value of any Collateral for the Secured
Obligations or related to the nature, scope or value of any right or remedy of
the Agent or any Lender hereunder or under any of the other Loan Documents,
including any review of factual matters in connection therewith, which expenses
shall include the fees and disbursements of such Persons; provided, however,
solely with respect to appraisers, if at any time no Default or Event of Default
has occurred and is continuing, then Borrower shall not be required to pay for
more than one (1) appraisal by any such appraiser in the subsequent twelve (12)
consecutive months; and (h) reasonable costs and expenses paid or incurred to
obtain payment of the Secured Obligations, enforce the Security Interests, sell
or otherwise realize upon the Collateral, and otherwise enforce the provisions
of this Agreement and each of the other Loan Documents, or to prosecute or
defend any claim in any way arising out of, related to or connected with, this
Agreement or any of the other Loan Documents, which expenses shall include the
reasonable fees and disbursements of counsel and of experts and other
consultants retained by the Agent or any Lender.
The foregoing shall not be construed to limit any other provisions of this
Agreement or any of the other Loan Documents regarding costs and expenses to be
paid by Borrower. Borrower
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hereby authorizes the Agent and the Lenders, upon reasonable consultation with
(but not notice to) Borrower, to debit the Borrower's Loan Accounts (by
increasing the principal amount of the Revolving Credit Loan) in the amount of
any such costs and expenses owed by Borrower when due.
SECTION 15.3 Stamp and Other Taxes Borrower will pay any and
all stamp, registration, recordation and similar taxes, fees or charges and
shall indemnify the Agent and the Lenders against any and all liabilities with
respect to or resulting from any delay in the payment or omission to pay any
such taxes, fees or charges, which may be payable or determined to be payable in
connection with the execution, delivery, performance or enforcement of this
Agreement and any of the Loan Documents or the perfection of any rights or
security interest thereunder, including, without limitation, the Security
Interest.
SECTION 15.4 Setoff; Pro Rata Participation.
(a) In addition to any rights now or hereafter granted under
Applicable Law and not by way of limitation of any such rights, during
the continuance of any Event of Default, each Lender is hereby
authorized by Borrower at any time or from time to time, without notice
to Borrower or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and
all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness at any time held or owing by any
Lender to or for the credit or the account of Borrower against and on
account of the Secured Obligations irrespective or whether or not the
Agent or such Lender shall have made any demand under this Agreement or
any of the Loan Documents, or the Agent or such Lender shall have
declared any or all of the Secured Obligations to be due and payable as
permitted by SECTION 12.2 and although such Secured Obligations shall
be contingent or unmatured.
(b) If any Lender shall obtain payment of any principal of or
interest on any Revolving Credit Loans made by it or on any other
Secured Obligation owing to such Lender through the exercise of any
right of set-off, banker's lien or counterclaim or similar right or
otherwise, it shall promptly so notify the Agent (which shall promptly
notify the other Lenders). If, as a result of such payment, such Lender
shall have received a greater percentage of the principal of or
interest on any Revolving Credit Loans than such Lender's Commitment
Percentage thereof, then it shall, at the request of such other Lender
or Lenders, promptly purchase from such other Lender or Lenders
participations in (or, if and to the extent specified by such first
Lender, direct interests in) the principal of or interest on Revolving
Credit Loans owing to such other Lenders in such amounts, and make such
other adjustments from time to time as shall be equitable, to the end
that such first Lender and such other Lender or Lenders (such first
Lender and such other Lender or Lenders being collectively referred to
as the "Sharing Lenders") shall share the benefit of such excess
payment (net of any expenses which may be incurred by such first Lender
in obtaining or preserving such excess payment) ratably in accordance
with the unpaid amounts of such obligations owing to each of the
Sharing Lenders and their respective Commitment Percentages of the
Revolving Credit Facility. To such end all the Sharing Lenders shall
make appropriate adjustments among
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themselves (by the resale of participations sold or otherwise) if such
payment is rescinded or must otherwise be restored.
(c) Borrower agrees that any Lender so purchasing a
participation in obligations hereunder of Borrower to another Lender or
other Lenders may exercise any and all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such participation
as fully as if such first Lender were a direct holder of obligations of
Borrower in the amount of such participation. Nothing contained herein
shall require any Lender to exercise any such right or shall affect the
right of any Lender to exercise, and retain the benefits of exercising,
any such right with respect to any other indebtedness or obligation of
Borrower.
(d) If under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a set-off
to which Section 15.4(b) hereof applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Lenders entitled
under this Section 15.4 to share in the benefits of any recovery on
such secured claim.
SECTION 15.5 Litigation EACH CREDIT PARTY, THE AGENT AND EACH
LENDER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN
ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION
MAY BE COMMENCED BY OR AGAINST ANY CREDIT PARTY, THE AGENT AND SUCH LENDER
ARISING OUT OF THIS AGREEMENT, THE COLLATERAL OR ANY ASSIGNMENT THEREOF OR BY
REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN ANY CREDIT PARTY AND THE
AGENT OR ANY LENDER OF ANY KIND OR NATURE. EACH CREDIT PARTY, THE AGENT AND THE
LENDERS HEREBY AGREE THAT THE FEDERAL COURT OF THE SOUTHERN DISTRICT OF NEW YORK
SHALL HAVE NONEXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN ANY CREDIT PARTY AND THE AGENT OR SUCH LENDER, PERTAINING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR THE LOAN DOCUMENTS OR TO ANY MATTER
ARISING THEREFROM. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS,
HEREBY WAIVING PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS
OR PAPERS ISSUED THEREIN AND AGREEING THAT SERVICE OF SUCH SUMMONS AND COMPLAINT
OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED
TO SUCH CREDIT PARTY AT THE ADDRESS OF SUCH CREDIT PARTY SET FORTH IN SECTION
15.1. SHOULD ANY CREDIT PARTY FAIL TO APPEAR OR ANSWER ANY SUMMONS, COMPLAINT,
PROCESS OR PAPERS SO SERVED WITHIN THIRTY (30) DAYS AFTER THE RECEIPT THEREOF
(AS THE TERM "RECEIPT" IS DEFINED IN SECTION 15.1 HEREOF), IT SHALL BE DEEMED IN
DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE RENDERED AGAINST IT AS DEMANDED OR
PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE NONEXCLUSIVE
CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT OF ANY JUDGMENT
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OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY APPROPRIATE JURISDICTION.
SECTION 15.6 Waiver of Rights EACH CREDIT PARTY HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES ALL RIGHTS WHICH SUCH CREDIT
PARTY HAS UNDER APPLICABLE LAW TO NOTICE AND TO A JUDICIAL HEARING PRIOR TO THE
AGENT OR ANY LENDER, OR THE SUCCESSORS AND ASSIGNS OF THE AGENT OR SUCH LENDER,
BECOMING ENTITLED TO POSSESSION OF THE COLLATERAL UPON AN EVENT OF DEFAULT. EACH
CREDIT PARTY ACKNOWLEGES THAT, UPON AN EVENT OF DEFAULT, THE AGENT AND LENDERS
WOULD BE IRREPRABLY HARMED AND, ACCORDINGLY, EACH CREDIT PARTY CONSENTS TO THE
EXERCISE BY THE AGENT, ON BEHALF OF LENDERS, OF SUCH LAWFUL PROVISIONAL REMEDIES
AS THE AGENT MAY ELECT. EACH CREDIT PARTY HEREBY ACKNOWLEDGES THAT IT HAS READ
AND FULLY UNDERSTANDS THE TERMS OF THIS WAIVER AND CONSENT AND THE EFFECTS
HEREOF.
SECTION 15.7 Reversal of Payments The Agent and each Lender
shall have the continuing and exclusive right to apply, reverse and re-apply any
and all payments to any portion of the Secured Obligations in a manner
consistent with the terms of this Agreement. To the extent Borrower makes a
payment or payments to the Agent, for the account of the Lenders, or any Lender
receives any payment or proceeds of the Collateral for Borrower's benefit, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the Secured Obligations or part thereof intended
to be satisfied shall be revived and continued in full force and effect, as if
such payment or proceeds had not been received by the Agent or such Lender, and
shall constitute a Prime Advance.
SECTION 15.8 Injunctive Relief Each Credit Party recognizes
that, in the event such Credit Party fails to perform, observe or discharge any
of its obligations or liabilities under this Agreement, any remedy at law may
prove to be inadequate relief to the Agent and the Lenders; therefore, such
Credit Party agrees that if any Event of Default shall have occurred and be
continuing, the Agent and the Lenders, if the Agent or any Lender so requests,
shall be entitled to temporary and permanent injunctive relief without the
necessity of proving actual damages.
SECTION 15.9 Accounting Matters All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by any
Credit Party to determine whether it is in compliance with any covenant
contained herein, shall, unless this Agreement otherwise provides or unless
Required Lenders shall otherwise consent in writing, be performed in accordance
with GAAP.
SECTION 15.10 Amendments
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(a) Except as set forth in SUBSECTION (B) below, any term,
covenant, agreement or condition of this Agreement or any of the Loan
Documents may be amended or waived, and any departure therefrom may be
consented to by the Required Lenders, if, but only if, such amendment,
waiver or consent is in writing signed by the Required Lenders and, in
the case of an amendment (other than an amendment described in SECTION
15.10(D)), by the Borrower, and in any such event, the failure to
observe, perform or discharge any such term, covenant, agreement or
condition (whether such amendment is executed or such waiver or consent
is given before or after such failure) shall not be construed as a
breach of such term, covenant, agreement or condition or as a Default
or an Event of Default. Unless otherwise specified in such waiver or
consent, a waiver or consent given hereunder shall be effective only in
the specific instance and for the specific purpose for which given.
(b) Except as otherwise set forth in this Agreement, without
the prior unanimous written consent of the Lenders,
(i) no amendment, consent or waiver shall affect the
amount or extend the time of the obligation of the Lenders to
make Advances or extend the originally scheduled time or times
of payment of the principal of any Revolving Credit Loans or
alter the time or times of payment of interest on any
Revolving Credit Loans or the Revolving Credit Facility
Amount, the Commitment or Commitment Percentage of any Lender
or the rate of interest thereon or the amount of any fee
payable hereunder or permit any subordination of the principal
or interest on such loans, permit the subordination of the
Security Interests in any material Collateral or amend the
provisions of ARTICLE 12 or of this SECTION 15.10(B),
(ii) no Collateral shall be released by the Agent
other than as specifically permitted in this Agreement,
(iii) except to the extent expressly provided herein,
the definition "Borrowing Base" shall not be amended, and
(iv) neither the Agent nor any Lender shall consent
to any amendment to or waiver of the amortization, deferral or
subordination provisions of any instrument or agreement
evidencing or relating to obligations of Borrower that are
expressly subordinate to any of the Secured Obligations if
such amendment or waiver would be adverse to the Lenders in
their capacities as Lenders hereunder;
provided, however, that anything herein to the contrary notwithstanding,
Required Lenders shall have the right to waive any Default or Event of Default
and the consequences hereunder of such Default or Event of Default, provided
that such Default or Event of Default does not arise under SECTION 12.1(G) or
SECTION 12.1(H) or out of a breach of, or failure to perform or observe any
term, covenant or condition of this Agreement or any other Loan Document (other
than the provisions of ARTICLE 12 of this Agreement), the amendment of which
requires the unanimous consent of the Lenders. The Required Lenders shall have
the right, with respect to any Default or Event of Default that may be waived by
them, to enter into an agreement with the Borrower
116
providing for the forbearance from the exercise of any remedies provided
hereunder or under the other Loan Documents without waiving any Default or Event
of Default.
(c) The making of Advances hereunder by the Lenders during the
existence of a Default or Event of Default shall not be deemed to
constitute a waiver of such Default or Event of Default.
(d) Notwithstanding any provision of this Agreement or the
other Loan Documents to the contrary, no consent, written or otherwise,
of the Borrower shall be necessary or required in connection with any
amendment to ARTICLE 14 (except to the extent provided in SECTION 14.9)
or SECTION 4.7; provided, however, Agent shall provide copies of such
amendment to the Borrower.
SECTION 15.11 Assignment All the provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that no Credit Party may assign or
transfer any of its rights under this Agreement.
SECTION 15.12 Performance of each Credit Party's Duties Each
Credit Party's obligations under this Agreement and each of the Loan Documents
shall be performed by such Credit Party at its own cost and expense. Upon the
occurrence of an Event of Default hereunder or under any of the Loan Documents,
if a Credit Party shall fail to do any act or thing which it has covenanted to
do under this Agreement or any of the Loan Documents, the Agent, on behalf of
the Lenders, may (but shall not be obligated to) do the same or cause it to be
done, at such Credit Party's cost and expense, either in the name of the Agent
or the Lenders or in the name and on behalf of such Credit Party, and such
Credit Party hereby irrevocably authorizes the Agent so to act.
SECTION 15.13 Indemnification Borrower agrees to reimburse the
Agent and the Lenders for all costs and expenses, including, without limitation,
reasonable counsel fees and disbursements, incurred, and to indemnify and hold
the Agent and the Lenders harmless from and against all losses suffered by, the
Agent or any Lender in connection with (i) the exercise by the Agent or any
Lender of any right or remedy granted to it under this Agreement or any of the
other Loan Documents, (ii) any claim, and the prosecution or defense thereof,
arising out of or in any way connected with this Agreement or any of the other
Loan Documents and (iii) the collection or enforcement of the Secured
Obligations or any of them, in each case, other than such costs, expenses and
liabilities solely and directly from such Agent's or any such Lender's gross
negligence or willful misconduct.
SECTION 15.14 All Powers Coupled with Interest All powers of
attorney and other authorizations granted to the Agent and the Lenders and any
Persons designated by the Agent or the Lenders pursuant to any provisions of
this Agreement or any of the other Loan Documents shall be deemed coupled with
an interest and shall be irrevocable so long as any of the Secured Obligations
remain unpaid or unsatisfied.
SECTION 15.15 Survival Notwithstanding any termination of this
Agreement, (a) until all Secured Obligations have been irrevocably paid in full
or otherwise satisfied, the Agent, for the benefit of the Lenders, shall retain
its Security Interest and shall
117
retain all rights under this Agreement and each of the Security Documents with
respect to the Collateral as fully as though this Agreement had not been
terminated, (b) the indemnities to which the Agent and the Lenders are entitled
under the provisions of this ARTICLE 15 and any other provision of this
Agreement and the Loan Documents shall continue in full force and effect and
shall protect the Agent and the Lenders against events arising after such
termination as well as before and (c) in connection with the termination of this
Agreement and the release and termination of the Security Interests, the Agent,
on behalf of itself as agent and the Lenders, may require such assurances and
indemnities as it shall reasonably deem necessary or appropriate to protect the
Agent and the Lenders against loss on account of such release and termination,
including, without limitation, with respect to credits previously applied to the
Secured Obligations that may subsequently be reversed or revoked.
SECTION 15.16 Severability of Provisions Any provision of this
Agreement or any Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 15.17 Governing Law This Agreement and the Notes shall
be construed in accordance with and governed by the law of the State of New
York.
SECTION 15.18 Counterparts This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and shall be binding upon all parties, their successors and assigns, and all of
which taken together shall constitute one and the same agreement.
SECTION 15.19 Reproduction of Documents This Agreement, each
of the Loan Documents and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by the Agent or any Lender, and (c) financial
statements, certificates and other information previously or hereafter furnished
to the Agent or any Lender, may be reproduced by the Agent or such Lender by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and such Person may destroy any original document so produced.
Each party hereto stipulates that, to the extent permitted by Applicable Law,
any such reproduction shall be as admissible in evidence as the original itself
in any judicial or administrative proceeding (whether or not the original shall
be in existence and whether or not such reproduction was made by the Agent or
such Lender in the regular course of business), and any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 15.20 Term of Agreement This Agreement shall remain in
effect from the Effective Date through the Termination Date and thereafter until
all Secured Obligations shall have been irrevocably paid and satisfied in full.
No termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
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SECTION 15.21 Confidentiality.(a) Each Credit Party severally
hereby consents that the Agent and each Lender may issue and disseminate to the
public general information describing the credit accommodation entered into
pursuant to this Agreement, including the name and address of the Credit Parties
and a general description of the Credit Parties' business and may use the Credit
Parties' names in advertising and other promotional material.
(b) Subject to the provisions of the following sentence, each
Lender severally agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information
provided to the Agent or such Lender by or on behalf of such Credit
Party under this Agreement or any other Loan Document (including,
without limitation, the Blocked Account Agreements), except to the
extent that such information (i) was or becomes generally available to
the public other than as a result of disclosure by the Agent or such
Lender, or (ii) was or becomes available on a nonconfidential basis
from a source other than such Credit Party, provided that such source
is not bound by a confidentiality agreement with such Credit Party
known to the Agent or such Lender; provided, however, that the Agent
and any Lender may disclose such information (A) at the request or
pursuant to any requirement of any Governmental Authority to which the
Agent or such Lender is subject or in connection with an examination of
the Agent or such Lender by any such Governmental Authority; (B)
pursuant to subpoena or other court process; (C) when required to do so
in accordance with the provisions of any Applicable Law; (D) to the
extent reasonably required in connection with any litigation or
proceeding (including, but not limited to, any bankruptcy proceeding)
to which the Agent, any Lender or their respective Affiliates may be
party, subject to reasonable prior notice to such Credit Party (only if
time permits such notice); (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other
Loan Document; (F) to the Agent's or such Lender's independent
auditors, accountants, attorneys and other professional advisors,
provided that any such Person agrees to keep such information
confidential to the same extent required of the Agent and the Lenders
hereunder; (G) to any prospective Participant or Assignee under any
Assignment and Acceptance, actual or potential, provided that such
prospective Participant or Assignee agrees to keep such information
confidential to the same extent required of the Agent and the Lenders
hereunder; and (H) to its Affiliates (excluding Affiliates described in
CLAUSE (B) of the definition thereof).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers in several counterparts all as of the
day and year first written above.
BORROWER:
XXXXXXXX'X OPERATING CO.
By:
-----------------------------------------
Name:
Title:
GUARANTORS:
XXXXXXXX'X HOLDINGS, INC.
By:
-----------------------------------------
Name:
Title:
XXXXXXXX'X, INC.
By:
-----------------------------------------
Name:
Title:
XXXXXXXX'X REAL ESTATE HOLDINGS,
INC.
By:
-----------------------------------------
Name:
Title:
AGENT:
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
-----------------------------------------
Name:
Title:
LENDER:
Commitment: $50,000,000 THE CIT GROUP/BUSINESS CREDIT, INC.
By:
-----------------------------------------
Name:
Title: