EXHIBIT 10.10
EXECUTION COPY
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U.S. $225,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
dated as of January 22, 2003,
among
GENERAL ELECTRIC CAPITAL CORPORATION,
individually and in its capacity as administrative agent,
FLEET PRECIOUS METALS, INC.,
individually and in its capacity as documentation agent,
CERTAIN OTHER LENDERS AND
FINANCIAL INSTITUTIONS PARTIES HERETO,
FINLAY FINE JEWELRY CORPORATION
and
FINLAY ENTERPRISES, INC.
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TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS.............................................................1
Section 1.1. CERTAIN DEFINED TERMS.............................................................1
Section 1.2. TERMS DEFINED IN THE UNIFORM COMMERCIAL CODE.....................................27
Section 1.3. COMPUTATION OF TIME PERIODS......................................................27
Section 1.4. ACCOUNTING TERMS.................................................................27
Section 1.5. OTHER PROVISIONS REGARDING DEFINITIONS...........................................27
SECTION 2. AMOUNT AND TERMS............................................................................27
Section 2.1. REVOLVING ADVANCES; SWING LINE FACILITY..........................................27
Section 2.2. REVOLVING CREDIT FACILITY COMMITMENT AND BORROWING LIMIT.........................29
Section 2.3. REVOLVING NOTES..................................................................29
Section 2.4. NOTICE OF BORROWING; BORROWER'S CERTIFICATE......................................30
Section 2.5. TERMINATION OR REDUCTION OF REVOLVING CREDIT FACILITY COMMITMENTS................31
Section 2.6. INTEREST.........................................................................32
Section 2.7. CONVERSION OF BORROWINGS; RENEWALS...............................................33
Section 2.8. COMPUTATION OF INTEREST..........................................................34
Section 2.9. INCREASED COSTS..................................................................34
Section 2.10. CHANGE IN LAW RENDERING EURODOLLAR ADVANCES UNLAWFUL.............................35
Section 2.11. EURODOLLAR AVAILABILITY..........................................................36
Section 2.12. INDEMNITIES......................................................................37
Section 2.13. DISBURSEMENT.....................................................................39
Section 2.14. AGENT'S AVAILABILITY ASSUMPTION..................................................39
Section 2.15. PRO RATA TREATMENT AND PAYMENTS..................................................40
Section 2.16. EURODOLLAR OFFICES...............................................................40
Section 2.17. TELEPHONIC NOTICE................................................................41
Section 2.18. MAXIMUM INTEREST.................................................................41
Section 2.19. RECEIPT OF PAYMENTS..............................................................41
Section 2.20. APPLICATION OF PROCEEDS..........................................................42
Section 2.21. ACCOUNTING.......................................................................43
Section 2.22. TAXES............................................................................43
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TABLE OF CONTENTS
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SECTION 2A. LETTERS OF CREDIT.........................................................................45
Section 2A.1. ISSUANCE........................................................................45
Section 2A.2. ADVANCES AUTOMATIC; PARTICIPATIONS..............................................45
Section 2A.3. CASH COLLATERAL.................................................................46
Section 2A.4. FEES AND EXPENSES...............................................................47
Section 2A.5. REQUEST FOR INCURRENCE OF LETTER OF CREDIT OBLIGATIONS..........................47
Section 2A.6. OBLIGATION ABSOLUTE.............................................................47
Section 2A.7. INDEMNIFICATION; NATURE OF LENDERS' DUTIES......................................48
SECTION 3. PAYMENTS AND PREPAYMENTS...................................................................48
Section 3.1. MANDATORY PAYMENTS..............................................................48
Section 3.2. CERTAIN PAYMENTS................................................................49
Section 3.3. OPTIONAL PREPAYMENTS............................................................50
Section 3.4. PROCEDURES FOR PAYMENT..........................................................50
Section 3.5. UNUSED FACILITY FEE.............................................................51
Section 3.6. FEES............................................................................51
SECTION 4. SECURITY AND GUARANTIES....................................................................51
Section 4.1. PLEDGE OF STOCK AND NOTES.......................................................51
Section 4.2. SECURITY AGREEMENT - TRADEMARK, PATENT AND COPYRIGHT............................52
Section 4.3. SECURITY AGREEMENTS.............................................................52
Section 4.4. REAL PROPERTY; MORTGAGES; LEASEHOLD MORTGAGES; TITLE INSURANCE..................53
Section 4.5. ADDITIONAL COLLATERAL...........................................................54
Section 4.6. FILING AND RECORDING............................................................54
Section 4.7. INTERPRETATION OF SECURITY DOCUMENTS............................................54
Section 4.8. GUARANTIES......................................................................54
Section 4.9. ASSIGNMENTS OF INSURANCE........................................................55
Section 4.10. CASH COLLATERAL AGREEMENT.......................................................55
Section 4.11. CONCERNING THE COLLATERAL.......................................................55
SECTION 5. CONDITIONS PRECEDENT TO AMENDMENT AND RESTATEMENT..........................................55
Section 5.1. OPINIONS OF COUNSEL.............................................................56
Section 5.2. QUALIFICATION...................................................................56
Section 5.3. SECURITY DOCUMENTS AND INSTRUMENTS..............................................56
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TABLE OF CONTENTS
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Section 5.4. NOTES...........................................................................56
Section 5.5. FEES AND EXPENSES...............................................................56
Section 5.6. LITIGATION......................................................................56
Section 5.7. COMPLIANCE WITH LAW.............................................................56
Section 5.8. PROCEEDINGS; RECEIPT OF DOCUMENTS...............................................56
Section 5.9. EVIDENCE OF INSURANCE...........................................................57
Section 5.10. LOCKBOX.........................................................................57
SECTION 6. CONDITIONS PRECEDENT TO EACH BORROWING AND ISSUANCE OF LETTERS OF CREDIT...................58
Section 6.1. CONDITIONS......................................................................58
Section 6.2. WRITTEN NOTICE..................................................................58
SECTION 7. USE OF PROCEEDS............................................................................58
SECTION 8. AFFIRMATIVE COVENANTS......................................................................59
Section 8.1. FINANCIAL STATEMENTS AND OTHER INFORMATION......................................59
Section 8.2. TAXES AND CLAIMS................................................................63
Section 8.3. INSURANCE.......................................................................63
Section 8.4. BOOKS AND RESERVES..............................................................64
Section 8.5. PROPERTIES IN GOOD CONDITION....................................................65
Section 8.6. MAINTENANCE OF EXISTENCE, ETC...................................................65
Section 8.7. INSPECTION BY THE AGENT AND THE LENDERS.........................................65
Section 8.8. PAY INDEBTEDNESS TO LENDERS AND PERFORM OTHER COVENANTS.........................65
Section 8.9. NOTICE OF DEFAULT...............................................................65
Section 8.10. REPORTING OF MISREPRESENTATIONS.................................................65
Section 8.11. COMPLIANCE WITH LAW.............................................................66
Section 8.12. ERISA...........................................................................66
Section 8.13. FURTHER ASSURANCES..............................................................67
Section 8.14. CONSIGNMENT AGREEMENTS..........................................................67
Section 8.15. AUDITS..........................................................................67
Section 8.16. ENVIRONMENTAL MATTERS, ETC......................................................67
Section 8.17. FINANCIAL COVENANTS.............................................................69
Section 8.18. LEASES; NEW REAL ESTATE.........................................................71
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TABLE OF CONTENTS
(CONTINUED)
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Section 8.19. LICENSE AGREEMENTS..............................................................72
Section 8.20. SUPPLEMENTAL DISCLOSURE.........................................................72
Section 8.21. AGREEMENTS......................................................................73
Section 8.22. COLLECTION AND PAYMENT; LOCK BOX; BANK ACCOUNTS.................................73
Section 8.23. EMPLOYMENT AGREEMENTS...........................................................74
Section 8.24. ASSIGNMENT OF FACTORING CREDIT BALANCES AGREEMENTS..............................74
Section 8.25. MORTGAGE........................................................................74
Section 8.26. NEW STORES......................................................................74
Section 8.27. [Intentionally Omitted.]........................................................74
Section 8.28. INTERCOMPANY CHARGES AND MANDATORY DIVIDENDS RELATING TO FINLAY MERCHANDISING...74
Section 8.29. INTERCOMPANY CHARGES AND MANDATORY DIVIDENDS RELATING TO eFINLAY................74
SECTION 9. NEGATIVE COVENANTS.........................................................................74
Section 9.1. CAPITAL EXPENDITURES............................................................75
Section 9.2. LIENS...........................................................................75
Section 9.3. INDEBTEDNESS....................................................................76
Section 9.4. LOANS, INVESTMENTS AND GUARANTEES...............................................78
Section 9.5. MERGER, SALE OF ASSETS, DISSOLUTION, ETC........................................79
Section 9.6. DIVIDENDS, REDEMPTIONS AND OTHER PAYMENTS.......................................80
Section 9.7. TRANSACTIONS WITH AFFILIATES....................................................82
Section 9.8. BLOCKED ACCOUNTS................................................................82
Section 9.9. MANAGEMENT COMPENSATION AND OTHER PAYMENTS......................................83
Section 9.10. COMPROMISE OF RECEIVABLES.......................................................83
Section 9.11. NONCOMPLIANCE WITH ERISA........................................................83
Section 9.12. AMENDMENT AND MODIFICATION OF CERTAIN DOCUMENTS.................................84
Section 9.13. FISCAL YEAR.....................................................................84
Section 9.14. CHANGE OF BUSINESS..............................................................84
Section 9.15. NO NEGATIVE PLEDGES.............................................................84
Section 9.16. RENTAL OBLIGATIONS..............................................................84
Section 9.17. LEASE-BACKS.....................................................................85
Section 9.18. CAPITAL STOCK...................................................................85
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Section 9.19. DEBT INCURRENCE AND PAYMENTS TO THE PARENT......................................85
Section 9.20. THE PARENT......................................................................85
Section 9.21. INDENTURE GUARANTEES............................................................85
Section 9.22. [Intentionally Omitted.]........................................................85
Section 9.23. [Intentionally Omitted.]........................................................85
Section 9.24. SONAB...........................................................................85
SECTION 10. DEFAULTS AND REMEDIES.....................................................................85
Section 10.1. EVENTS OF DEFAULT...............................................................85
Section 10.2. SUITS FOR ENFORCEMENT...........................................................89
Section 10.3. RIGHTS AND REMEDIES CUMULATIVE..................................................90
Section 10.4. RIGHTS AND REMEDIES NOT WAIVED..................................................90
Section 10.5. APPLICATION OF PROCEEDS.........................................................90
SECTION 11. REPRESENTATIONS AND WARRANTIES............................................................91
Section 11.1. CORPORATE STATUS................................................................91
Section 11.2. POWER AND AUTHORITY.............................................................91
Section 11.3. NO VIOLATION OF AGREEMENTS......................................................92
Section 11.4. NO LITIGATION...................................................................92
Section 11.5. GOOD TITLE TO PROPERTIES........................................................92
Section 11.6. FINANCIAL STATEMENTS AND CONDITION..............................................94
Section 11.7. TRADEMARKS, PATENTS, ETC........................................................94
Section 11.8. TAX LIABILITY...................................................................94
Section 11.9. GOVERNMENTAL ACTION.............................................................95
Section 11.10. DISCLOSURE......................................................................95
Section 11.11. REGULATION U....................................................................95
Section 11.12. INVESTMENT COMPANY..............................................................95
Section 11.13. EMPLOYEE BENEFIT PLANS..........................................................96
Section 11.14. NEW SENIOR DEBENTURE COLLATERAL.................................................97
Section 11.15. PERMITS, ETC....................................................................97
Section 11.16. ENVIRONMENTAL STATUS............................................................97
Section 11.17. SOLVENCY........................................................................98
Section 11.18. PROJECTIONS.....................................................................98
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Section 11.19. BANK ACCOUNTS...................................................................98
Section 11.20. EMPLOYMENT AGREEMENTS...........................................................99
Section 11.21. LABOR MATTERS...................................................................99
Section 11.22. OTHER VENTURES..................................................................99
Section 11.23. BROKERS AND CONSULTANTS.........................................................99
Section 11.24. MATERIAL CONTRACTS..............................................................99
Section 11.25. LICENSE AGREEMENTS..............................................................99
Section 11.26. UNWRITTEN AGREEMENTS............................................................99
Section 11.27. UCC FINANCING STATEMENTS........................................................99
SECTION 12. MISCELLANEOUS............................................................................100
Section 12.1. COLLECTION COSTS...............................................................100
Section 12.2. AMENDMENT, MODIFICATION AND WAIVER.............................................100
Section 12.3. NEW YORK LAW...................................................................101
Section 12.4. NOTICES........................................................................101
Section 12.5. FEES AND EXPENSES..............................................................101
Section 12.6. STAMP OR OTHER TAX.............................................................102
Section 12.7. WAIVER OF JURY TRIAL AND SET-OFF...............................................102
Section 12.8. TERMINATION OF AGREEMENT.......................................................102
Section 12.9. CAPTIONS.......................................................................103
Section 12.10. LIEN; SET-OFF BY LENDERS.......................................................103
Section 12.11. PAYMENT DUE ON NON-BUSINESS DAY................................................103
Section 12.12. SERVICE OF PROCESS.............................................................104
Section 12.13. GENERAL ELECTRIC CAPITAL CORPORATION, AS AGENT.................................104
Section 12.14. NON-RECOURSE TO PARENT.........................................................108
Section 12.15. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS...........................108
Section 12.16. COUNTERPARTS; FACSIMILE SIGNATURE..............................................110
Section 12.17. INVALIDITY.....................................................................110
Section 12.18. DISCLOSURE OF FINANCIAL INFORMATION............................................110
SCHEDULES AND EXHIBITS
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TABLE OF CONTENTS
(CONTINUED)
Schedule 2A.1 - Letters of Credit
Schedule 4.3(b)(B) - Jurisdictions
Schedule 4.4(a)(ii) - Excluded Leases
Schedule 8.3 - Insurance
Schedule 9.2 - Existing Liens
Schedule 9.3 - Indebtedness
Schedule 9.4 - Outstanding Investments
Schedule 9.9 - Compensation Policies
Schedule 9.21 - Indenture Guarantees
Schedule 11.1 - Subsidiaries
Schedule 11.5 - Real Property
Schedule 11.7 - Trademarks, Patents, Etc.
Schedule 11.8 - Taxes
Schedule 11.13 - ERISA
Schedule 11.16 - Environmental Matters
Schedule 11.19.... - Collection, Concentration and Special Accounts
Schedule 11.20.... - Employment Agreements
Schedule 11.21 - Labor Matters
Schedule 11.22 - Other Ventures
Schedule 11.24 - Material Contracts
Schedule 11.25 - License Agreements
Exhibit A - Lenders, Commitments and Initial Eurodollar Offices
Exhibit B - Form of Indemnification Agreement
Exhibit C - Form of Master Agreement for Documentary Letters of Credit
Exhibit D - Form of Master Agreement for Standby Letters of Credit
Exhibit 2.1(c)(ii) - Form of Swing Line Note
Exhibit 2.3(a) - Form of Revolving Note
Exhibit 2.4 - Form of Borrower's Certificate
Exhibit 4.1(a) - Form of Pledge Agreement
Exhibit 4.2 - Form of Trademark, Patent and Copyright Security Agreement
Exhibit 4.3(a) - Form of Security Agreement
Exhibit 4.8 - Form of Guaranty
Exhibit 4.9(a) - Assignment of Life Insurance
Exhibit 4.9(b) - Assignment of Business Interruption Insurance
Exhibit 5.1 - Form of Opinion of Counsel for the Credit Parties
Exhibit 8.1(p) - Form of Borrowing Base Certificate
Exhibit 8.14 - Form of Consignor Letter
Exhibit 9.2(j) - Form of Collateral Description Regarding Gold Consignment Documents
Exhibit 12.15(c) - Form of Assignment
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of January 22,
2003, among FINLAY FINE JEWELRY CORPORATION, a Delaware corporation (the
"Borrower"), FINLAY ENTERPRISES, INC., a Delaware corporation (the "Parent"),
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation having an office at
000 Xxxxxxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxx, XX 00000 ("GE Capital"),
individually and as administrative agent for each of the Lenders hereunder (GE
Capital, in such capacity, together with any successor administrative agent
under Section 12.13 hereof, being the "Agent"), FLEET PRECIOUS METALS, INC.
("Fleet"), individually and as documentation agent for each of the Lenders
hereunder (Fleet, in such capacity, being the "Documentation Agent"), and the
other banks and other financial institutions named herein and whose signatures
appear on the signature pages hereto (GE Capital, Fleet, and such other banks
and other financial institutions and their respective successors and assigns,
individually, a "Lender" and collectively, the "Lenders").
WHEREAS, the Borrower borrowed certain sums pursuant to the Credit
Agreement dated as of May 26, 1993 among the Borrower, the Parent, the Lenders
thereunder and GE Capital, individually as a Lender thereunder and as agent for
the Lenders thereunder (such Credit Agreement, as amended, is referred to herein
as the "Original Credit Agreement");
WHEREAS, the Original Credit Agreement was amended and restated in its
entirety pursuant to the Amended and Restated Credit Agreement dated as of
September 11, 1997 among the Borrower, the Parent, the Lenders thereunder and GE
Capital, individually as a Lender thereunder and as agent for the Lenders
thereunder (such Amended and Restated Credit Agreement, as amended, is referred
to herein as the "First Amended and Restated Credit Agreement");
WHEREAS, the Borrower has requested that the Lenders continue to make
secured revolving credit advances to the Borrower from time to time which the
Borrower may use consistent with the terms of this Agreement;
WHEREAS, the Lenders are willing, subject to and upon the terms and
conditions herein set forth, to extend such financial accommodations to the
Borrower; and
WHEREAS, the parties hereto desire to amend and restate the First
Amended and Restated Credit Agreement in its entirety in order to effect and/or
permit the foregoing.
NOW, THEREFORE, IT IS AGREED THAT THE FIRST AMENDED AND RESTATED CREDIT
AGREEMENT IS HEREBY AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS FOLLOWS:
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS
Sections 1.1. CERTAIN DEFINED TERMS. For all purposes of this
Agreement, unless the context otherwise requires, the following terms shall have
the meanings set forth below (the following meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"A Rated Bank" shall have the meaning set forth in Section 9.4(b).
"Account Debtor" means any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).
"Accounts" means all "accounts," as such term is defined in the UCC,
now owned or hereafter acquired by any Credit Party, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments) (including
any such obligations that may be characterized as an account or contract right
under the UCC), (b) all of each Credit Party's rights in, to and under all
purchase orders or receipts for goods or services, (c) all of each Credit
Party's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all rights
to payment due to any Credit Party for property sold, leased, licensed, assigned
or otherwise disposed of, for a policy of insurance issued or to be issued, for
a secondary obligation incurred or to be incurred, for energy provided or to be
provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services rendered
or to be rendered by such Credit Party or in connection with any other
transaction (whether or not yet earned by performance on the part of such Credit
Party), (e) all health care insurance receivables and (f) all collateral
security of any kind, given by any Account Debtor or any other Person with
respect to any of the foregoing. Without limiting the foregoing, "Accounts"
shall include amounts payable to the Borrower under License Agreements as
provided in the second paragraph of the definition of Eligible Receivables.
"Additional Indebtedness" shall mean all Obligations other than
principal of Revolving Advances and interest thereon.
"Additional Repurchase Amount" shall mean as of the Fiscal Year ending
on the Saturday closest to January 31, 2003, and each Fiscal Year end
thereafter, 50% of the amount of net income (without giving effect to
extraordinary gains or losses or gains or losses resulting from the repurchase,
acquisition or redemption of Senior Debentures and Senior Notes) of the Borrower
and its Subsidiaries.
"Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for a Eurodollar Advance, the rate obtained by dividing (i) the
Eurodollar Rate for such Interest Period by (ii) a number equal to 1.0 minus the
aggregate (but without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on the day that is two (2)
Eurodollar Business Days prior to the beginning of such Interest Period
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Federal Reserve Board or other Governmental Authority having
jurisdiction with respect thereto, as now and from time to time in effect) for
Eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Federal Reserve Board) that are required to be maintained by
a member bank of the Federal Reserve System, and adding thereto the Applicable
Eurodollar Margin.
"Adverse Environmental Condition" shall mean any of the matters
referred to in clause (i), (ii) or (iii) of the definition of Environmental
Claim, which could give rise to an Environmental Claim.
"Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person or which is a director, officer or
partner (limited or general) of such specified Person. For the purposes of this
definition, "control," when used with respect to any specified Person, means the
possession, direct or indirect, of the power to vote five percent (5%) or more
of the securities having ordinary voting power for the election of directors or
the power to direct or cause the direction of the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" shall have the meaning set forth in the preamble to this
Agreement.
"Aggregate Revolving Commitments" shall mean at any time the sum of the
Revolving Commitments of the Lenders at such time.
"Agreement" shall mean this Second Amended and Restated Credit
Agreement, as amended, restated, modified or supplemented from time to time.
2
"Applicable Eurodollar Margin" shall mean the per annum interest rate
margin from time to time in effect and payable in addition to the Eurodollar
Rate applicable to the Revolving Loan, as determined by reference to Section
2.6(f) of this Agreement.
"Applicable Index Margin" shall mean the per annum interest rate margin
from time to time in effect and payable in addition to the Index Rate applicable
to the Revolving Loan, as determined by reference to Section 2.6(f) of this
Agreement.
"Applicable Margins" means collectively the Applicable Index Margin and
the Applicable Eurodollar Margin.
"Approved Delegate" shall have the meaning set forth in Section
12.13(n) hereof.
"Assignment Agreement" shall have the meaning set forth in Section
12.15(c) hereof.
"Assignment of Business Interruption Insurance" shall have the meaning
set forth in Section 4.9 hereof.
"Assignment of Life Insurance" shall have the meaning set forth in
Section 4.9 hereof.
"Authorized Representative" shall mean each Person designated from time
to time, as appropriate, in a Written Notice of the Borrower to the Agent for
the purposes of giving notices of borrowing, requests for issuances of Letters
of Credit or guaranties thereof, or conversion or renewal of, Revolving
Advances, which designation shall continue in force and effect until terminated
in a Written Notice to the Agent.
"Base Rate" shall mean a fluctuating interest rate per annum as shall
be in effect from time to time, which rate per annum shall be equal to the Index
Rate plus the Applicable Index Margin.
"Base Rate Advance" shall mean the portion of any Revolving Advance
which is not a Eurodollar Advance.
"Blocked Accounts" shall mean the deposit accounts of the Borrower
designated as "Blocked Accounts" on Schedule 11.19 hereto and such other deposit
accounts as the Agent may from time to time approve in writing as "Blocked
Accounts" for purposes of this Agreement.
"Board" shall mean the Board of Governors of the Federal Reserve System
or any successor agency or entity performing substantially the same functions.
"Borrower" shall have the meaning set forth in the preamble to this
Agreement.
"Borrower's Certificate" shall have the meaning set forth in Section
2.4 hereof.
"Borrower's First Supplemental Indenture" shall mean the First
Supplemental Indenture to the Senior Note Indenture, dated as of August 8, 2002,
between the Borrower and HSBC Bank USA (formerly known as Marine Midland Bank),
as trustee.
"Borrowing Base" shall mean, at any time, the sum of (i) an amount
equal to sixty percent (60%) of the aggregate value (lower of cost (on a
first-in-first-out basis consistent with the Borrower's practices) and current
market value) of Eligible Inventory plus (ii) an amount equal to eighty-five
percent (85%) of the Net Amount of Eligible Receivables; in each case as
indicated on the most recent weekly Borrowing Base Certificate delivered to the
Agent by the Borrower as of such time, unless a more recent Borrowing Base
Certificate has been requested by the Agent and delivered by the Borrower
3
to the Agent, in which case as indicated on such more recent Borrowing Base
Certificate. In no event shall any Borrowing Base be attributable to Foreign
Inventory and Foreign Receivables.
The Agent reserves the right to adjust the Borrowing Base in its
reasonable judgment by revising standards of eligibility, establishing reserves,
and/or subject to the following sentence increasing or decreasing from time to
time the percentages set forth above, in which case "Borrowing Base" shall be
defined to include such revisions, reserves or altered percentages.
Notwithstanding the foregoing, any increase in the percentages set forth above
shall require the consent of the Majority Lenders.
"Borrowing Base Certificate" shall have the meaning set forth in
Section 8.1(p) hereof.
"Borrowing Limit" shall have the meaning set forth in Section 2.2(a)
hereof.
"Business Day" shall mean:
(a) for all portions of the Revolving Advances on which interest
accrues based upon the Base Rate, any day other than a Saturday, Sunday or other
day on which banks in New York, New York are authorized or required to close,
and
(b) for portions of the Revolving Advances on which interest accrues
based upon the Adjusted Eurodollar Rate, the Business Days described in the
immediately preceding subclause (a) for the definition of Business Day, but
excluding therefrom any day on which commercial banks are not open for dealings
in Dollar deposits in the London (England) interbank market.
"Capital Expenditures" shall mean, for any Person, any expenditures or
costs (excluding any Initial License Expense) made by such Person for the
acquisition, maintenance or repair of fixed or capital assets (which are
required to be capitalized into the fixed asset caption on the balance sheet of
such Person in accordance with GAAP), including, without limitation, the
incurrence or assumption of any Indebtedness in respect of such fixed or capital
asset, and, without double counting, any payment made in respect of such
incurrence or assumption.
"Capital Lease" of any Person shall mean any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is, or is required to be, accounted for as a capital lease on the
balance sheet of such Person.
"Capitalized Lease Obligations" of any Person shall at any time mean
all obligations under Capital Leases of such Person in each case taken at the
amount thereof accounted for as liabilities in accordance with GAAP at such
time.
"Cash Collateral Account" shall have the meaning set forth in Section
2A.3(a) hereof.
"Cash Collateral Agreement" shall have the meaning set forth in Section
4.10 hereof.
"Cash Equivalents" shall have the meaning set forth in Section 2A.3(a)
hereof.
"Cash Interest Expense" shall mean, for any period, the aggregate
amount of cash required to be applied by the Parent and its Subsidiaries to
Interest Expense of the Borrower and its Subsidiaries during such period.
"Certificate of Exemption" shall have the meaning set forth in Section
2.22(c).
"Change of Control" shall mean a "Change of Control" as such term is
defined in the Senior Note Indenture (as in effect on the Closing Date).
4
"Charge" shall mean all Federal, state, county, city, municipal, local,
foreign or other governmental taxes at the time due and payable, levies,
assessments, charges, liens, claims or encumbrances upon or relating to (i) any
Collateral, (ii) any Obligations, (iii) any of the Parent's or any of its
Subsidiaries' employees, payroll, income or gross receipts, (iv) the Parent's or
any of its Subsidiaries' ownership or use of any of its assets, or (v) any other
aspect of the Parent's or any of its Subsidiaries' business.
"Chattel Paper" means any "chattel paper," as such term is defined in
the UCC, including electronic chattel paper, now owned or hereafter acquired by
any Credit Party.
"Claims" shall have the meaning set forth in Section 2.12(c) hereof.
"Clean Down Period" shall mean each period which begins on or after
December 15 of a calendar year and ends on the last day in February of the
immediately succeeding calendar year.
"Closing Date" shall mean January 23, 2003.
"COBRA" shall have the meaning set forth in Section 11.13 hereof.
"Code" shall mean, at any date, the Internal Revenue Code of 1986, as
the same shall be in effect at such date.
"Collateral" shall mean all property and interests therein (real or
personal, tangible or intangible) in which a Lien is now or hereafter granted to
the Agent or any one or more of the Lenders by any Credit Party or any
Subsidiary thereof as security for all or any portion of the Obligations or any
guarantee thereof.
"Collecting Bank Agreement" shall mean, with respect to any Collecting
Bank, an agreement, in such form or with such provisions as the Agent may
require, executed by such Collecting Bank, the Agent, where applicable, and the
Borrower, in each case as amended, supplemented or otherwise modified from time
to time with the prior written consent of the Agent.
"Collecting Banks" shall mean the banks listed on Schedule 11.19 hereto
under the heading "Blocked Accounts" and such other banks as the Agent may from
time to time approve in writing as "Collecting Banks" for purposes of this
Agreement.
"Consignment Agreement" shall mean (i) each written consignment
agreement existing as of the Closing Date or entered into after the Closing Date
and as to which the Borrower has complied with Section 8.14 hereof, in each
case, as in effect from time to time, and (ii) each consignment arrangement,
which is not evidenced by or memorialized in a writing signed by the consignor
and as to which the Borrower has complied with Section 8.14 hereof, in each
case, under which the Borrower or any Domestic Subsidiary thereof is the
consignee thereunder.
"Consignment Inventory" shall mean, at any time, each item of
merchandise which (i) at such time is in possession of the Borrower or any
Domestic Subsidiary thereof as consignee pursuant to a Consignment Agreement
which, if not in a writing signed by the consignor, has been approved in writing
by the Agent, (ii) at such time is identified by item number in the computer
records of the Borrower or any Domestic Subsidiary thereof (to which the Agent
has on-line access to the extent required by Section 8.7(b) hereof) as being
"memo" or "consigned" inventory, (iii) as of such time has not been sold or
deemed sold to or by the Borrower or any Domestic Subsidiary thereof, (iv) to
which ownership, at such time, is retained by a consignor under such Consignment
Agreement or other consignment arrangement until such item of merchandise is
sold or deemed sold by the consignor to the consignee, and (v) accordingly, at
such time, is not an asset of the Borrower or any Domestic Subsidiary thereof.
Ownership of an item of merchandise described in the foregoing sentence is
deemed to be retained by
5
such consignor until, in accordance with the applicable Consignment Agreement or
other consignment arrangement, ownership is transferred (or deemed to be
transferred) to a buyer, the Borrower or any Domestic Subsidiary thereof,
regardless of whether any procedures have been performed to protect the third
party's title to such item of merchandise. Additionally, "Consignment Inventory"
(a) includes, at any time, any item of merchandise (including the gold content
thereof) which (i) contains gold which is leased by or consigned or lent to the
Borrower or any Domestic Subsidiary thereof, and (ii) complies at such time with
clauses (ii) and (iii) of the first sentence of this definition, and (b)
excludes all cash and non-cash proceeds of any item of merchandise (and any gold
content thereof) which constituted Consignment Inventory.
"Consignor Letter" shall mean a letter agreement executed and delivered
by a consignor of "memo" or "consigned" inventory to the Borrower substantially
in the form of Exhibit 8.14 attached hereto (it being understood and agreed that
a letter agreement substantially in the form of the corresponding exhibit to the
Original Credit Agreement or the First Amended and Restated Credit Agreement
shall be acceptable).
"Contingent Obligations" of any Person shall mean any direct or
indirect liability, contingent or otherwise, of such Person:
(i) with respect to any indebtedness, lease, dividend, letter
of credit or other obligation of another if the primary purpose or
intent in creating such liability is to provide assurance to the
obligee of such obligation of another that such obligation of another
will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof;
(ii) under any letter of credit issued for the account of such
Person or for which such Person is otherwise liable for reimbursement
thereof;
(iii) under any Hedge Agreement; or
(iv) to advance or supply funds or otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect
thereof.
Contingent Obligations shall include, without limitation:
(a) the direct or indirect guarantee, endorsement (otherwise
than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, and
(b) any liability of such Person for the obligations of
another through any agreement (contingent or otherwise):
(i) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise);
(ii) to maintain the solvency or any balance sheet item, level
of income or financial condition of another; or
(iii) to make take-or-pay or similar payments if required
regardless of non-performance by any other party or parties to an
agreement,
6
if in the case of any agreement described under subclause (i) or (ii) of this
sentence the primary purpose or intent thereof is as described in the
immediately preceding sentence. The amount of any Contingent Obligation shall be
equal to the amount of the obligation so guaranteed or otherwise supported.
"Contracts" means all "contracts," as such term is defined in the UCC,
now owned or hereafter acquired by any Credit Party, in any event, including all
contracts, undertakings, or agreements (other than rights evidenced by Chattel
Paper, Documents or Instruments) in or under which any Credit Party may now or
hereafter have any right, title or interest, including any agreement relating to
the terms of payment or the terms of performance of any Account.
"Control Letter" means a letter agreement between Agent and (i) the
issuer of uncertificated securities with respect to uncertificated securities in
the name of any Credit Party, (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 any Credit
Party, (iii) a futures commission merchant or clearing house, as applicable,
with respect to commodity accounts and commodity contracts held by any Credit
Party, whereby, among other things, the issuer, securities intermediary or
futures commission merchant disclaims any security interest in the applicable
financial assets, acknowledges the Lien of Agent, on behalf of itself and
Lenders, on such financial assets, and agrees to follow the instructions or
entitlement orders of Agent without further consent by the affected Credit
Party.
"Copyright License" means any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.
"Copyrights" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all copyrights and General Intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"Credit Parties" shall mean and include the Borrower, the Parent and
each other Guarantor.
"Current Liabilities" of any Person, determined at any time, shall mean
all liabilities of such Person which would, in accordance with GAAP, be
classified as current liabilities excluding Revolving Advances and excluding the
current portion of long-term Indebtedness for Borrowed Money.
"Default" shall mean an event, act or condition which with the giving
of notice or the lapse of time, or both, would constitute an Event of Default.
"Deposit Accounts" means all "deposit accounts" as such term is defined
in the UCC, now or hereafter held in the name of any Credit Party.
"Designated Officer" shall mean the chief financial officer, president,
any vice president having responsibility for financial affairs, treasurer or
controller of the Parent or the Borrower, as the case may be.
"Disbursement Account" shall mean, with respect to the Borrower, the
deposit account of the Borrower into which shall be deposited only proceeds of
Revolving Advances, which shall constitute a "Blocked Account" and which is
designated as a "Disbursement Account" on Schedule 11.19 hereto.
7
"Disqualified Stock" shall mean any capital stock which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to date on
which the Senior Debentures mature.
"Documentation Agent" shall have the meaning set forth in the preamble
to this Agreement.
"Documents" means all "documents," as such term is defined in the UCC,
now owned or hereafter acquired by any Credit Party, wherever located.
"Domestic Inventory" shall mean Inventory (i) owned by the Borrower and
(ii) located in the United States of America.
"Domestic Subsidiary" shall mean any Subsidiary of the Parent which is
not a Foreign Subsidiary.
"EBITDA" shall mean, for the Parent and its Subsidiaries, on a
consolidated basis for any period, the sum of:
(i) the net income (or net loss) from operations of the Parent
and its Subsidiaries on a consolidated basis (determined in accordance
with GAAP) for such period without giving effect to any extraordinary
gains or non-cash extraordinary losses, but giving effect to cash
extraordinary losses; plus
(ii) to the extent that any of the items referred to in any of
clauses (A) through (C) below were deducted in calculating such net
income:
(A) Interest Expense of the Parent and its
Subsidiaries, on a consolidated basis for such period;
(B) income tax expense of the Parent and its
Subsidiaries, on a consolidated basis with respect to
operations for such period; and
(C) the amount of all depreciation and amortization
of the Parent and its Subsidiaries, on a consolidated basis
for such period; plus (or minus)
(iii) without double counting items taken into account in
clause (C) above, all other non-cash charges or credits including any
"LIFO" charges or credits of the Parent and its consolidated
Subsidiaries for such period provided that such non-cash charges (or
credits) cannot become cash in accordance with GAAP; plus (or minus)
(iv) any losses or gains resulting from the repurchase,
acquisition or redemption of Senior Debentures or Senior Notes.
Any calculation of EBITDA for the Parent and its Subsidiaries on a
consolidated basis for any period shall exclude any negative "EBITDA" (as
calculated solely for the Parent and not its Subsidiaries) of up to $1,000,000.
"eFinlay" shall mean eFinlay, Inc., a Delaware corporation and
wholly-owned Subsidiary of the Borrower.
8
"eFinlay Agreements" shall mean, collectively, the eFinlay Contribution
Agreement, the eFinlay FFJC Services Agreement, the eFinlay FMBI Services
Agreement and the eFinlay Lease Agreement.
"eFinlay Contribution Agreement" shall mean that certain Contribution
Agreement dated as of September 29, 2000 between the Borrower and eFinlay (as
originally in effect, without any waivers or modifications materially adverse to
the Lenders not consented to by the Majority Lenders) pursuant to which the
Borrower transferred certain assets to eFinlay.
"eFinlay FFJC Services Agreement" shall mean that certain Services
Agreement dated as of September 29, 2000 between the Borrower and eFinlay (as
originally in effect, without any waivers or modifications materially adverse to
the Lenders not consented to by the Majority Lenders) pursuant to which the
Borrower provides certain managerial advice, direction and services to eFinlay.
"eFinlay FMBI Services Agreement" shall mean that certain Services
Agreement dated as of September 29, 2000 between Finlay Merchandising and
eFinlay (as originally in effect, without any waivers or modifications
materially adverse to the Lenders not consented to by the Majority Lenders)
pursuant to which Finlay Merchandising provides certain merchandising and buying
services to eFinlay.
"eFinlay Lease Agreement" shall mean that certain Lease Agreement dated
as of September 29, 2000 between the Borrower and eFinlay (as originally in
effect, without any waivers or modifications materially adverse to the Lenders
not consented to by the Majority Lenders) pursuant to which the Borrower leases
certain space in its Connecticut distribution center to eFinlay.
"Eligible Inventory" shall mean such of the Domestic Inventory (valued
at the lower of cost (on a first-in-first-out basis) and current market value)
of the Borrower which is subject to no Lien (other than in favor of the Agent or
otherwise permitted by the Loan Documents) and which the Agent, in its
reasonable discretion, shall deem eligible, less such reserves as the Agent, in
its reasonable discretion, shall from time to time deem appropriate and shall
exclude, in any event, the categories of Inventory deemed ineligible as set
forth on the Borrowing Base Certificate most recently delivered by the Borrower
prior to the Closing Date. The Agent does not intend to treat an item of
Inventory as eligible if any warranty or representations contained in any of the
Loan Documents applicable either to Eligible Inventory in general or to any such
specific Inventory has been breached with respect to such Inventory.
"Eligible Receivables" shall mean (A) amounts payable to the Borrower,
whether or not due under the License Agreements (and attributable to an
underlying sale of inventory to a customer of the host store), including,
without limitation, at any time during any calendar month (or other relevant
calculation period under a License Agreement), amounts which, based on gross
sales in accordance with the terms of the License Agreements, the Borrower has
calculated will become due and payable to the Borrower under the License
Agreements as of the end of such calendar month (or other relevant calculation
period under a License Agreement), in each case, less (B) (a) all amounts
payable by the Borrower (by set-off or otherwise), whether or not due under the
License Agreements, including, without limitation, at any time during any
calendar month (or other relevant calculation period under a License Agreement),
all amounts which, based on the terms of such License Agreement or otherwise,
the Borrower has calculated will become due and payable (by set-off or
otherwise) by the Borrower (including, without limitation, by means of offset or
deduction from amounts payable to the Borrower under the License Agreements) as
of the end of such calendar month (or other relevant calculation period under a
License Agreement), such amounts payable by the Borrower to include, without
limitation, the percentage of sales, net sales or other amount which is withheld
from the Borrower by the other party thereto as a license fee, rental fee or
otherwise, all amounts denominated as "Other Costs" or any similar term under
any License Agreement, including, without limitation, discounts payable in
respect of credit
9
card sales, interest, carrying or service charges collected by the other party
to any License Agreements, and charges payable by or charged to the Borrower in
respect of advertising or promotion, (b) the amount of all sales in respect of
which goods have been returned and (c) all other amounts or adjustments which,
based on the License Agreements or otherwise, was or as of the end of any
calendar month (or other relevant calculation period) will be deducted from
amounts payable to the Borrower or will be payable by the Borrower under the
License Agreements (the excess of (A) over (B), the "Net Amount of Eligible
Receivables"), in each case, as such amounts and deductions described in clauses
(A) and (B) are set forth on the most recent Borrowing Base Certificate
delivered by the Borrower under Section 8.1(p) hereof or pursuant to the request
of the Agent, in each case, except to the extent that the Agent has determined
that any amount payable to the Borrower under any one or more License Agreements
is not an Eligible Receivable or has determined that any amount payable by the
Borrower should be increased, and less such reserves as the Agent shall
reasonably deem appropriate.
For the purposes of this Agreement, the term "Account" shall also
include, with respect to any License Agreement, amounts described in clause (A)
of this definition payable to the Borrower under such License Agreement (whether
or not due), less the amounts described in clauses (B)(a), (B)(b) and (B)(c) of
this definition which have been or will be deducted therefrom or will be payable
by the Borrower.
Without in any way limiting the discretion of the Agent to deem or not
deem any Account arising from any License Agreement as an Eligible Receivable,
Agent does not currently intend to treat an Account as eligible if:
(a) any warranty or representation contained in any of the Loan
Documents applicable either to Accounts in general or to any such specific
Account or related License Agreement has been breached with respect to such
Account or License Agreement;
(b) 50% or more of the outstanding Accounts from the Account Debtor
which constituted Eligible Receivables at the time they arose have become, or
been determined by the Agent, in its reasonable credit judgment, to be,
ineligible;
(c) such Account is owed by an Account Debtor which has commenced a
voluntary case under the bankruptcy or insolvency laws of any jurisdiction, or
made an assignment for the benefit of creditors, or against which a decree or
order for relief has been entered by a court in an involuntary case under the
bankruptcy or insolvency laws of any jurisdiction, or against which any other
petition or other application for relief under the bankruptcy or insolvency laws
of any jurisdiction has been filed, or which has suspended business or consented
to or suffered a receiver, trustee, liquidator or custodian to be appointed for
it or for all or a significant portion of its assets or affairs (except that
such an Account shall not be deemed ineligible under this clause (c) if the
Agent, in its reasonable discretion, deems such Account as not ineligible or to
the extent that and only so long as the Account Debtor on such Account shall
have a debtor-in-possession credit facility or other credit support, in each
instance reasonably satisfactory to the Agent, to assure timely payment of such
Account and such Account (to the extent not covered by credit insurance) shall
constitute a post-petition claim against such Account Debtor);
(d) any amount payable in respect of such Account is more than 60 days
past due;
(e) the License Agreement under which such Account arises has been
terminated (or notice of termination given) or is otherwise not in full force or
effect (or, if not in effect because such License Agreement has been approved as
a reasonably acceptable arrangement by the Agent, if the Agent's approval has
been rescinded), the Borrower or the licensor thereunder is in material default
under such License Agreement, the licensor under such License Agreement is
entitled to withhold amounts which may be withheld only upon default by the
Borrower thereunder, or the Account Debtor under such License Agreement has no
place of business in the United States;
10
(f) the Account Debtor is an Affiliate or employee of the Parent or any
of its Subsidiaries;
(g) such Account is denominated in other than United States dollars or
is payable outside the United States;
(h) such Account is subject to any claim or dispute by the Account
Debtor, in which event such Account will be deemed ineligible to the extent of
such claim or dispute;
(i) such Account may become subject to any setoff (not already taken
into account in clauses (B)(a), (B)(b) or (B)(c) of this definition) by the
Account Debtor, in which event such Account will be deemed ineligible to the
extent of such setoff;
(j) such Account is not subject to an enforceable and duly perfected
first priority Lien in favor of the Agent as security for the Obligations, or
such Account is not owned by the Borrower free and clear of all Liens, claims,
defenses or rights of others except the Liens granted to the Agent pursuant to
the Loan Documents or otherwise permitted hereunder;
(k) any sale taken into account in determining the amount payable to
the Borrower in respect of such Account by the Account Debtor was made other
than in accordance with the terms of the applicable License Agreement;
(l) such Account is not a genuine, bona fide obligation of the Account
Debtor or is not valid, binding and enforceable against the Account Debtor in
accordance with its terms;
(m) such Account is evidenced by any note, draft, trade acceptance or
other instrument for the payment of money which has not been delivered in pledge
to the Agent (endorsed in a manner acceptable to the Agent); or
(n) such Account is assigned to the credit insurance company pursuant
to the Factor Guaranties.
"Employee Plan" shall mean an "employee benefit plan" as defined in
Section 3(3) of ERISA, which is maintained for, or contributions are made on
behalf of, employees of any Credit Party, and any ERISA Affiliate, other than a
Multiemployer Plan.
"Employment Agreements" shall mean and include, the written employment
agreement dated as of January 3, 1995 between the Borrower and Xxxxxx X. Xxxxxx,
and the letter agreement dated April 18, 1997 by the Parent in favor of Xxxxxx
X. Xxxxxx, and each other written employment agreement between the Borrower and
any other full time employee of the Borrower in effect at any time, as each may
be amended, modified, supplemented, restated, renewed, replaced or extended from
time to time in accordance with its terms and the limitations set forth in
Section 9.12 hereof.
"Environmental Claim" shall mean any written notice of violation,
claim, demand, abatement or other order by any Governmental Authority or any
person for personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or deed or use restrictions, resulting from or based upon (i) the
existence, or the continuation of the existence, of a Release (including,
without limitation, sudden or non-sudden, accidental or nonaccidental Releases),
of, or exposure to, any Hazardous Material or any substance, chemical, material,
pollutant, contaminant, odor or audible noise in, into or onto the environment
(including, without limitation, the air, ground, water or any surface) at, in,
by or from any of the Facilities, (ii) the environmental aspects of the
transportation, storage, treatment or disposal of materials in connection with
the operation of any of the Facilities or (iii) the violation, or alleged
violation by the Parent or any of its Subsidiaries, of any statutes, ordinances,
11
orders, rules, regulations, Permits or licenses of or from any Governmental
Authority, agency or court relating to environmental matters connected with any
of the Facilities, under any applicable Environmental Law.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Oil
Pollution Act of 1990 (P.L. 101-380), the Safe Drinking Water Act (42 U.S.C.
Section 300(f), et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.),
the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601 et seq.),
the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et
seq.), and the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.), as such laws have been and hereafter may be amended or supplemented, and
any analogous future federal, or any analogous present or future, and
applicable, state or local, statutes and regulations promulgated pursuant
thereto, or any other federal, state or local statute, ordinance or regulation
which regulates or creates liability with respect to a Hazardous Material.
"Equipment" means all "equipment," as such term is defined in the UCC,
now owned or hereafter acquired by any Credit Party, wherever located and, in
any event, including all such Credit Party's machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"Equity Interests" shall mean capital stock and all warrants, options
or other rights to acquire capital stock or that are measured by the value of
capital stock (but excluding any debt security that is convertible into, or
exchangeable for, capital stock).
"ERISA" shall mean, at any date, the Employee Retirement Income
Security Act of 1974 and the regulations promulgated and rulings issued
thereunder, all as the same shall be in effect at such date.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated), any individual, trust, firm, partnership or joint venture that
for purposes of Title I and Title IV of ERISA and Section 412 of the Code is a
member of any Credit Party's controlled group or is under common control with
any Credit Party within the meaning of Section 414(b), (c), (m) or (o) of the
Code, and the regulations promulgated and rulings issued thereunder.
"ERISA Event" shall mean, with respect to any Credit Party or any ERISA
Affiliate and with respect to any Pension Benefit Plan subject to Title IV of
ERISA or Section 412 of the Code, (a) a Reportable Event (other than a
Reportable Event for which the 30-day notice to the PBGC has been waived under
section 4043 of ERISA and the regulations promulgated thereunder), (b) the
withdrawal of any Credit Party or any ERISA Affiliate from a Pension Benefit
Plan during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, (c) the provision of a notice of intent to
terminate a Pension Benefit Plan under Section 4041 of ERISA, resulting in a
material liability (d) the institution of proceedings to terminate a Pension
Benefit Plan by the PBGC under Section 4042 of ERISA, (e) the failure to make
required contributions which would result in the imposition of a Lien under
Section 412 of the Code or Section 302 of ERISA, or (f) any other event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the
12
appointment of a trustee to administer, any Pension Benefit Plan or to
cause the imposition of any material liability on any Credit Party or any ERISA
Affiliate under Title IV of ERISA.
"Eurodollar Advance" shall mean the portion of any Revolving Advance
designated to bear interest based upon the Adjusted Eurodollar Rate as provided
in Section 2 of this Agreement.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Advance
for any Interest Period, a rate of interest determined by Agent equal to the
offered rate for deposits in U.S. dollars for the applicable Interest Period
that appears on Telerate Page 3750 as of 11:00 a.m. (London time), on the second
full Eurodollar Business Day next preceding the first day of such Interest
Period (unless such date is not a Business Day, in which event the next
succeeding Business Day will be used), subject, however, to the provisions of
Section 2.11 hereof. If such interest rates shall cease to be available from
Telerate News Service, the Eurodollar Rate shall be determined from such
financial reporting service or other information as shall be mutually acceptable
to the Borrower and the Agent. The term "Eurodollar Business Day" means a
Business Day on which banks in London, England are generally open for interbank
or foreign exchange transactions.
"Events of Default" shall have the meaning set forth in Section 10.1
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Claims" shall have the meaning set forth in Section 2.12(c)
hereof.
"Excluded Taxes" shall mean (A) franchise taxes and taxes upon or
determined by reference to any Lender's net income, in each case, imposed by the
United States of America or any political subdivision or taxing authority
thereof or therein or by any jurisdiction in which the Initial Eurodollar Office
or other branch of any Lender is located, is resident or in which any Lender is
organized or has its principal or registered office (including, without
limitation, branch taxes imposed by the United States or similar taxes imposed
by any subdivision thereof), (B) any United States withholding taxes payable
with respect to payments hereunder or the Notes or under the Loan Documents
under laws (including any statute, treaty or regulation) in effect on the
Closing Date (or, in the case of (i) an assignee, the date of the Assignment
Agreement, (ii) a successor Agent, the date of the appointment of such Agent,
and (iii) a successor L/C Issuer, the date such L/C Issuer becomes an L/C
Issuer) applicable to such Lender, such L/C Issuer or the Agent, as the case may
be, but not excluding any United States withholding tax payable with respect to
interest arising under a Loan Document as a result of any change in such laws
occurring after the Closing Date (or the date of such Assignment Agreement or
the date of such appointment of such Agent or the date such L/C Issuer becomes
an L/C Issuer), (C) any other United States federal taxes, and (D) all
liabilities, penalties and interest with respect to any of the foregoing.
In the event Section 1.6011-4T of the U.S. Treasury Regulations is
amended or finalized such that the transactions described in the Loan Documents
would not be "reportable transactions," as defined in such Regulations were
clauses (B) and (C) not included in the definition of "Excluded Taxes," then
clauses (B) and (C) shall, as of the effective date of such amendment or
finalization, be deleted from the definition of "Excluded Taxes" and shall be of
no further force and effect.
"Facilities" shall mean real property owned, operated or leased by any
Credit Party.
"Factor Guaranties" shall mean collectively the factor guaranties dated
as of December 9, 2002 issued by GE Capital Commercial Services, Inc. to the
Borrower, guaranteeing receivables from certain customers of the Borrower and
any future factor guaranties in form and substance similar to the existing
factor guaranties or otherwise reasonably acceptable to the Agent, including the
Assignment of Factoring Credit Balances to be entered into pursuant to Section
8.24.
13
"Federal Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto.
"Federal Funds Rate" shall mean, for any day, a floating rate equal to
the weighted average of the rates on overnight Federal funds transactions among
members of the Federal Reserve System, as determined by the Agent.
"Fee Letter" shall mean that certain fee letter dated as of the date
hereof between GE Capital and the Borrower.
"Financial Statements" shall mean the financial statements most
recently delivered to the Agent prior to the Closing Date pursuant to Section
8.1 of the First Amended and Restated Credit Agreement.
"Finlay Merchandising" shall mean Finlay Merchandising & Buying, Inc.,
a Delaware corporation and wholly owned Subsidiary of the Borrower.
"FIRREA" shall mean the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, as amended from time to time.
"First Amended and Restated Credit Agreement" shall have the meaning
set forth in the second "WHEREAS" clause to this Agreement.
"First Sonab Intercompany Note" shall mean the demand promissory note
dated October 28, 1994 by Sonab to the order of the Borrower in the principal
amount of $12,000,000 together with any replacement or substitution thereof and
any amendment or modification thereof, in each case as permitted by the terms
hereof.
"First Supplemental Indentures " shall mean, collectively, the Parent's
First Supplemental Indenture and the Borrower's First Supplemental Indenture.
"Fiscal Year" shall mean, with respect to the Parent and its
consolidated Subsidiaries, each annual accounting period which begins on the day
immediately following the end of the preceding period and ends on the Saturday
closest to January 31 of each year.
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of
(a) the excess, if any, of (i) EBITDA of the Parent and its Subsidiaries for
such period over the sum of (x) the amount of cash applied by the Parent to the
payment of income taxes of the Parent and its Subsidiaries in respect of such
period, whether directly or pursuant to the Tax Allocation Agreement plus (y)
the amount of Capital Expenditures made by the Parent and its Subsidiaries
during such period to (b) the sum of (i) Cash Interest Expense for such period,
plus (ii) the amount of payments of principal on Indebtedness for Borrowed
Money, including, without limitation, Capitalized Lease Obligations, scheduled
to be made during such period excluding payments of principal on the Revolving
Loan or in respect of reimbursement of Letters of Credit (or guaranties
thereof), plus (iii) dividends paid in cash by the Parent during such period.
"Fleet" shall have the meaning set forth in the preamble to this
Agreement.
"Fixtures" means all "fixtures" as such term is defined in the UCC, now
owned or hereafter acquired by any Credit Party.
"Foreign Lender" shall have the meaning set forth in Section 2.22(c).
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"Foreign Subsidiary" shall mean a Subsidiary of the Parent organized
under the laws of a country other than the United States or any State thereof.
"GAAP" shall mean, for the Parent or any of its Subsidiaries, generally
accepted accounting principles in the United States of America, consistent with
those applied in the preparation of the financial statements of the Parent and
its Subsidiaries from time to time; provided, however, that for the purposes of
determining compliance with the financial covenants contained in Section 8.17
hereof (and the definitions contained herein to the extent employed in
determining such compliance) only, GAAP shall mean such accounting principles as
in effect and as applied on the Closing Date.
"GE Capital" shall have the meaning set forth in the preamble to this
Agreement.
"General Intangibles" means all "general intangibles," as such term is
defined in the UCC, now owned or hereafter acquired by any Credit Party,
including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, IP Licenses, Copyrights, Trademarks, Patents, and all applications
therefor and reissues, extensions or renewals thereof, rights in Intellectual
Property, interests in partnerships, joint ventures and other business
associations, licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including the goodwill associated with any
Trademark or Trademark License), all rights and claims in or under insurance
policies (including insurance for fire, damage, loss and casualty, whether
covering personal property, real property, tangible rights or intangible rights,
all liability, life, key man and business interruption insurance, and all
unearned premiums), uncertificated securities, choses in action, deposit,
checking and other bank accounts, rights to receive tax refunds and other
payments, rights to receive dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged Stock and Investment
Property, rights of indemnification, all books and records, correspondence,
credit files, invoices and other papers, including without limitation all tapes,
cards, computer runs and other papers and documents in the possession or under
the control of such Credit Party or any computer bureau or service company from
time to time acting for such Credit Party.
"Gold Consignment Agreement" shall mean the Amended and Restated Gold
Consignment Agreement dated as of March 30, 2001 among the Borrower, eFinlay,
Sovereign Bank and Commerzbank International S.G. amended by the First Amendment
dated as of December 31, 2001 and the Second Amendment dated as of September 30,
2002, as further amended, restated modified or supplemented from time to time in
accordance with its terms and the limitations set forth in Section 9.12 hereof.
"Gold Consignment Documents" shall mean and include the Gold
Consignment Agreement and each of the Consignment Documents (as defined
therein), other than the Intercreditor Agreement, in each case, as amended,
modified or supplemented from time to time in accordance with its terms and the
limitations set forth in Section 9.12 hereof; provided that the Gold Consignment
Documents shall be subject at all times to the terms and provisions of the
Intercreditor Agreement.
"Goods" means all "goods" as defined in the UCC, now owned or hereafter
acquired by any Credit Party, wherever located, including embedded software to
the extent included in "goods" as defined in the UCC, manufactured homes,
standing timber that is cut and removed for sale and unborn young of animals.
"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.
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"Guarantor" shall mean, at any time, each present or future direct and
indirect Subsidiary of the Borrower, or other Person, in any case, which shall
have executed and delivered a Guaranty as of such time.
"Guaranty" shall mean any guaranty executed and delivered pursuant to
Section 4.8 hereof, as each may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
"Guaranty Obligations" shall mean the obligations of any Guarantor
under the Loan Documents to which such Guarantor is a party.
"Hazardous Material" shall mean any pollutant, contaminant, chemical,
or industrial or hazardous or toxic waste, substance or material, as defined in
or regulated by any Environmental Law and any other toxic, reactive, or
flammable chemicals, including (without limitation) any asbestos, any petroleum
(including crude oil or any fraction), any radioactive substance and any
polychlorinated biphenyls; provided, in the event that any Environmental Law is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment; and
provided, further, to the extent that the applicable laws of any state establish
a meaning for "hazardous material," "hazardous substance," "hazardous waste,"
"solid waste" or "toxic substance" which is broader than that specified in any
Environmental Law, such broader meaning shall apply.
"Hedge Agreements" shall mean and include (i) interest rate swap
agreements, currency swap agreements, interest rate cap agreements and interest
rate collar agreements, (ii) other agreements or arrangements designed to hedge
against fluctuations in interest rates or foreign exchange rates and (iii)
precious metal options and futures contracts and other precious metal hedging
obligations.
"Indebtedness" of any Person shall mean all items which, in accordance
with GAAP, would be included in determining total liabilities of such Person as
shown on the liability side of a balance sheet as at the date Indebtedness of
such Person is to be determined and, in any event, shall include (without
limitation and without duplication):
(i) all trade accounts payable of such Person;
(ii) any liability of such Person secured by any Lien on
property owned or acquired by such Person, whether or not such
liability shall have been assumed;
(iii) all Contingent Obligations of such Person;
(iv) letters of credit issued for the account of such Person
or an Affiliate thereof, and all obligations of such Person relating
thereto;
(v) all obligations (other than obligations to pay fees in
connection therewith) of such Person in respect of Hedge Agreements;
and
(vi) all obligations of such Person under the Gold Consignment
Documents, whether or not due; provided that if in accordance with GAAP
any such obligations under the Gold Consignment Documents would not be
included in determining total liabilities of such Person as shown on
the liability side of a balance sheet of such Person, then for purposes
of the calculation of the financial covenants in Section 8.17 hereof,
such excluded obligations shall not constitute "Indebtedness".
"Indebtedness for Borrowed Money" of any Person shall mean all
Indebtedness for borrowed money or evidenced by notes, bonds, debentures or
similar evidences of Indebtedness of such Person (including in the event that
any obligations of such Person under the Gold Consignment
16
Documents would, in accordance with GAAP, be included in determining total
liabilities of such Person as shown on the liability side of a balance sheet of
such Person, such obligations under the Gold Consignment Documents), all
obligations of such Person for the deferred and unpaid purchase price of any
property, service, or business (other than trade accounts payable incurred in
the ordinary course of business and constituting Current Liabilities and other
than Hedge Agreements), and all obligations of such Person under Capitalized
Lease Obligations and finance leases.
"Indemnification Agreements" shall mean, collectively, each of the
Indemnification Agreements among the Parent and the Borrower, and each of their
(and their Subsidiaries') respective directors and executive officers,
substantially in the form of Exhibit B attached hereto, as each may be amended,
modified or supplemented from time to time in accordance with its terms and the
terms hereof.
"Indemnified Party" shall have the meaning set forth in Section 2.12(c)
hereof.
"Index Rate" shall mean, for any day, a floating rate equal to the
higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "prime rate" (or, if The Wall Street Journal ceases quoting a
"prime rate", the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus fifty (50) basis points per annum. Each change
in any interest rate provided for in this Agreement based upon the Index Rate
shall take effect at the time of such change in the Index Rate.
"Initial Eurodollar Office" shall mean, for any Lender, the branch or
Affiliate of such Lender designated as the Initial Eurodollar Office of such
Lender in Exhibit A hereto.
"Initial License Expense" shall mean any franchise or other fee or
other expense paid in cash by the Borrower or a Foreign Subsidiary as
consideration for the initial granting of a license under a License Agreement.
"Instruments" means all "instruments," as such term is defined in the
UCC, now owned or hereafter acquired by any Credit Party, wherever located, and,
in any event, including all certificated securities, all certificates of
deposit, and all promissory notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" means any and all IP Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"Intercreditor Agreement" shall mean the Amended and Restated
Intercreditor Agreement dated as of March 30, 2001 between the Agent and
Sovereign Bank and acknowledged by the Borrower and eFinlay, as amended,
modified or supplemented from time to time in accordance with its terms.
"Interest Expense" shall mean, with respect to any Person for any
period, the interest expense (whether cash or accretion) of such Person during
such period determined in accordance with GAAP, and shall include in any event,
without limitation, interest expense with respect to Indebtedness for Borrowed
Money (including with respect to the Borrower, in the event that the obligations
and liabilities of the Borrower under the Gold Consignment Documents would, in
accordance with GAAP, be included in determining total liabilities of the
Borrower as shown on the liability side of a balance sheet of the Borrower,
"Daily Consignment Fees" as such term is defined in the Gold Consignment
Agreement as in effect on the date of execution thereof) and payments under
Hedge Agreements that are designed to hedge against fluctuations in interest
rates and shall exclude the write off of deferred financing fees.
"Interest Payment Date" shall mean, with respect to each Eurodollar
Advance, the last day of the Interest Period for such Eurodollar Advance;
provided, however, that with respect to each
17
Interest Period for any Eurodollar Advance of a duration of more than three
months, interest shall be payable at three-month intervals and on the last day
of such Interest Period.
"Interest Period" shall mean, with respect to each Eurodollar Advance,
initially, the period commencing on, as the case may be, the borrowing or
conversion date with respect to such Eurodollar Advance and ending one, two,
three or (if available) six months thereafter, as selected by Borrower; and
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Advance and ending one, two, three
or (if available) six months thereafter, as selected by Borrower; provided,
however, that no Interest Period may be selected for a Eurodollar Advance which
expires later than the Maturity Date; provided, further, that any Interest
Period in respect of a Eurodollar Advance which 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 Interest Period) shall, subject to
the foregoing proviso, end on the last Business Day of a calendar month.
Notwithstanding the above, all Interest Periods shall be adjusted in accordance
with Section 12.11 hereof.
"Inventory" means all "inventory," as such term is defined in the UCC,
now owned or hereafter acquired by any Credit Party, wherever located, and in
any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Credit Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, or materials or
supplies of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded software. Without limiting the foregoing, "Inventory" shall include
such inventory as is on consignment to third party consignees, leased to
customers of the Borrower, or otherwise temporarily out of the custody or
possession of the Borrower, excluding any Consignment Inventory.
"Investment" shall have the meaning set forth in Section 9.4 hereof.
"Investment Property" means all "investment property" as such term is
defined in the UCC now owned or hereafter acquired by any Credit Party, wherever
located, including (i) all securities, whether certificated or uncertificated,
including stocks, bonds, interests in limited liability companies, partnership
interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all
securities entitlements of any Credit Party, including the rights of any Credit
Party to any securities account and the financial assets held by a securities
intermediary in such securities account and any free credit balance or other
money owing by any securities intermediary with respect to that account; (iii)
all securities accounts of any Credit Party; (iv) all commodity contracts of any
Credit Party; and (v) all commodity accounts held by any Credit Party.
"IP License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Credit Party.
"L/C Issuer" shall have the meaning set forth in Section 2A.1 hereof.
"L/C Sublimit" shall have the meaning set forth in Section 2A.1 hereof.
"Land" shall have the meaning set forth in the definition of Real
Estate herein.
"Landlord's Certificate" shall have the meaning set forth in Section
4.3 hereof.
"Lease" shall mean each lease or sublease of real property existing on
the date hereof under which any Credit Party is the lessee or sublessee and each
future lease or sublease of real property under which any Credit Party is the
lessee or sublessee; provided, however, that in no event shall the term "Lease"
be deemed to include any License Agreement. The exclusion of License Agreements
from the defined term "Lease" shall not be construed as an admission,
determination or opinion of the Agent or
18
any Lender that the License Agreements are not leases or executory contracts for
the purposes of Section 365 of the Federal Bankruptcy Code.
"Leasehold Mortgage" shall have the meaning set forth in Section
4.4(a)(ii) hereof.
"Xxx Group" shall mean THL Equity Partners, L.P., together with its
Affiliates and their respective successors and assigns.
"Lender" and "Lenders" shall have the respective meanings set forth in
the preamble to this Agreement.
"Letter of Credit Cash Collateral" shall have the meaning set forth in
Section 3.1(a) hereof.
"Letter of Credit Fee" shall have the meaning set forth in Section 2A.4
hereof.
"Letter of Credit Obligations" means all outstanding obligations
incurred by Agent and Lenders at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of Letters of Credit by Agent or another L/C Issuer or the purchase of
a participation as set forth in Section 2A with respect to any Letter of Credit.
The amount of such Letter of Credit Obligations shall equal the maximum amount
that may be payable by Agent or Lenders thereupon or pursuant thereto.
"Letters of Credit" means documentary or standby letters of credit
issued for the account of Borrower by any L/C Issuer, and bankers' acceptances
issued by Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations, and shall include such letters of credit outstanding on the Closing
Date issued pursuant to the Original Credit Agreement or the First Amended and
Restated Credit Agreement.
"Letter-of-Credit Rights" means letter-of-credit rights as such term is
defined in the UCC, now owned or hereafter acquired by any Credit Party,
including rights to payment or performance under a letter of credit, whether or
not such Credit Party, as beneficiary, has demanded or is entitled to demand
payment or performance.
"Leverage Ratio" shall mean, as of the end of any period, the ratio of
(a) the aggregate principal amount of all Indebtedness for Borrowed Money of the
Parent and its Subsidiaries as of the end of such period to (b) EBITDA of the
Parent and its Subsidiaries, for such period.
"License Agreement" shall mean an agreement (or an arrangement not in
writing which has been described by the Borrower in writing to the Agent and
approved by the Agent in writing) between the Borrower and another Person (which
is not an Affiliate of the Borrower), whether entered into prior to or after the
Closing Date, granting to the Borrower the right to operate a fine jewelry
department in an establishment owned or operated by such Person, in the form as
in effect on the Closing Date or as amended, modified, extended or supplemented
in accordance with the terms thereof and hereof. If a License Agreement which is
an approved arrangement as of the Closing Date is memorialized in a writing
signed by the licensor after the Closing Date, it shall be deemed entered into
and effective as of the Closing Date. The failure of the Borrower to obtain the
written approval of the Agent for an Unapproved License Agreement, shall result
in such arrangement not constituting a License Agreement hereunder (including,
without limitation, for the purpose of the definition of Eligible Receivables)
but shall not be an Event of Default hereunder.
The Agent reserves the right, in its reasonable judgment, to withdraw
at any time its approval with respect to any License Agreement which is not
evidenced by a written agreement and
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immediately upon such withdrawal of its approval of such arrangement, such
arrangement shall cease to constitute a License Agreement for purposes of this
Agreement.
"Lien" shall mean any lien, mortgage, pledge, security interest or
other type of charge or encumbrance of any kind, or any other type of
preferential arrangement, including, without limitation, the lien or retained
security title of a conditional vendor and any easement, right of way or other
encumbrance on title to real property and any financing statement filed in
respect of any of the foregoing. For the purposes of this Agreement, a Credit
Party shall be deemed to be the owner of any property which it has placed in
trust for the benefit of the holder of Indebtedness of such Credit Party (or any
agent or trustee of such holder) which Indebtedness is deemed to be extinguished
under GAAP but for which such Credit Party or trust remains legally liable, and
such trust shall be deemed to be a Lien.
"Loan" shall mean the Revolving Loan.
"Loan Account" shall have the meaning set forth in Section 2.21.
"Loan Documents" shall mean this Agreement, each Security Document,
each Guaranty, the Notes, the Master Standby Agreement, the Master Documentary
Agreement, the Borrower's Certificate, each Borrowing Base Certificate, each
Landlord's Certificate, each Collecting Bank Agreement, the Fee Letter, and each
other document or instrument now or hereafter delivered to the Agent or any
Lender pursuant to or in connection herewith or therewith.
"Long Term Incentive Plan" shall mean the Long Term Incentive Plan of
the Parent, as amended, modified, supplemented, restated, renewed or replaced
from time to time in accordance with its terms and the terms hereof, which shall
include the 1997 Long Term Incentive Plan of the Parent.
"Majority Lenders" shall mean, at any time, (a) in the event there are
at least two or more Lenders at such time, at least two Lenders having at least
fifty-one percent (51%) of the amount of the Aggregate Revolving Commitments of
the Lenders at such time or (b) in the event there is only one Lender at such
time, such Lender having one hundred percent (100%) of the amount of the
Aggregate Revolving Commitments at such time.
"Management Agreement" shall mean the management agreement dated as of
May 26, 1993 between the Parent, the Borrower and Xxxxxx X. Xxx Capital, LLC (as
assignee of Xxxxxx X. Xxx Company), as amended, modified, or supplemented from
time to time in accordance with its terms and the terms hereof.
"Master Documentary Agreement" means the Master Agreement for
Documentary Letters of Credit, in substantially the form of Exhibit C, dated as
of the Closing Date between Borrower, as Applicant, and GE Capital, as Issuer.
"Master Standby Agreement" means the Master Agreement for Standby
Letters of Credit, in substantially in the form of Exhibit D, dated as of the
Closing Date between Borrower, as Applicant, and GE Capital, as Issuer.
"Material Adverse Effect" shall mean a material adverse effect on (i)
the business, assets, operations or financial or other condition of the Parent
and its Subsidiaries, taken as a whole, (ii) the Parent's, the Borrower's and
their Subsidiaries' collective ability to pay the Obligations in accordance with
the terms thereof or (iii) the Agent's Lien on any material portion of the
Collateral or the priority of any such Lien.
"Maturity Date" shall mean the earliest of (a) January 15, 2008, (b)
the date of termination of Lenders' obligations to make Revolving Advances and
to incur Letter of Credit Obligations or permit existing Revolving Advances to
remain outstanding pursuant to Section 10.1, and
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(c) the date of indefeasible prepayment in full by Borrower of the Loan and the
cancellation and return (or stand-by guarantee) of all Letters of Credit or the
cash collateralization of all Letter of Credit Obligations pursuant to Section
2A, and the permanent reduction of the Revolving Commitment to zero dollars
($0).
"Maximum Lawful Rate" shall have the meaning set forth in Section
2.18(a) hereof.
"Maximum Permissible Rate" shall have the meaning set forth in Section
2.18(b) hereof.
"Mortgage" shall have the meaning set forth in Section 4.4(a)(i)
hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" (as defined in
Section 4001(a)(3) in ERISA) maintained or contributed to for employees of (i)
the Parent or any of its Subsidiaries; (ii) any Credit Party; or (iii) any ERISA
Affiliate.
"Net Amount of Eligible Receivables" shall have the meaning set forth
in the definition of "Eligible Receivables" contained herein.
"Net Cash Proceeds" shall mean, with respect to any transaction, (i)
cash (freely convertible into U.S. dollars) received by a Credit Party from such
transaction (including cash received as consideration for the assumption or
incurrence of liabilities incurred in connection with or anticipation of such
transaction), after (a) provision for all income, title, recording or other
taxes measured by or resulting from such transaction, (b) payment of all
brokerage commissions, reasonable investment banking and legal fees and other
fees and expenses related to such transaction, (c) deduction of appropriate
amounts to be provided by such Credit Party as a reserve, in accordance with
GAAP, against any liabilities associated with the assets sold or disposed of in
such transaction and retained by such Credit Party after such transaction,
including, without limitation, pension and other post-employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with the assets sold or disposed of in
such transaction and (d) amounts paid to satisfy Indebtedness (other than any
Obligations) which are required to be repaid in connection with any such
transaction and (ii) promissory notes received by such Credit Party from such
transaction or such other disposition upon the liquidation or conversion of such
notes into cash.
"Notes" shall mean and include each of the Revolving Notes and the
Swing Line Note.
"Obligations" shall mean and include all Revolving Advances (including
Swing Line Advances), Letter of Credit Obligations, and all other Indebtedness
(including, without limitation, Additional Indebtedness) owing at any time by
any Credit Party to the Agent or any one or more of the Lenders (including,
without limitation, all principal, interest, fees, indemnities, costs, charges
and other amounts payable under the Loan Documents) arising under or in
connection with this Agreement, the Notes, any Security Document, any of the
other Loan Documents, any Guaranty in favor of the Agent or any one or more of
the Lenders, whether absolute or contingent, secured or unsecured, due or not,
arising by operation of law or otherwise, and all interest and other charges
thereon.
"Original Credit Agreement" shall have the meaning set forth in the
first "WHEREAS" clause to this Agreement.
"Other Taxes" shall have the meaning set forth in Section 2.22(a)
hereof.
"Parent" shall have the meaning set forth in the preamble to this
Agreement.
"Parent's First Supplemental Indenture" shall mean the First
Supplemental Indenture to the Senior Debenture Indenture, dated as of August 8,
2002, between the Parent and HSBC Bank USA (formerly known as Marine Midland
Bank), as trustee.
21
"Patent License" means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.
"Patents" means all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.
"Payment Account" shall have the meaning set forth in Section 2.4(c)
hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereof under ERISA.
"Pension Benefit Plan" shall mean any Employee Plan which is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA).
"Permits" shall mean any permit, approval, authorization, license or
variance required from a Governmental Authority having jurisdiction under an
applicable Environmental Law.
"Person" shall mean an individual, trust, firm, partnership, limited
liability company, corporation (including business trust), unincorporated
association, joint venture, government or any political subdivision or agency
thereof or any other form of public, private or governmental entity or
authority.
"Pledge Agreement" shall have the meaning set forth in Section 4.1
hereof.
"Prior Closing Date" shall mean September 11, 1997.
"pro rata" shall mean, with respect to each Lender, a percentage equal
to the ratio that the Revolving Commitment of such Lender bears to the Aggregate
Revolving Commitments of all Lenders.
"Proceeds" means "proceeds," as such term is defined in the UCC,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Credit Party 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 any Credit Party 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 any Credit Party 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 any Credit Party 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.
"Qualified Assignee" means (a) any Lender, any Affiliate of any Lender
and, with respect to any Lender that is an investment fund that invests in
commercial loans, any other investment fund that invests in commercial loans and
that is managed or advised by the same investment advisor as
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such Lender or by an Affiliate of such investment advisor, and (b) any
commercial bank, savings and loan association or savings bank or any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses,
including insurance companies, mutual funds, lease financing companies and
commercial finance companies, in each case, which has a rating of BBB or higher
from S&P and a rating of Baa2 or higher from Xxxxx'x at the date that it becomes
a Lender and which in the case of any person of the type under clause (a) or
(b), through its applicable lending office, is capable of lending to Borrower
without the imposition of any withholding or similar taxes; provided that no
Person determined by Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser shall be a Qualified Assignee and no Person or
Affiliate of such Person (other than a Person that is already a Lender) holding
Subordinated Debt or Stock issued by any Credit Party shall be a Qualified
Assignee.
"Real Estate" shall mean all of those plots, pieces or parcels of land
now owned or hereafter acquired by the Borrower and its Domestic Subsidiaries or
any interest therein (the "Land"), including, without limitation, those listed
on Schedule 11.5 hereto and more particularly described in the Mortgages,
together with the right, title and interest of the Borrower and its Domestic
Subsidiaries, if any, in and to the streets, the land lying in the bed of any
streets, roads or avenues, opened or proposed, in front of, adjoining, or
abutting the Land to the center line thereof, the air space and development
rights pertaining to the Land and right to use such air space and development
rights, all rights of way, privileges, liberties, tenements, hereditaments, and
appurtenances belonging or in any way appertaining thereto, awards from any
condemnation or eminent domain proceedings and insurance proceeds resulting from
any casualty or other damage to the buildings and other improvements on the
Land, all fixtures, all easements now or hereafter benefiting the Land and all
royalties and rights appertaining to the use and enjoyment of the Land,
including, without limitation, all alley, vault, drainage, mineral, water, oil,
coal, gas, timber and other similar rights, together with all of the buildings
and other improvements now or hereafter erected on the Land, all fixtures and
all additions thereto and substitution and replacement thereof.
"Reference Date" shall mean February 1, 2002.
"Registration Rights Agreement" shall mean the registration rights
agreement dated as of May 26, 1993 among the Parent, certain existing holders of
the common stock of the Parent and the Xxx Group, as such may be amended,
modified, supplemented, restated, renewed or replaced from time to time in
accordance with its terms and the terms hereof..
"Regulation D" shall mean Regulation D of the Board as from time to
time in effect and any successor to all or a portion thereof establishing
reserve requirements.
"Xxxxxx Employment Agreement" shall mean the Employment Agreement dated
as of January 3, 1995 (as originally in effect or as amended in accordance with
its terms and the limitations set forth in Section 9.12 hereof) among Xxxxxx X.
Xxxxxx, the Borrower and the Parent.
"Related Party" shall mean with respect to any Person (i) any
controlling stockholder, general or limited partner, 80% (or more) owned
subsidiary, or spouse or immediate family member (in the case of an individual)
of such Person or (ii) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or persons beneficially holding an
80% or more controlling interest of which consist of such Person and/or such
other persons referred to in the immediately preceding clause (i), and with
respect to the Parent, "Related Party" shall include any full-time employee of
the Xxxxxx X. Xxx Company or an Affiliate thereof.
"Release" shall mean any releasing, spilling, escaping, leaking,
seepage, pumping, pouring, emitting, emptying, discharging, injecting, leaching,
disposing or dumping. The meaning of the term shall also include any threatened
Release.
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"Remedial Action" shall mean all actions required by any Environmental
Law to (1) clean up, remove, treat or dispose of Hazardous Materials in the
indoor or outdoor environment; (2) prevent the Release or minimize the further
Release of Hazardous Materials so they do not migrate or otherwise endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment; or (3) perform pre-remedial studies and investigations and
post-remedial monitoring and care in respect of actions contemplated in the
preceding clauses (1) and (2).
"Reportable Event" shall have the meaning set forth in Section
8.12(b)(i) hereof.
"Revolving Advance" shall have the meaning set forth in Section 2.1(a)
hereof and shall include, except where the context otherwise requires, Swing
Line Advances.
"Revolving Commitment" as to any Lender shall have the meaning set
forth in Section 2.2(b) hereof.
"Revolving Credit Facility" shall mean, collectively, the facilities
provided by the Agent and the Lenders to the Borrower hereunder to make
Revolving Advances (including Swing Line Advances) and to incur Letter of Credit
Obligations.
"Revolving Credit Facility Commitment" shall mean, at any time, an
amount equal to $225,000,000 or such lesser amount after giving effect to each
reduction of the Revolving Credit Facility Commitment pursuant to Section 2.5
hereof.
"Revolving Loan" shall have the meaning set forth in Section 2.1(a)
hereof.
"Revolving Note" and "Revolving Notes" shall have the respective
meanings set forth in Section 2.3(a) hereof.
"Second Amended and Restated Mortgage" shall mean the Second Amended
and Restated Mortgage to be executed between the Borrower, as mortgagor, and the
Agent, as mortgagee, in form and substance substantially similar to the First
Mortgage Deed and Security Agreement from the Borrower to the Agent dated as of
September 11, 1997 and reasonably acceptable to the Agent.
"Second Sonab Intercompany Note" shall mean the demand promissory note
dated August 5, 1997 by Sonab to the order of the Borrower in the principal
amount of $33,000,000 together with any replacement or substitution thereof and
any amendment or modification thereof, in each case as permitted by Section 9.12
hereof.
"Security Agreement" shall have the meaning specified in Section 4.3
hereof.
"Security and Pledge Agreement" shall mean that certain Security and
Pledge Agreement dated as of April 24, 1998 between the Parent and HSBC Bank USA
(formerly known as Marine Midland Bank).
"Security Documents" shall have the meaning specified in Section 4.3
hereof.
"Senior Debenture Indenture" shall mean the indenture dated as of April
24, 1998 between the Parent and HSBC Bank USA (formerly known as Marine Midland
Bank), as trustee, under which the Senior Debentures were issued, as modified
through the Closing Date.
"Senior Debentures" shall mean the Parent's 9% Senior Debentures due
2008 in the original principal amount of $75,000,000.
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"Senior Note Indenture" shall mean the indenture dated as of April 24,
1998 between the Borrower and HSBC Bank USA (formerly known as Marine Midland
Bank), as trustee under which the Senior Notes were issued, as modified through
the Closing Date.
"Senior Notes" shall mean the Borrower's 8 3/8% Senior Notes due 2008
in the original principal amount of $150,000,000.
"Services Agreement" shall mean the Services Agreement dated as of
October 28, 1998 between Finlay Merchandising and the Borrower, as such may be
amended, modified or supplemented from time to time in accordance with its terms
and the terms hereof.
"Shareholders Agreement" shall mean the stockholders' agreement dated
as of March 6, 1995 among the Parent and certain existing holders of the common
stock of the Parent, as such may be amended, modified, supplemented, restated,
renewed or replaced from time to time in accordance with its terms and the
limitations set forth in Section 9.12 hereof.
"Software" means all "software" as such term is defined in the UCC, now
owned or hereafter acquired by any Credit Party, 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.
"Solvent" and "Solvency" shall mean, with respect to any Person on a
particular date, that on such date,
(a) the fair value of the property of such Person is greater than the
total amount of liabilities, including, without limitation, contingent
liabilities, of such Person; and
(b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; and
(c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and
(d) such Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such Person's property
would constitute an unreasonably small capital.
"Sonab" shall mean Societe Nouvelle D'Achat De Bijouterie - S.O.N.A.B.,
a French societe en nom collectif.
"Sonab Entities" shall mean collectively, Sonab, Sonab Holdings and
Sonab International.
"Sonab Holdings" shall mean Sonab Holdings, Inc., a Delaware
corporation.
"Sonab Intercompany Notes " shall mean, collectively, the First Sonab
Intercompany Note and the Second Sonab Intercompany Note.
"Sonab International" shall mean Sonab International, Inc., a Delaware
corporation.
"Specified Default" shall mean an Event of Default under Sections
10.1(a), including, without limitation, by virtue of any payment required under
Sections 3.1 or 3.2 hereof, 10.1(b), 10.1(d), 10.1(f), 10.1(g), 10.1(h) (to the
extent such Event of Default involves a judgment of $5,000,000 or more),
25
10.1(j), 10.1(k) or 10.1(l) hereof or, to the extent arising from a Default
under Section 8.1(c), Section 8.1(g), Section 8.1(p), Section 8.6 (to the extent
such Default involves the maintenance of existence of the Borrower or the
Parent), Section 8.17, Section 8.22, any one or more of Sections 9.1 through 9.9
inclusive, 9.12, 9.14 or 9.20 hereof.
"Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).
"Subordinated Debt" means any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.
"Subsidiary" of any Person shall mean any corporation or other business
entity of which more than fifty percent (50%) of the issued and outstanding
securities having ordinary voting power for the election of directors is owned
or controlled, directly or indirectly, by a Person and/or one or more of its
Subsidiaries. The use of the term Subsidiary in the phrase Parent and its
Subsidiaries on a consolidated basis, or the like, shall only include
Subsidiaries whose accounts or financial reports are consolidated with Parent in
accordance with GAAP, and in any event shall include the Borrower.
"Supporting Obligations" means all supporting obligations as such term
is defined in the UCC, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.
"Swing Line Advance" has the meaning assigned to it in Section
2.1(c)(i).
"Swing Line Availability" has the meaning assigned to it in Section
2.1(c)(i).
"Swing Line Commitment" shall mean, as to the Swing Line Lender, the
commitment of the Swing Line Lender to make Swing Line Loans in the amount of up
to $15,000,000, which commitment constitutes a subfacility of the Revolving
Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean, as the context may require, at any time,
the aggregate amount of Swing Line Advances outstanding to the Borrower.
"Swing Line Note" has the meaning assigned to it in Section 2.1(c)(ii).
"Tax Allocation Agreement" shall mean the tax allocation agreement
dated as of November 1, 1992 between the Parent and the Borrower, as such may be
amended, modified or supplemented from time to time in accordance with its terms
and the terms hereof.
"Taxes" means any and all taxes, levies, imposts, deductions, Charges
or withholdings, and all liabilities with respect thereto, excluding Excluded
Taxes.
"Trade Name License Agreement" shall mean the Trade Name License
Agreement dated as of October 28, 1998 among Finlay Merchandising, the Borrower
and the Parent, as such may be amended, modified or supplemented from time to
time in accordance with its terms and the terms hereof.
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"Trademark, Patent and Copyright Security Agreement" shall have the
meaning set forth in Section 4.2 hereof.
"Trademark License" means rights under any written agreement now owned
or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademarks" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"U.S. dollars" and "$" shall mean lawful currency of the United States
of America.
"U.S. Lender" shall mean each Lender, each L/C Issuer or each Agent
that is a United States person as defined in Section 7701(a)(30) of the Code.
"UCC" shall mean the Uniform Commercial Code as the same may, from time
to time, be enacted and in effect in the State of 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 or Division 9 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" shall mean 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.
"Unapproved License Agreement" shall mean an unwritten arrangement (not
yet approved in writing by the Agent or as to which the approval of the Agent
has been withdrawn) between the Borrower or a Foreign Subsidiary and another
Person, granting to the Borrower or a Foreign Subsidiary the right to operate a
fine jewelry department in an establishment owned or operated by such Person.
"Written Notice" and "in writing" shall mean any form of written
communication or a communication by means of electronic mail, telex, telecopier
device, telegraph or cable.
Section 1.2. TERMS DEFINED IN THE UNIFORM COMMERCIAL CODE. Each term
defined in the UCC of the State of New York and used herein shall have the
meaning given therein unless otherwise defined herein.
Section 1.3. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" shall mean "from and including," the words "to" and "until" each
shall mean "to but excluding" and the word "through" shall mean "to and
including."
Section 1.4. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed, as to a specified Person, in accordance with
GAAP.
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Section 1.5. OTHER PROVISIONS REGARDING DEFINITIONS. (a) 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
provision of this Agreement.
(b) The terms defined in this Section 1, unless the context requires
otherwise, will have the meanings applied to them in this Section 1, references
to an "Exhibit," "exhibit," "Schedule" or "schedule" are, unless otherwise
specified, to one of the exhibits or schedules attached to this Agreement and
references to a "section" or "Section" are, unless otherwise specified, to one
of the sections of this Agreement.
(c) The term "or" is not exclusive.
SECTION 2. AMOUNT AND TERMS.
Section 2.1. REVOLVING ADVANCES; SWING LINE FACILITY. (a) Each of the
Lenders severally agrees to lend to the Borrower, subject to and upon the terms
and conditions herein set forth, at any time or from time to time on or after
the Closing Date and before the Maturity Date, such Lender's pro rata share, as
determined under Section 2.4(c) hereof, of such borrowings as may be requested
or be deemed requested by the Borrower in accordance with the terms of this
Agreement (each such borrowing, a "Revolving Advance" and the outstanding
principal balance of all Revolving Advances (including Swing Line Advances) from
time to time, the "Revolving Loan"), subject to the limitations contained in
Section 2.2 hereof.
(b) Each Revolving Advance shall be in an amount equal to $100,000 or
any integral multiple of $100,000 and shall be made on the date specified in the
Written Notice as described in Section 2.4(a) hereof; provided, however, that if
the Borrower shall be deemed to request a Revolving Advance under Section 2A.2
hereof, no notice of a borrowing by the Borrower shall be necessary and such
Revolving Advance shall be in the amount of the reimbursement obligation of the
Borrower for the drawing made under the Letter of Credit for which such
Revolving Advance is deemed requested. Each Revolving Advance shall be either a
Base Rate Advance or a Eurodollar Advance, or a combination thereof, as the
Borrower shall request, subject to and in accordance with the provisions of this
Agreement. Any portion of a Revolving Advance which shall be a Eurodollar
Advance shall be in an amount equal to $1,000,000 or any greater integral
multiple thereof.
(c) Swing Line Facility. (i) Agent shall notify the Swing Line Lender
upon Agent's receipt of any Written Notice requesting a Revolving Advance.
Subject to the terms and conditions hereof, the Swing Line Lender may, in its
discretion, make available from time to time until the Maturity Date advances
(each, a "Swing Line Advance") in accordance with any such notice. The aggregate
amount of Swing Line Advances outstanding shall not exceed the lesser of (A) the
Swing Line Commitment and (B) the aggregate Borrowing Base less the outstanding
balance of the Revolving Loan and Letter of Credit Obligations at such time
("Swing Line Availability"). Until the Maturity Date, Borrower may from time to
time borrow, repay and reborrow under this Section 2.1(c). Each Swing Line
Advance shall be made pursuant to a Written Notice of Revolving Advance
delivered to Agent by Borrower in accordance with Section 2.4(a) hereof. Those
notices must be given no later than 12:00 noon (New York time) on the Business
Day of the proposed Swing Line Advance. Notwithstanding any other provision of
this Agreement or the other Loan Documents, the Swing Line Loan shall constitute
a Base Rate Advance and a Revolving Advance. Borrower shall repay the aggregate
outstanding principal amount of the Swing Line Loan upon demand therefor by
Agent.
(ii) Borrower shall execute and deliver to the Swing Line
Lender a promissory note to evidence the Swing Line Commitment. The
note shall be in the principal amount of the Swing Line Commitment of
the Swing Line Lender, dated the Closing Date and substantially in the
form of Exhibit 2.1(c)(ii) (the "Swing Line Note"). The Swing Line Note
shall represent the obligation of Borrower to pay the amount of the
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Swing Line Commitment or, if less, the aggregate unpaid principal
amount of all Swing Line Advances made to the Borrower together with
interest thereon. The entire unpaid balance of the Swing Line Loan and
all other non-contingent Obligations shall be immediately due and
payable in full in immediately available funds on the Maturity Date if
not sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing Line Lender, at
any time and from time to time in its sole and absolute discretion (but
no less frequently than once per week), may on behalf of Borrower (and
the Borrower hereby irrevocably authorizes the Swing Line Lender to so
act on its behalf) request each Lender (including the Swing Line
Lender) to make a Revolving Advance to the Borrower (which shall be a
Base Rate Advance) in an amount equal to such Lender's pro rata share
of the principal amount of the Borrower's Swing Line Loan (the
"Refunded Swing Line Loan") outstanding on the date such notice is
given. Unless any of the events described in Section 10 shall have
occurred (in which event the procedures of this Section shall apply)
and regardless of whether the conditions precedent set forth in this
Agreement to the making of a Revolving Advance are then satisfied, each
Lender shall disburse directly to Agent, its pro rata share of a
Revolving Advance on behalf of the Swing Line Lender, prior to 3:00
p.m. (New York time), in immediately available funds on the date such
notice is given. The proceeds of such Revolving Advances shall be
immediately paid to the Swing Line Lender and applied to repay the
Swing Line Loan of the Borrower.
(iv) Participation in Swing Line Loans. If, prior to refunding
a Swing Line Loan with a Revolving Advance pursuant to Section
2.1(c)(iii), one of the events described in Section 10 shall have
occurred, then, subject to the provisions of Section 2.1(c)(v) below,
each Lender will, on the date such Revolving Advance was to have been
made for the benefit of the Borrower, purchase from the Swing Line
Lender an undivided participation interest in the Swing Line Loan to
the Borrower in an amount equal to its pro rata share of such Swing
Line Loan. Upon request, each Lender will promptly transfer to the
Swing Line Lender, in immediately available funds, the amount of its
participation.
(v) Lenders' Obligations Unconditional. Each Lender's
obligation to make Revolving Advances in accordance with Section
2.1(c)(iii) and to purchase participating interests in accordance with
Section 2.1(c)(iv) shall be absolute and unconditional and shall not be
affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against
the Swing Line Lender, Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of any Default or Event
of Default; (C) any inability of Borrower to satisfy the conditions
precedent to borrowing set forth in this Agreement on the date upon
which such participating interest is to be purchased; or (D) any other
circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing. If any Lender does not make available to Agent or
the Swing Line Lender, as applicable, the amount required pursuant to
Section 2.1(c)(iii) or 2.1(c)(iv), as the case may be, the Swing Line
Lender shall be entitled to recover such amount on demand from such
Lender, together with interest thereon for each day from the date of
non-payment until such amount is paid in full at the Federal Funds Rate
for the first two Business Days and at the Base Rate thereafter.
Section 2.2. REVOLVING CREDIT FACILITY COMMITMENT AND BORROWING LIMIT.
(a) The aggregate unpaid principal amount of the Revolving Loan (including the
Swing Line Loan) at any time, when added to the aggregate amount of Letter of
Credit Obligations at such time, shall not exceed an amount (the "Borrowing
Limit") equal to the lesser of (i) the Revolving Credit Facility Commitment at
such time and (ii) except in the case of Revolving Advances to be made under
Section
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2A.2 hereof as to which this clause (ii) shall not apply to prevent such
Revolving Advances (but this exception shall not limit the application of
Section 3.1(a) hereof), an amount equal to the Borrowing Base at such time.
Notwithstanding the foregoing, except for Revolving Advances to be made under
Section 2A.2 hereof, no Revolving Advance shall be made if, after giving effect
to the making of such Revolving Advance, a prepayment would be required under
Section 3.1(a) hereof.
(b) Subject to the limitations of Sections 2 and 3 hereof, the Borrower
may borrow, repay and reborrow the Revolving Loan. The portion of the Revolving
Loan to be funded by each Lender shall not exceed in aggregate principal amount
at any one time outstanding, and no Lender shall have any obligation to fund its
pro rata share of any Revolving Advance if, after giving effect thereto, the
outstanding portions of Revolving Advances made by such Lender shall be in the
aggregate in excess of, the revolving commitment amount set forth opposite such
Lender's name on Exhibit A hereto for the Revolving Credit Facility Commitment,
as reduced from time to time (for each Lender, its "Revolving Commitment").
Section 2.3. REVOLVING NOTES. (a) The pro rata portion of the Revolving
Advances made by each Lender shall be evidenced by, and be repayable with
interest in accordance with the terms of, a promissory note issued by the
Borrower payable to the order of such Lender or its registered assignees, in the
maximum principal amount of such Lender's Revolving Commitment and in the form
of Exhibit 2.3(a) hereto (together with any replacement, modification, renewal
or substitution thereof, individually, a "Revolving Note" and collectively, the
"Revolving Notes").
(b) Each Revolving Note shall be dated the Closing Date and be duly
completed, executed and delivered by the Borrower and such Revolving Notes shall
replace the Revolving Notes previously delivered by the Borrower to the Lenders
in connection with the Original Credit Agreement or the First Amended and
Restated Credit Agreement.
(c) Each Lender shall record that portion of the amount of each
Revolving Advance which it has made to Borrower and the amount of each payment
or prepayment of principal thereon in its records; provided, however, that the
failure of any Lender to make any such recordation shall not in any manner
affect the obligation of the Borrower to repay to such Lender the portion of the
Revolving Advance advanced by such Lender under the applicable Revolving Note
held by such Lender. Any such recordation shall represent conclusive evidence of
the date and amount of such Lender's pro rata share of any Revolving Advance or
payment or prepayment of principal thereon, absent manifest error.
(d) Each of the Revolving Notes shall mature on the Maturity Date, and
shall be subject to payment and prepayment as provided in Sections 2 and 3
hereof.
Section 2.4. NOTICE OF BORROWING; BORROWER'S CERTIFICATE. (a) Subject
to Section 3.2(e) hereof, whenever Borrower desires to make a borrowing of a
Revolving Advance, it shall give the Agent, at its address set forth in Section
12.4 hereof, not later than 12:00 noon (New York time), at least three (3)
Business Days' prior Written Notice (or same day prior Written Notice in the
case of a Revolving Advance which shall be a Base Rate Advance) from an
Authorized Representative (which notice shall be irrevocable) of its desire to
make a borrowing of a Revolving Advance. Each notice of borrowing under this
Section 2.4(a) shall be substantially in the form of Exhibit 2.4 hereto (each a
"Borrower's Certificate") and specify the date on which the Borrower desires to
make a borrowing of a Revolving Advance (which in each instance shall be a
Business Day), the amount of such borrowing, whether such borrowing shall be a
Base Rate Advance or a Eurodollar Advance or a combination thereof, and, in the
case of the selection of a Eurodollar Advance, the proposed Interest Period
therefor, and shall refer to the most recent Borrowing Base Certificate
delivered by the Borrower to the Agent pursuant to Section 8.1(p) hereof or at
the request of the Agent and set forth the applicable Borrowing Base provided
therein. If such notice shall be with respect to a borrowing of a Eurodollar
Advance but fails to state an applicable Interest Period therefor, then such
notice shall be deemed to be a request for a one-month Interest Period. If (x)
the Borrower shall fail to state in any such notice whether such Revolving
Advance
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shall be a Base Rate Advance or a Eurodollar Advance or (y) the Borrower shall
be deemed to make a borrowing of a Revolving Advance pursuant to Section 2A.2
hereof, then the Borrower shall be deemed to have selected a Base Rate Advance.
Subject to the other provisions of this Agreement, Revolving Advances of more
than one type may be outstanding at the same time; provided, however, that no
more than six (6) Eurodollar Advances in the aggregate may be outstanding at any
one time.
(b) Borrower shall not be permitted to select a borrowing of a
Eurodollar Advance (x) to the extent such selection would be prohibited by
Section 2.10 or Section 2.11 hereof or (y) if a Default or an Event of Default
shall be in existence as of the date of selection or commencement of the
applicable Interest Period.
(c) Agent shall notify Lenders upon Agent's receipt of any Written
Notice requesting a Revolving Advance. Each Lender shall make available to the
Agent such Lender's pro rata portion of the Revolving Advance to be made on the
date specified in the aforementioned notice (which for purposes of Revolving
Advances made pursuant to Section 2A.2 hereof shall be deemed to be the Business
Day after receipt of the written or telephonic notice by the Agent to each such
Lender of such borrowing) not later than 2:00 p.m. (New York time) on such
specified date in U.S. dollars in immediately available funds, at the account of
the Agent located at Deutche Bank Trust Company Americas, New York, New York,
CFN 2173, ABA Number: 000-000-000, Account Title: GECC/CAF Depository, Account
Number: 00-000-000, Reference: Finlay Fine Jewelry or such other account as the
Agent may from time to time direct (the "Payment Account"). The portion of each
Revolving Advance to be funded by each Lender shall be an amount equal to (x)
the dollar amount of the Revolving Advance requested or deemed requested by the
Borrower under Section 2.1(a) or 2A.2 hereof, multiplied by (y) the percentage
set forth opposite such Lender's name on Exhibit A hereto for the Revolving
Credit Facility Commitment.
(d) [Intentionally Deleted].
(e) Except for Revolving Advances made pursuant to Section 2A.2 hereof
(which Revolving Advances shall be applied to the reimbursement of drawings
under the Letter of Credit for which such Revolving Advance was made in
accordance with such Section 2A.2 hereof), proceeds of each Revolving Advance
received by the Agent shall be made available to the Borrower by the Agent at
the Borrower's Disbursement Account upon satisfaction of all applicable
conditions. Section 2.5. TERMINATION OR REDUCTION OF REVOLVING CREDIT FACILITY
COMMITMENTS. (a) The Borrower shall have the right, upon not less than three (3)
Business Days' prior Written Notice to the Agent (and the Agent shall promptly
notify each Lender thereof in writing or by telephone confirmed promptly in
writing), to terminate the Revolving Credit Facility Commitment or, from time to
time, to reduce ratably (as among the Lenders) in part the amount of the
Revolving Credit Facility Commitment; provided, however, that:
(i) any such partial reduction of the Revolving Credit
Facility Commitment shall be in the aggregate amount of at least
$25,000,000 (or an integral multiple of $5,000,000 in excess thereof)
or following the first partial reduction under this Section 2.5(a)(i),
an amount equal to $50,000,000 minus the amount of such first partial
reduction of the Revolving Credit Facility Commitment and shall be
accompanied by prepayment of the Revolving Loan, together with the
payment of any fees, premiums, costs and charges required to be paid by
the Borrower pursuant to Section 2.12 hereof, and accrued interest on
the amount so prepaid to the date of such prepayment, to the extent, if
any, that the aggregate principal amount of the sum of the Revolving
Loan and the Letter of Credit Obligations then outstanding exceeds the
Borrowing Limit at such time (after giving effect to such reduction in
the Revolving Credit Facility Commitment); provided, however, that
notwithstanding the foregoing, the Borrower shall not (x) reduce
(except in connection with a termination) the Revolving Credit Facility
Commitment by
31
more than $50,000,000 in the aggregate during the term of this
Agreement or (y) reduce the Revolving Credit Facility Commitment to an
amount which is less than the sum of the aggregate unpaid principal
balance of the then outstanding Letter of Credit Obligations;
(ii) any termination of the Revolving Credit Facility
Commitment shall be accompanied by prepayment in full of the Revolving
Loan (together with all other Obligations) then outstanding hereunder,
together with the payment of any unpaid fees owing with respect to the
Revolving Credit Facility Commitment, any fees, premiums, costs and
charges required to be paid by the Borrower pursuant to Section 2.12
hereof, and accrued interest on the amount so prepaid to the date of
such prepayment, together with the cancellation or termination of any
outstanding Letters of Credit (or the providing of Letter of Credit
Cash Collateral equal to the undrawn amount under all outstanding
Letters of Credit) and the reimbursement of any unreimbursed Letters of
Credit; and
(iii) any termination of the Revolving Credit Facility
Commitment while Eurodollar Advances are outstanding thereunder and any
reduction thereof that reduces the amount of the Revolving Credit
Facility Commitment below the principal amount of such Eurodollar
Advances then outstanding thereunder may be made only on the last day
of the respective Interest Periods for such Eurodollar Advances.
(b) Upon the giving of Written Notice of termination or reduction of
the Revolving Credit Facility Commitment, the amount of Revolving Advances
required to be prepaid in subsection (a) above shall be due and payable on the
date therein specified for such reduction or termination, together with all
accrued interest thereon to such date plus any fees, premiums, charges or costs
provided for hereunder, and the Revolving Credit Facility Commitment shall be
permanently reduced pro rata among Lenders by the amount of such reduction on
the date specified in such Written Notice for such reduction or termination.
Section 2.6. INTEREST. (a) Interest on Eurodollar Advances. Except as
provided in Section 2.6(c) hereof, the Borrower shall pay interest on the unpaid
principal amount of each Eurodollar Advance made to it hereunder which is
outstanding from time to time, on each Interest Payment Date with respect to
such Eurodollar Advance, at the date of conversion of such Eurodollar Advance
(or portion thereof) to a Base Rate Advance and at maturity of such Eurodollar
Advance at an interest rate per annum equal during the Interest Period for such
Eurodollar Advance to the Adjusted Eurodollar Rate for the Interest Period in
effect for such Eurodollar Advance, and after maturity of such Eurodollar
Advance (whether by acceleration or otherwise) upon demand. Interest not paid
when due shall be payable on demand.
(b) Interest on Base Rate Advances. Except as provided in Section
2.6(c) hereof, the Borrower shall pay interest on the unpaid principal amount of
each Base Rate Advance and, to the extent due and payable, Additional
Indebtedness incurred by it, in each case, which is outstanding from time to
time at an interest rate per annum equal to the Base Rate in effect from time to
time. Interest on Base Rate Advances shall be payable monthly in arrears on the
first day of each month, upon conversion thereof to a Eurodollar Advance and at
maturity (whether by acceleration or otherwise) and thereafter on demand.
Interest on Additional Indebtedness shall be payable upon demand.
(c) Default Interest. During the continuation of any Event of Default,
interest on the Eurodollar Advances, Base Rate Advances and, to the extent due
and payable, Additional Indebtedness, and Letter of Credit fees pursuant to
Section 2A.4 hereof shall accrue and be payable at a rate two percentage points
(2%) in excess of the rate of interest or fee otherwise applicable to such
Eurodollar Advances, Base Rate Advances, Additional Indebtedness, or Letters of
Credit, as the case may be, and interest on any interest in default shall accrue
and shall be payable upon demand at a rate equal to two percentage points (2%)
in excess of the rate then applicable to Base Rate Advances.
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(d) Eurodollar Rate Determination. The Agent, upon determining the
Eurodollar Rate and the Adjusted Eurodollar Rate for any Interest Period, shall
promptly notify by telephone (confirmed promptly in writing) or in writing the
Borrower and the Lenders thereof. Such determination shall, in the absence of
manifest error, be conclusive and binding upon the Borrower, the Agent and the
Lenders.
(e) Changes in Index Rate. After each change in the Index Rate, the
Agent shall promptly notify the Borrower and each Lender of the date of such
change and the new Index Rate; provided, however, that the failure of the Agent
to so notify the Borrower or any Lender shall not affect the effectiveness of
such change.
(f) The Applicable Index Margin and Applicable Eurodollar Margin, will
be 0.50% and 1.50% per annum, respectively, as of the Closing Date. The
Applicable Margins will then be adjusted (up or down) prospectively on a
quarterly basis as determined by Parent's consolidated financial performance for
the trailing four quarters most recently then ended, commencing (such date being
the "Initial Adjustment Date") on the fifth Business Day after delivery of the
Parent's financial statements to Lenders for the fiscal quarter ending January
31, 2003. Adjustments in Applicable Margins will be determined by reference to
the following grids:
IF LEVERAGE APPLICABLE APPLICABLE
RATIO IS INDEX MARGIN EURODOLLAR MARGIN
5.00 1.00% 2.00%
less than 5.00 but 4.25 .75% 1.75%
less than 4.25 but 3.25 .50% 1.50%
less than 3.25 but 2.50 .25% 1.25%
less than 2.50 .00% 1.00%
All adjustments in the Applicable Margins after the Initial Adjustment
Date will be implemented quarterly on a prospective basis, for each calendar
month commencing after the date of delivery to Lenders of the quarterly
unaudited or annual audited (as applicable) financial statements of the Parent
evidencing the need for an adjustment. Concurrently with the delivery of those
financial statements, the Borrower shall deliver to the Agent and Lenders a
certificate, signed by its chief financial officer, setting forth in reasonable
detail the basis for the continuance of, or any change in, the Applicable
Margins. Failure to timely deliver such financial statements in accordance with
Section 8.1 shall, in addition to any other remedy provided for in this
Agreement, result in an increase in the Applicable Margins to the highest level
set forth in the foregoing grid, until the first day of the first calendar month
following the delivery of those financial statements demonstrating that such an
increase is not required. If an Event of Default shall have occurred and be
continuing at the time any reduction in the Applicable Margins is to be
implemented, that reduction shall be deferred until the first day of the first
calendar month following the date on which such Event of Default is waived or
cured.
Section 2.7. CONVERSION OF BORROWINGS; RENEWALS. (a) The Borrower may,
from time to time prior to the Maturity Date convert (i) all or a portion of
outstanding Base Rate Advances to one or more Eurodollar Advances, except as
provided in the last sentence of Section 2.4(a) or in Section 2.10 or 2.11
hereof, and only in amounts of $1,000,000 or more, or (ii) all or a portion of
outstanding Eurodollar Advances to a Base Rate Advance so long as the aggregate
principal balance of the portion of the Eurodollar Advances not being converted,
if any, is $1,000,000 or any greater integral multiple thereof; provided,
however, that Borrower shall not be entitled to convert any Base Rate Advance,
or portion thereof, to a Eurodollar Advance unless all accrued interest on the
Base Rate Advance, or portion thereof, to be converted through the date of such
conversion shall have been paid in full. Each conversion by Borrower of any
Revolving Advance or portion thereof (other than a conversion pursuant to
Section 2.10 or 2.11 hereof) shall be made not later than 12:00 noon (New York
time) on a Business Day on at least three (3) Business Days' prior Written
Notice from an Authorized Representative to the Agent (and the Agent shall
promptly notify each Lender thereof in writing or by
33
telephone confirmed promptly in writing). Each such notice (which notice shall
be irrevocable) shall specify (i) the date of the conversion and the amount to
be converted, (ii) the particular Base Rate Advance, or portion thereof, to be
converted, and (iii) in the case of conversion of any Base Rate Advance, or
portion thereof, to a Eurodollar Advance, the duration of the Interest Period
for such Eurodollar Advance. Notwithstanding the above, Borrower shall not be
entitled to convert any Base Rate Advance, or portion thereof, to a Eurodollar
Advance if a Default or Event of Default shall have occurred and be continuing.
Except as provided in Section 2.10 hereof, any conversion of a Eurodollar
Advance, or portion thereof, to a Base Rate Advance shall be made only on the
last day of the Interest Period with respect to such Eurodollar Advance.
(b) Each renewal by Borrower of an outstanding Eurodollar Advance or
portion thereof shall be made on Written Notice to the Agent (and the Agent
shall promptly notify each Lender thereof in writing or by telephone confirmed
promptly in writing) given not later than 12:00 noon (New York time) on the
third Business Day prior to the last day of the Interest Period just ending for
such Eurodollar Advance. Each notice (which notice shall be irrevocable) by
Borrower of the renewal of a Eurodollar Advance or portion thereof, shall be in
writing from an Authorized Representative and shall specify (i) the amount of
such renewal of the Eurodollar Advance or portion thereof and (ii) the duration
of the Interest Period for such renewal; provided, however, that if the Borrower
fails to select the duration of any Interest Period for the renewal of such
Eurodollar Advance or portion thereof, the duration of such Interest Period
shall be one month. Notwithstanding the above, Borrower shall not be entitled to
renew a Eurodollar Advance or a portion thereof, (i) if at the time of the
selection of such renewal there shall exist a Default or an Event of Default, or
(ii) to the extent such renewal would be prohibited by the last sentence of
Section 2.4(a) or by Section 2.10 or 2.11 hereof.
(c) Any Eurodollar Advance or portion thereof as to which the Agent
shall not have received a proper notice of conversion or renewal as provided in
Section 2.7(a) or 2.7(b) hereof or notice of payment or prepayment by 12:00 noon
(New York time) at least three (3) Business Days prior to the last day of the
Interest Period just ending for such Eurodollar Advance shall (whether or not
any Default or Event of Default has occurred) automatically be converted to a
Base Rate Advance on the last day of the Interest Period for such Eurodollar
Advance.
Section 2.8. COMPUTATION OF INTEREST. Interest on Base Rate Advances
and Eurodollar Advances and fees and other amounts calculated on the basis of a
rate per annum shall be computed on the basis of actual days elapsed over a
360-day year. Any rate of interest on the Loan, Additional Indebtedness or on
interest which is computed on the basis of the Base Rate shall change when and
as the Index Rate changes.
Section 2.9. INCREASED COSTS. In the case of the pro rata share of any
Lender in any Eurodollar Advance, in the event any law, treaty, order,
directive, rule or regulation shall be adopted, issued or become effective after
the Closing Date or in the event of any change in any law, treaty, order,
directive, rule or regulation from that in effect on the Closing Date or in the
interpretation thereof by any governmental or other regulatory authority charged
with the administration thereof (including, without limitation, Regulation D),
in any case, which:
(i) subjects such Lender or any branch or Affiliate of such
Lender to any charge with respect to such share of such Eurodollar
Advance (other than with respect to taxes and amounts relating thereto
(payment with respect to which shall be governed by Section 2.22); or
(ii) imposes, modifies or deems applicable any reserve,
deposit or similar requirement against any assets held by, deposits
with or for the account of, or loans or commitments by, an office of
any Lender or any branch or Affiliate of such Lender; or
34
(iii) imposes upon such Lender or any branch or Affiliate of
such Lender any other condition with respect to such share of such
Eurodollar Advance or this Agreement;
and the result of any of the foregoing is to increase the actual cost by an
amount such Lender reasonably deems to be material to such Lender or any branch
or Affiliate of such Lender of making, funding or maintaining such share of such
Eurodollar Advance hereunder, or to reduce the amount of any payment (whether of
principal, interest, or otherwise) received or receivable by such Lender or any
branch or Affiliate of such Lender, or to require such Lender or any branch or
Affiliate of such Lender to make any payment, in each case by or in an amount
which such Lender in its sole judgment deems material, then and in any such
case:
(1) such Lender shall promptly notify the Borrower, the Agent
and the other Lenders in writing of the happening of such event;
(2) such Lender shall promptly deliver to the Borrower, the
Agent and the other Lenders a certificate stating the change which has
occurred, or the reserve requirements or other conditions which have
been imposed on such Lender or branch or Affiliate of such Lender, or
the request, directive or requirement with which it has complied,
together with the date thereof, the amount of such increased cost,
reduction or payment and the way in which such amount has been
calculated; and
(3) the Borrower hereby agrees to pay to the Agent for the
benefit of such Lender on demand by such Lender (with a notice of such
demand to be sent by such Lender to the Agent) such an amount or
amounts as will compensate such Lender or its branch or Affiliate for
such additional cost, reduction or payment.
The certificate of such Lender as to the additional amounts payable pursuant to
this Section 2.9 delivered to the Borrower and the Agent shall in the absence of
manifest error be conclusive of the amount thereof. The protection of this
Section 2.9 shall be available to such Lender regardless of any possible
contention of invalidity or inapplicability of the law, regulation, treaty,
order, directive, interpretation or condition which has been imposed.
Section 2.10. CHANGE IN LAW RENDERING EURODOLLAR ADVANCES UNLAWFUL. (a)
Notwithstanding anything to the contrary herein contained, in the event that any
law, treaty, order, directive, rule or regulation adopted, issued or becoming
effective after the Closing Date or any change in any law, treaty, order,
directive, rule or regulation from that in effect on the Closing Date or in the
interpretation thereof by any governmental or other regulatory authority charged
with the administration thereof (in any case, whether or not having the force of
law), should make it unlawful for any Lender to fund any portion of a Eurodollar
Advance or to give effect to its obligations as contemplated hereby with respect
to Eurodollar Advances, such Lender shall, upon the happening of such event,
notify the Agent, the other Lenders and the Borrower thereof in writing stating
the reason therefor, and the obligation of such Lender to allow conversion to or
selection or renewal with respect to its pro rata share of any Eurodollar
Advance by the Borrower shall, upon the happening of such event, forthwith be
suspended for the duration of such illegality and during such illegality such
Lender shall fund its share of all Revolving Advances as Base Rate Advances and
there shall be no renewal of, or conversion to, any share of such Lender in any
Eurodollar Advance. If and when such illegality ceases to exist, such suspension
shall cease and such affected Lender shall similarly notify the Agent, the other
Lenders and the Borrower.
(b) Notwithstanding anything to the contrary contained herein, in the
event that any law, treaty, order, directive, rule or regulation adopted, issued
or becoming effective after the Closing Date or any change in any law, treaty,
order, directive, rule or regulation from that in effect on the
35
Closing Date or in the interpretation thereof by any governmental or other
regulatory authority charged with the administration thereof (in any case,
whether or not having the force of law) shall make it commercially impracticable
or unlawful for any Lender to continue in effect the funding of any portion of a
Eurodollar Advance previously made by it hereunder and then outstanding, such
Lender shall, upon the happening of such event, notify the Agent, the other
Lenders and the Borrower thereof in writing stating the reasons therefor, and
such Lender's pro rata share of such Eurodollar Advance shall automatically be
converted to a Base Rate Advance. The Borrower shall pay to the Agent for the
benefit of such Lender accrued interest owing on such converted portion of such
Eurodollar Advance made to the Borrower through the date of such conversion,
together with any amounts payable under Section 2.12 hereof with respect to such
prepayment. After such notice shall have been given and until the circumstances
giving rise to such notice no longer exist, each request for such Lender's pro
rata share of a Eurodollar Advance or for conversion to or renewal of such
Lender's pro rata share of a Eurodollar Advance shall be deemed a request by
Borrower for a Base Rate Advance. If and when such impracticability or
illegality ceases to exist, such suspension shall cease and such affected Lender
shall similarly notify the Agent, the other Lenders and the Borrower.
(c) Within 15 days after receipt by Borrower of written notice and
demand from any Lender (an "Affected Lender") for payment of additional amounts
or increased costs as provided in Sections 2.9, 2.10 or 2.12(b), Borrower may,
at its option, notify Agent and such Affected Lender of its intention to replace
the Affected Lender. So long as no Default or Event of Default has occurred and
is continuing, Borrower, with the consent of Agent, may obtain, at Borrower's
expense, a replacement Lender ("Replacement Lender") for the Affected Lender,
which Replacement Lender must be reasonably satisfactory to Agent. If Borrower
obtains a Replacement Lender within 90 days following notice of its intention to
do so, the Affected Lender must sell and assign its Loans and Revolving
Commitments to such Replacement Lender for an amount equal to the principal
balance of all Loans held by the Affected Lender and all accrued interest and
fees with respect thereto through the date of such sale; provided, that Borrower
shall have reimbursed such Affected Lender for the additional amounts or
increased costs that it is entitled to receive under this Agreement through the
date of such sale and assignment. Notwithstanding the foregoing, Borrower shall
not have the right to obtain a Replacement Lender if the Affected Lender
rescinds its demand for increased costs or additional amounts within 15 days
following its receipt of Borrower's notice of intention to replace such Affected
Lender. Furthermore, if Borrower gives a notice of intention to replace and does
not so replace such Affected Lender within 90 days thereafter, Borrower's rights
under this Section 2.10(c) shall terminate and Borrower shall promptly pay all
increased costs or additional amounts demanded by such Affected Lender pursuant
to Sections 2.9, 2.10 and 2.12(b).
Section 2.11. EURODOLLAR AVAILABILITY. (a) In the event, and on each
occasion, that on the day two (2) Business Days prior to the commencement of any
Interest Period for a Eurodollar Advance, the Agent shall have determined in
good faith that dollar deposits in the amount of the principal amount of such
Eurodollar Advance are not generally available in the London (England) interbank
market, or that the rate at which such dollar deposits are being offered will
not accurately reflect the cost to one or more Lenders of making or funding the
principal amount of their portions of such Eurodollar Advance during such
Interest Period, or that reasonable means do not exist for ascertaining the
Eurodollar Rate, the Agent shall, as soon as practicable thereafter, give
written or telephonic notice of such determination to the Lenders and the
Borrower, and any request by Borrower for a Eurodollar Advance pursuant to
Section 2.4 hereof or for conversion to or renewal of a Eurodollar Advance
pursuant to Section 2.7 hereof shall thereupon, and until the circumstances
giving rise to such notice no longer exist (as notified by the Agent to the
Borrower and the Lenders), be deemed a request by the Borrower for the making of
or conversion to a Base Rate Advance.
(b) If, at any time, the Agent shall have determined that any
contingency has occurred which adversely affects the London (England) interbank
market or that any law, treaty, order, directive, rule or regulation adopted,
issued or becoming effective after the Closing Date or any change in any
existing law, treaty, order, directive, rule or regulation from that in effect
on the Closing Date or in
36
the interpretation thereof (in any case, whether or not having the force of law)
or other circumstance affecting one or more Lenders or the London (England)
interbank market makes the funding of any portion of a Eurodollar Advance
impracticable, the Agent shall, as soon as practicable thereafter, give written
or telephonic notice of such determination to the Lenders and the Borrower and
any request by Borrower for a Eurodollar Advance pursuant to Section 2.4 hereof
or for conversion to or renewal of a Eurodollar Advance pursuant to Section 2.7
hereof shall thereupon, and until the circumstances giving rise to such notice
no longer exist (as notified by the Agent to the Borrower and the Lenders), be
deemed a request by the Borrower for the making of or conversion to a Base Rate
Advance.
Section 2.12. INDEMNITIES. (a) Each of Borrower and Parent hereby
indemnifies each Lender on demand against any loss or reasonable expense which
such Lender or its branch or Affiliate may sustain or incur as a consequence of:
(i) any default in payment or prepayment of the principal
amount of any Eurodollar Advance made to the Borrower or any portion of
any thereof or interest accrued thereon, as and when due and payable
(at the due date thereof, by irrevocable notice of payment or
prepayment, or otherwise),
(ii) the effect of the occurrence of any Event of Default upon
any Eurodollar Advance made to it, including, but not limited to, any
loss or reasonable expense sustained or incurred in liquidating or
employing deposits from third parties acquired to effect or maintain
such Eurodollar Advance or any portion thereof,
(iii) the payment or prepayment of the principal amount of any
Eurodollar Advance made to it or any portion thereof, pursuant to
Section 2 or 3 hereof, or otherwise, on any day other than the last day
of an Interest Period or the payment of any interest on any Eurodollar
Advance made to it, or portion thereof, on a day other than an Interest
Payment Date for such Eurodollar Advance, or
(iv) the failure by Borrower to accept or make a borrowing of
a Eurodollar Advance or a conversion to or renewal of a Eurodollar
Advance after it has given notice of such borrowing, conversion or
renewal.
Each Lender shall provide to the Borrower, the Agent and the other Lenders a
statement, supported where applicable by documentary evidence, explaining the
amount and calculation of any such loss or expense it incurs, which statement
shall be conclusive absent manifest error.
(b) If any law, treaty, order, directive, rule or regulation shall be
adopted, issued or becoming effective after the Closing Date or if any change in
any law, treaty, order, directive, rule or regulation from that in effect on the
Closing Date or in the interpretation thereof by any governmental or other
regulatory authority charged with the administration thereof (and including in
any event all risk based capital guidelines heretofore adopted by the
Comptroller of the Currency, the Board or any other banking regulatory agency,
domestic or foreign, to the extent that any provision contained therein does not
have to be complied with as of the date hereof) shall, or if the compliance by
any Lender with any guideline or request from any central bank or other
Governmental Authority, shall:
(i) impose upon, modify, require, make or deem applicable to
any one or more Lenders, or any of their Affiliates or branches, any
reserve requirement, special deposit requirement, insurance assessment
or similar requirement against or affecting the Revolving Commitment of
such Lender or Lenders or such Affiliates or branches, or
(ii) impose any condition upon or cause in any manner the
addition of, any supplement to or any increase of any kind to the
capital or cost base of such Lender or Lenders, or such Affiliates or
branches thereof, for extending or maintaining the
37
Revolving Commitment of such Lender, which results in an increase in
the capital requirement supporting the Revolving Commitment, or
(iii) impose upon, modify, require, make or deem applicable to
such Lender or Lenders or any such Affiliates or branches any capital
requirement, increased capital requirement or similar requirement,
and the result of any events referred to in clause (i), (ii) or (iii) above
shall be to (A) increase the amount of capital required or expected to be
required to be maintained by such Lender or any such Affiliate or branch and
such Lender determines that the amount of such capital requirement is incurred
by or based on the Revolving Commitment of such Lender or other commitments of
this type or (B) increase the costs or decrease the benefit in any way to such
Lender or Lenders, or any such Affiliate or branch, of extending or maintaining
the Revolving Commitment or extending or maintaining such Lender's or Lenders'
portion of the Loan or holding any Collateral;
then and in such event the Borrower shall, on or prior to the tenth (10th)
Business Day after the giving of Written Notice of such increased costs and/or
decreased benefits to the Borrower and the Agent by such Lender or Lenders (or
any such Affiliate or branch), pay to the Agent for the benefit of such Lender
or Lenders all such additional amounts which in the good faith calculation of
such Lender or Lenders are properly allocable to the Revolving Commitment of
such Lender, such Lender's or Lenders' portion of the Loan and/or the
Collateral, as the case may be, and which:
(1) in the case of events referred to in clause (i) above,
shall be sufficient to compensate it for all such increased costs
and/or decreased benefits, and/or
(2) in the case of events referred to in clauses (ii) and
(iii) above, shall be an amount equal to the reduction, as reasonably
determined by such Lender, in the after-tax rate of return on such
Lender's capital resulting from any such capital or increased capital
or similar requirement (including, without limitation, any such
Lender's or Lender's Affiliates' or branches' cost of taking action in
anticipation of the effectiveness of any event described in clause (ii)
or (iii) in order to enable such Lender, Lenders, Affiliate or branch
to be in compliance therewith upon such effectiveness), all as
certified by such Lender or Lenders in said Written Notice to the
Borrower. Such certification shall be conclusive and binding on the
Borrower absent manifest error.
(c) Each Credit Party hereby indemnifies and holds harmless the Agent
and each Lender and their respective Affiliates, directors, officers, agents,
representatives, counsel and employees and each other Person, if any,
controlling them or any of their Affiliates within the meaning of either Section
15 of the Securities Act of 1933, as amended, or Section 20(a) of the Securities
Exchange Act of 1934 (each an "Indemnified Party"), from and against any and all
losses, claims, damages, costs, expenses (including reasonable counsel fees and
disbursements) and liabilities which may be incurred by or asserted against such
Indemnified Party with respect to or arising out of the financing contemplated
by this Agreement, the commitments hereunder to make, or the making of the
Revolving Advances or the financings contemplated hereby, the other Loan
Documents, the Collateral (including, without limitation, the use thereof by any
of such Persons or any other Person, the exercise by the Agent or any Lender of
rights and remedies or any power of attorney with respect thereto, and any
action or inaction of the Agent or any Lender under any Security Document), the
use of proceeds of any financial accommodations provided hereunder, any
investigation, litigation or other proceeding brought or threatened relating
thereto, or the role of any such Person or Persons in connection with the
foregoing whether or not they or any other Indemnified Party is named as a party
to any legal action or proceeding ("Claims"). No Credit Party will, however, be
responsible to any Indemnified Party hereunder for any Claims to the extent that
any such Claim shall have arisen out of or resulted from actions taken or
omitted to be taken by such
38
Indemnified Party which constitute the gross negligence or willful misconduct of
such Indemnified Party ("Excluded Claims"). Further, should any of the Agent's
or any of the Lender's employees be involved in any legal action or proceeding
in connection with the transactions contemplated hereby (other than relating to
an Excluded Claim), each Credit Party hereby agrees to pay to the Agent and each
Lender an amount equal to the actual per diem compensation for each employee for
each day or portion thereof that such employee is involved in preparation and
testimony pertaining to any such legal action or proceeding. The Indemnified
Party shall give the Borrower prompt written notice of any Claim setting forth a
description of those elements of the Claim of which such Indemnified Party has
knowledge. The Borrower shall have the right at any time during which a Claim is
pending to select counsel to defend and settle any Claims so long as in any such
event the Borrower shall have stated in a writing delivered to the applicable
Indemnified Party that, as between the Borrower and such Indemnified Party, the
Borrower is responsible to such Indemnified Party with respect to such Claim;
provided, however, that the Borrower shall not be entitled to control the
defense of any Claim in the event that there are defenses available to the
Indemnified Party which are not available to the Borrower. In any other case,
the Indemnified Party shall have the right to select counsel and control the
defense of any Claims; provided, however, that no Indemnified Party shall settle
any Claim as to which it is controlling the defense without the consent of the
Borrower, which consent shall not be unreasonably withheld or delayed. With
respect to any Claim for which the Borrower is entitled to select counsel, each
Indemnified Party shall have the right, at its expense, to participate in the
defense of such Claim. In the event that, with respect to any Claim, more than
one Indemnified Party shall be permitted hereunder to select counsel to defend
such Claim at the expense of the Borrower and shall decide to do so, then all
such Indemnified Parties shall select the same counsel to defend such
Indemnified Parties with respect to such Claim; provided, however, that if any
such Indemnified Party shall in its reasonable opinion (or in the reasonable
opinion of its counsel) consider that the retention of one joint counsel as
aforesaid shall result in a conflict of interest to it, such Indemnified Party
may, at the reasonable expense of the Borrower, select its own counsel to defend
such Indemnified Party with respect to such Claim. The Indemnified Parties and
the Borrower and their respective counsel shall cooperate with each other in all
reasonable respects in any investigation, trial and defense of any such Claim
and any appeal arising therefrom.
(d) If for any reason the foregoing indemnity is unavailable to any
Indemnified Party or insufficient to hold it free and harmless as contemplated
by the preceding paragraph (c), then the Borrower shall contribute to the amount
paid or payable by the Indemnified Party as a result of any Claim in such
proportion as is appropriate to reflect, not only the relative benefits received
by the Borrower on the one hand and such Indemnified Party on the other hand,
but also the relative fault of the Borrower and such Indemnified Party, as well
as any other relevant equitable considerations.
(e) Notwithstanding anything to the contrary set forth herein, no
indemnity is provided, nor may any Claim be made, pursuant to this Section 2.12
with respect to taxes (and amounts relating thereto), the indemnification for
which shall be governed solely and exclusively by Section 2.22.
Section 2.13. DISBURSEMENT. Each Revolving Advance shall be disbursed
by the Agent from the Payment Account to the Disbursement Account as provided in
Section 2.4(e) hereof, shall be charged, together with interest, fees and other
amounts payable by Borrower hereunder, to the account of the Borrower on the
books of the Agent from time to time, and shall be payable to the Payment
Account or to such other account or office as the Agent may specify in writing
to the Borrower.
Section 2.14. AGENT'S AVAILABILITY ASSUMPTION. (a) Unless the Agent
shall have been notified by any Lender by Written Notice prior to a borrowing
date that such Lender does not intend to make available to the Agent such
Lender's pro rata portion of any Revolving Advance which it shall be obligated
to make on such date, the Agent may assume that such Lender has made such amount
available to the Agent on the date for such borrowing and the Agent may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Agent
by such Lender on such date of borrowing, the Agent shall be entitled to recover
such corresponding amount on demand from such Lender, which demand shall be
39
made in a reasonably prompt manner. If such Lender does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent shall
promptly notify the Lenders and the Borrower and the Borrower shall pay such
corresponding amount to the Agent on demand.
(b) The Agent shall also be entitled to recover from such Lender or the
Borrower interest on such corresponding amount in respect of each day from the
date such corresponding amount was made available by the Agent to the Borrower
to the date such corresponding amount is recovered by the Agent, at a rate per
annum equal to (x) if paid by such Lender, the cost to the Agent of funding such
amount as notified in writing by the Agent to such Lender, or (y) if paid by
Borrower, the applicable rate for Base Rate Advances or Eurodollar Advances, as
the case may be.
(c) In the event that any Lender shall fail to fund its pro rata share
of any Revolving Advance or letter of credit participation under Section 2A.2
hereof, the Agent on behalf of the L/C Issuer shall be entitled to recover such
amount on demand from such Lender, which demand shall be made in a reasonably
prompt manner. If such Lender does not pay such amount forthwith upon the
Agent's demand therefor, the Agent shall notify promptly the Lenders and the
Borrower thereof and the Borrower shall pay such amount to the Agent. The Agent
on behalf of the L/C Issuer, shall also be entitled to recover from such Lender
or the Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such Revolving Advance was made, or the date
such purchase was to have been made or funded, to the date such amount is
recovered by the Agent, at a rate per annum equal to (x) if paid by such Lender,
the cost to the L/C Issuer of funding the payment of the drawing under the
Letter of Credit for which the Revolving Advance was made or participation
purchased under Section 2A.2 hereof, or (y) if paid by the Borrower, the
applicable rate for Base Rate Advances in the case of a Revolving Advance made
or participation purchased under Section 2A.2 hereof.
(d) Nothing herein shall be deemed to relieve any Lender from its
obligation to fund or purchase its pro rata share of any Revolving Advance or
purchase any participation as required hereunder, or to prejudice any rights
which Borrower may have against any Lender as a result of any default by such
Lender hereunder. No Lender shall be responsible for any default of any other
Lender in respect of any other Lender's obligation to make its pro rata share of
any Revolving Advances hereunder nor shall the Revolving Commitment of any
Lender hereunder be increased as a result of such default of any other Lender.
Each Lender shall be obligated to the extent provided herein regardless of the
failure of any other Lender to fulfill its obligations hereunder.
(e) Notwithstanding anything contained herein to the contrary, so long
as any Lender shall be in default in its obligation to fund its pro rata share
of any Revolving Advance (as notified to such Lender by the Agent; the Agent
agreeing to use good faith efforts to give such notification promptly following
the occurrence of such default) or shall have rejected any such commitment, then
such Lender shall not be entitled to receive any payments of principal of or
interest on its pro rata share of the Revolving Loan or its share of any
commitment or other fees payable hereunder unless and until (x) the Loan and all
interest thereon has been paid in full, (y) such failure to fulfill its
obligation to fund is cured and such Lender shall have paid, as and to the
extent provided in this Section 2.14, to the applicable party, if any, interest
on the amount of funds that such Lender failed to timely fund or (z) the
Obligations under this Agreement shall have been declared or shall have become
immediately due and payable, and until the earlier to occur of (x) or (y) above,
for purposes of voting or consenting to matters with respect to the Loan
Documents, such Lender shall be deemed not to be a "Lender" hereunder and such
Lender's Revolving Commitment shall be deemed to be zero (0). No Revolving
Commitment of any Lender shall be increased or otherwise affected by any such
failure or rejection by any Lender. Any payments of principal of or interest on
Obligations which would, but for this paragraph (e), be paid to any Lender,
shall be paid to the Lenders who shall not be in default under their respective
Revolving Commitments and who shall not have rejected any Revolving Commitment,
for application to Obligations or to provide Letter of Credit Cash Collateral in
such manner and order (pro rata among such Lenders) as shall be determined by
the Agent.
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Section 2.15. PRO RATA TREATMENT AND PAYMENTS. Except as contemplated
by this Agreement, including, without limitation, Sections 2.1(c), 2.9, 2.10,
2.12, 2.13, 2.14, 2.18, 12.1, 12.5 and 12.13(h) hereof, each Revolving Advance
and each payment (including each prepayment) on account of the principal of and
interest on the Loan and fees described in this Agreement shall be made pro rata
to each Lender according to the respective percentages of each Lender set forth
opposite its name on Exhibit A hereto. The Agent will distribute each payment to
the Lenders in accordance with Section 2.19 hereof.
Section 2.16. EURODOLLAR OFFICES. Each Lender intends to initially
fulfill its commitment with respect to such Lender's pro rata share of any
Eurodollar Advance by causing the Initial Eurodollar Office of such Lender to
make such Lender's proportionate share of such Eurodollar Advance; provided,
however, that each Lender may at its option fulfill such commitment by causing
another branch or an Affiliate of such Lender to make such Lender's pro rata
share of such Eurodollar Advance; and provided, further, that the selection by
such Lender of the Initial Eurodollar Office of such Lender or any other such
branch or Affiliate shall not affect the obligations of the Borrower to repay
such Lender's pro rata share of the Eurodollar Advances in accordance with the
terms of this Agreement.
Section 2.17. TELEPHONIC NOTICE. Without in any way limiting Borrower's
obligation to confirm in writing any telephonic notice of a borrowing,
conversion or renewal, the Agent may act without liability upon the basis of
telephonic notice believed by the Agent in good faith to be from an Authorized
Representative of Borrower prior to receipt of written confirmation.
Section 2.18. MAXIMUM INTEREST. (a) No provision of this Agreement or
any Revolving Note shall require the payment to any Lender or permit the
collection by any Lender of interest in excess of the maximum rate permitted by
applicable law (the "Maximum Lawful Rate").
(b) If the amount of interest computed without giving effect to this
Section 2.18 and payable on any interest payment date in respect of the
preceding interest computation period would exceed the amount of interest
computed in respect of such period at the maximum rate of interest from time to
time permitted (after taking into account all consideration which constitutes
interest) by laws applicable to any Lender (such maximum rate being such
Lender's "Maximum Permissible Rate"), the amount of interest payable to such
Lender on such date in respect of such period shall be computed at such Lender's
Maximum Permissible Rate.
(c) If at any time and from time to time (i) the amount of interest
payable to any Lender on any interest payment date shall be computed at such
Lender's Maximum Permissible Rate pursuant to the preceding paragraph (b) and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at such Lender's Maximum Permissible
Rate, then the amount of interest payable to such Lender in respect of such
subsequent interest computation period shall continue to be computed at such
Lender's Maximum Permissible Rate until the amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to the preceding paragraph (b).
Section 2.19. RECEIPT OF PAYMENTS. (a) Each payment by Borrower under
this Agreement shall be made without deduction, set-off, defense, recoupment,
claim or counterclaim, all of which are waived, not later than 12:00 noon (New
York time) on the day when due in lawful money of the United States of America
in immediately available funds to the Agent's Payment Account. The Agent will,
upon any such payment to its Payment Account, promptly thereafter (and in any
event on the same Business Day as the date when received if such payment is
received at or prior to 12:00 noon (New York time) (or, if sent by wire transfer
in immediately available funds, if such wire is initiated by such time)), cause
to be distributed like funds relating to the payment of principal or interest
ratably to the Lenders or as otherwise provided above, and like funds relating
to the payment of any other amount payable to any Lender to such Lender, in each
case to be applied in accordance with the terms of this Agreement.
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(b) Pursuant and subject to Section 8.22 hereof, the Borrower has
agreed to cause all Proceeds to be deposited into Blocked Accounts, and to cause
all such Proceeds to be transferred to the Payment Account in accordance with
the Collecting Bank Agreements. Subject to Section 2.20(a) hereof, on each
Business Day, the Agent shall apply to Obligations (or invest as hereinafter
provided) effective as of such Business Day, all Proceeds credited in
immediately available funds to the Payment Account on such Business Day (and
which shall not have theretofore been credited to Obligations) as follows: (i)
first, to the Revolving Loan, until the Revolving Loan shall have been paid in
full and (ii) second, invested in accordance with and subject to the
requirements of Section 2.20(b) hereof.
In the event the Borrower (or any Affiliate of the Borrower or any
Person acting for or in concert with the Borrower) shall, notwithstanding the
existence of any lock-box or collection arrangement referred to in this
Agreement, receive any monies, checks, drafts or other similar negotiable items
of payment made with respect to Accounts (other than payments in respect of
accommodation sales and other miscellaneous transactions which are not store
settlements so long as such monies, checks, drafts or similar items are
deposited as required by this sentence no less frequently than once every week
and in any event when the undeposited amount of such monies, checks, drafts or
similar items equals or exceeds $750,000 in the aggregate during November,
December or January or $450,000 in the aggregate at any other time), the
Borrower shall no later than the first Business Day following receipt thereof
deposit or cause the same to be deposited, in kind, in a Blocked Account or as
otherwise directed by the Agent. Notwithstanding anything to the contrary
herein, all such items of payment shall, solely for purposes of determining the
occurrence of an Event of Default, be deemed received upon actual deposit to the
Payment Account, unless the same shall be subsequently dishonored for any reason
whatsoever in which case such payment will not be deemed so received.
Section 2.20. APPLICATION OF PROCEEDS. (a) So long as no Event of
Default has occurred and is continuing and except as otherwise provided
hereunder, all payments applied to a particular Revolving Loan shall be applied
ratably to the portion thereof held by each Lender pro rata, first to any
portion of Revolving Loans which constitute Base Rate Advances and then to such
portion of the Revolving Loan comprising Eurodollar Rate Advances. On and after
an Event of Default and while such Event of Default continues, the Borrower
irrevocably (x) waives the right to direct the application of any and all
payments received at any time or times during such period by the Agent or any
Lender from or on behalf of the Borrower pursuant to the terms of this
Agreement, and (y) agrees that the Agent and Lenders shall have the continuing
exclusive right to apply any and all such payments against any Obligations as
the Agent may deem advisable or as otherwise provided herein. Unless otherwise
provided herein (including, without limitation, under Section 2.19(b) hereof) or
in the absence of a specific determination by the Agent with respect thereto,
the same shall, when in the form of immediately available funds, be applied in
the following order: (i) then due and payable fees and expenses owing under the
Loan Documents; (ii) then due and payable interest and the principal outstanding
on the Swing Line Loan; (iii) then due and payable interest payments on the
Obligations; (iv) principal outstanding under the Revolving Loan until paid in
full; and (v) other Obligations then due and payable (including being held as
Letter of Credit Cash Collateral). Any amounts remaining after application of
all items in clauses (i) through (v) above shall be deposited in the account of
the Agent as provided in paragraph (b) below.
(b) Subject to paragraph (a) above, all amounts remaining after
application as provided in the last sentence of paragraph (a) above shall be
deposited into an account maintained by the Agent. So long as no Event of
Default or Default shall be continuing the Borrower may direct in writing that
the Agent release any and all amounts (and earnings thereon) from such account.
Any amounts on deposit in such account may be, unless and until withdrawn by
Borrower, applied by the Agent to the payment of Obligations under the Loan
Documents as provided in paragraph (a) above. Any monies remaining in such
account shall be invested and reinvested (so long as in such account) by and in
the name of the Agent in investments of the type permitted under Section 9.4(b)
hereof with the type and maturity of such investments to be mutually agreed to
by the Agent and the Borrower (until an Event of Default shall occur and be
continuing, at which time the Agent shall have the sole right to choose such
42
investments). All interest and other income on such investments shall be for the
account and risk of the Borrower. As collateral security for the Obligations,
the Borrower hereby grants to the Agent a security interest in (x) all monies in
such account and all investments thereof, including, without limitation, any
certificates or instruments evidencing such investments, and all claims and
choses in action in respect of the foregoing, (y) any interest or other payment
made in respect of such investments and (z) any and all proceeds of any of the
above and all claims and choses in action in respect of the foregoing (all of
the foregoing constituting part of the Collateral). To the extent the Agent
makes any such investments, the Borrower hereby authorizes the Agent to hold any
certificate or instrument evidencing such investments.
(c) The Agent is authorized to, and at its option may, make advances on
behalf of the Borrower for payment of all fees, expenses, charges, costs,
principal and interest incurred by the Borrower hereunder. Such advances shall
be made when and as the Borrower fails to promptly pay such fees, expenses,
charges, costs, principal and interest and, at the Agent's option and to the
extent permitted by law and within the Revolving Commitments of the Lenders,
shall be deemed Revolving Advances constituting part of the Revolving Loan
hereunder. Promptly following any advance made by the Agent under this paragraph
(c), the Agent shall deliver a notice of such advance to the Borrower; provided,
however, that the Agent shall have no liability to the Borrower as a result of
the failure of the Agent to deliver such notice to the Borrower.
Section 2.21. ACCOUNTING. Agent, acting as agent for the Lenders and,
solely for purposes of Treasury Regulation Section 5f.103-1(c) under this
Section 2.21, Borrower, shall maintain a loan account (the "Loan Account") on
its books to record: all Revolving Advances, all Loans, all Swing Line Loans,
all Letter of Credit Obligations, the amount of the reimbursement obligations of
the Borrower for each drawing made under a Letter of Credit, all payments made
by Borrower, and all other debits and credits as provided in this Agreement with
respect to the Loans or any other Obligations, and Borrower and Agent shall
treat each Person whose name is entered in the Loan Account as a Lender or as an
L/C Issuer, as the case may be, as such for all purposes hereunder, and amounts
due and owing to Agent, the Lenders and the L/C Issuers, as the case may be, by
Borrower will be paid only to those Persons entered in the Loan Account as such.
The Agent will provide a monthly accounting of transactions under the Revolving
Loan to the Borrower. Each and every such accounting shall (absent manifest
error) be deemed final, binding and conclusive upon the Borrower in all respects
as to all matters reflected therein, unless the Borrower, within 30 days after
the date any such accounting is rendered, shall notify the Agent in writing of
any objection which the Borrower may have to any such accounting, describing the
basis for such objection with specificity. In that event, only those items
expressly objected to in such notice shall be deemed to be disputed by the
Borrower. The Agent's determination, based upon the facts available, of any item
objected to by the Borrower in such notice shall (absent manifest error) be
final, binding and conclusive on the Borrower, unless Borrower shall commence a
judicial proceeding to resolve such objection within 90 days following the
Agent's notifying the Borrower in writing of such determination.
Section 2.22. TAXES. Except as otherwise provided in Section 2.22(c)(v)
below, (a) any and all payments by Borrower or any other Credit Party hereunder
or under the Notes or any other Loan Document shall be made, in accordance with
this Section 2.22, free and clear of and without deduction for or on the account
of any and all present or future Taxes. If Borrower or any other Credit Party
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under the Notes or any other Loan Document, (i) the sum
payable shall be increased as much as shall be necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.22) Agent, Lenders or L/C Issuers, as applicable,
receive an amount equal to the sum they would have received had no such
deductions been made, (ii) Borrower or such other Credit Party shall make such
deductions, and (iii) Borrower or such other Credit Party shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law. Within 30 days after the date of any payment of Taxes, Borrower
shall furnish to Agent the original or a certified copy of a receipt evidencing
payment thereof. Except as provided in Section 2.22(c)(vi), Agent, Lenders and
L/C Issuers shall not be obligated to return or refund any amounts received
pursuant to this Section.
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In addition, Borrower and each of the Credit Parties agree to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies by any state, county, city or other political
subdivision within the United States or by any applicable foreign jurisdiction,
and all liabilities with respect thereto, which arise in respect of this
Agreement, any Note, any other Loan Document, the Obligations, the Collateral or
any modification hereof or thereof (collectively, "Other Taxes"). Within thirty
(30) days after the date of any payment of Other Taxes, Borrower shall furnish
to Agent the original or certified copy of a receipt evidencing payment thereof.
(b) Each of Borrower and Parent shall jointly and severally indemnify
and, within 10 days of demand therefor, pay Agent and each Lender and each L/C
Issuer for the full amount of Taxes and Other Taxes (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.22) paid by Agent or such Lender or such L/C Issuer, as appropriate, and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted.
(c) (i) Each Lender, each L/C Issuer and each Agent that is not a
United States person as defined in Section 7701(a)(30) of the Code (each a
"Foreign Lender") as to which payments to be made under this Agreement or under
the Notes are exempt from United States withholding tax under an applicable
statute or tax treaty shall provide to Borrower and Agent a properly completed
and executed IRS Form W-8ECI or Form W-8BEN or other applicable form,
certificate or document prescribed by the IRS or the United States certifying as
to such Foreign Lender's entitlement to such exemption (a "Certificate of
Exemption"). Any Person that is not a United States person as defined in Section
7701(a)(30) of the Code that seeks to become a Lender or an L/C Issuer, as
applicable, under this Agreement shall provide a Certificate of Exemption to
Borrower and Agent prior to becoming a Lender or an L/C Issuer, as applicable,
hereunder. No Person that is not a United States person as defined in Section
7701(a)(30) of the Code may become a Lender or an L/C Issuer, as applicable,
hereunder if such Person fails to deliver a Certificate of Exemption in advance
of becoming a Lender or an L/C Issuer, as applicable.
(ii) Each U.S. Lender shall provide to Borrower and Agent a
properly completed and executed IRS Form W-9 (certifying that such U.S.
Lender is entitled to an exemption from United States backup
withholding tax) or any successor form. Solely for purposes of this
section 2.22(c), a U.S. Lender shall not include a Lender, an L/C
Issuer or an Agent that may be treated as an exempt recipient based on
the indicators described in Treasury Regulation Section
1.6049-4(c)(1)(ii).
(iii) Each U.S. Lender and Foreign Lender, from time to time
after submitting the forms referred to above, shall submit to the
Borrower and the Agent such additional duly completed and signed copies
of one or the other such forms (or such successor forms or other
documents as shall be adopted from time to time by the relevant United
States taxing authorities) as may be (1) reasonably requested in
writing by the Borrower or the Agent and (2) appropriate under then
current United States law or regulations to avoid United States
withholding taxes on payments in respect of any amounts to be received
by such Lender pursuant to this Agreement and/or the Notes.
(iv) If any Lender which is not a "United States person"
determines that it is unable to submit to the Borrower or the Agent any
form or certificate that such Lender is requested to submit pursuant to
the preceding paragraph, or that it is required to withdraw or cancel
any such form or certificate, or that any such form or certificate
previously submitted has otherwise become ineffective or inaccurate,
such Lender shall promptly notify the Borrower and the Agent of such
fact.
(v) No Credit Party shall be required to pay any additional
amount in respect of Taxes to any Lender if and only to the extent that
(A) such Lender becomes subject to
44
Taxes subsequent to the date this Agreement (or, if applicable, an
Assignment Agreement) is executed by such Lender above (or in the case
of a Lender which is not a "United States person," the first date on
which it delivers the appropriate form or certificate to the Borrower
and the Agent as referred to in paragraph (c)(i) of this Section) as a
result of any change in the circumstances of such Lender, other than a
change in applicable law (including without limitation an increase in
any applicable tax rate), including without limitation a change in the
residence, place of incorporation or principal place of business of the
Lender, a change in the branch or lending office of the Lender
participating in the transactions set forth herein or as a result of
the sale by the Lender of participating interests in such Lender's
creditor position(s) hereunder; provided, however, that the Credit
Parties will be required to pay any additional amount in respect of
Taxes to any Lender to the extent that after a change in the
circumstances (as described above) of such Lender a subsequent change
in any applicable law results in an additional amount that such Lender
is subject to with respect to Taxes; or (B) such Taxes would not have
been incurred but for the failure of such Lender to file with the
appropriate tax authorities and/or provide to the Borrower or the Agent
any form or certificate that it was required so to do pursuant to
paragraph (c) of this Section and entitled so to do under applicable
law.
(vi) Within thirty (30) days after the written reasonable
request of the Borrower, each Lender shall execute and deliver to such
Borrower such certificates, forms or other documents which can be
furnished consistent with the facts and which are reasonably necessary
to assist such Borrower in applying for refunds of Taxes paid by such
Borrower hereunder or making payment of Taxes hereunder; provided,
however, that no Lender shall be required to furnish to the Borrower
any financial information with respect to itself or other information
which it in its reasonable discretion considers confidential. Upon the
written request of the Borrower made to the Lender, and at the
Borrower's expense, such Lender shall apply for a refund with respect
to any Tax for which such Lender has been indemnified by, and has
received payment from, the Borrower pursuant to this Section 2.22, and
for which such Lender believes, in its reasonable discretion, that it
is entitled to receive. If the Lender receives such refund and in its
reasonable discretion determines that such refund is of Taxes for which
it has been indemnified by, and has received payment from, the Borrower
or another Credit Party pursuant to this Section 2.22, such Lender
shall remit such refund to the Borrower without interest (other than
interest, if any, included in such refund), net of all costs and
expenses of such Lender and any taxes payable with respect to the
receipt of such refund and interest. Lender shall be required to remit
such refund to Borrower only after the expiration of the statue of
limitations applicable to the Taxes refunded.
(d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.22 shall survive the payment in full of principal and interest
hereunder and under the Notes indefinitely.
SECTION 2A. LETTERS OF CREDIT
Section 2A.1. ISSUANCE. Subject to the terms and conditions of this
Agreement, Agent and Lenders agree to incur, from time to time prior to the
Maturity Date, upon the request of Borrower and for Borrower's account, Letter
of Credit Obligations by causing Letters of Credit to be issued by GE Capital or
a Subsidiary thereof or a bank or other legally authorized Person selected by or
acceptable to Agent in its sole discretion (each, an "L/C Issuer") for
Borrower's account and guaranteed by Agent; provided, that if the L/C Issuer is
a Lender, then 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 2A.2(b) below. The
45
aggregate amount of all such Letter of Credit Obligations shall not at any time
exceed the least of (i) Thirty Million Dollars ($30,000,000) (the "L/C
Sublimit"), and (ii) the Revolving Credit Facility Commitment less the aggregate
outstanding principal balance of the Revolving Loan, and (iii) the Borrowing
Base less the aggregate outstanding principal balance of the Revolving Loan.
Except as set forth on Schedule 2A.1, no such Letter of Credit shall have an
expiry date that is more than one year following the date of issuance thereof,
unless otherwise determined by Agent in its sole discretion, and neither Agent
nor 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 that is later than the Maturity Date.
Section 2A.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
a Revolving Advance under Section 2.1(a) of this Agreement regardless of whether
a Default or Event of Default has occurred and is continuing and notwithstanding
Borrower's failure to satisfy the conditions precedent set forth in Section 6,
and each Lender shall be obligated to pay its pro rata share thereof in
accordance with this Agreement. The failure of any Lender to make available to
Agent for Agent's own account its pro rata share of any such Revolving Advance
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 its pro
rata share thereof, but no Lender shall be responsible for the failure of any
other Lender to make available such other Lender's pro rata share of any such
payment.
(b) If it shall be illegal or unlawful for Borrower to incur Revolving
Advances as contemplated by Section 2A.2(a) above because of an Event of Default
described in Sections 10.1(f) or (g) 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 L/C Issuer, or if the L/C Issuer is a
Lender, then (i) immediately and without further action whatsoever, each Lender
shall be deemed to have irrevocably and unconditionally purchased from Agent (or
such L/C Issuer, as the case may be) an undivided interest and participation
equal to such Lender's pro rata share (based on the Revolving 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 L/C Issuer, as the case may be) an undivided
interest and participation in such Lender's pro rata share (based on the
Revolving 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 Revolving
Advances.
Section 2A.3. CASH COLLATERAL. (a) If Borrower is required to provide
cash collateral for any Letter of Credit Obligations pursuant to the Agreement
prior to the Maturity Date, Borrower will pay to Agent for the ratable benefit
of itself and Lenders cash or cash equivalents acceptable to Agent ("Cash
Equivalents") in an amount equal to 105% of the maximum amount then available to
be drawn under each applicable 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 Borrower and shall be
pledged to, and subject to the control of, Agent, for the benefit of Agent and
Lenders, in a manner satisfactory to Agent. Borrower hereby pledges and grants
to Agent, on behalf of itself and Lenders, a security interest in all such funds
and Cash Equivalents held in the 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 Obligations, whether or not then
due. This Agreement shall constitute a security agreement under applicable law.
(b) If any Letter of Credit Obligations, whether or not then due and
payable, shall for any reason be outstanding on the Maturity Date, Borrower
shall either (A) provide cash collateral therefor in the manner described above,
or (B) cause all such Letters of Credit and guaranties thereof, if any, to be
46
canceled and returned, or (C) 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 (plus 30 additional days)
as, and in an amount equal to 105% of the aggregate maximum amount 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, as are be satisfactory to Agent in its
reasonable discretion.
(c) From time to time after funds are deposited in the Cash Collateral
Account by Borrower, whether before or after the Maturity Date, Agent may apply
such funds or Cash Equivalents then held in the Cash Collateral Account to the
payment of any amounts, and in such order as Agent may elect, as shall be or
shall become due and payable by Borrower to Agent and Lenders with respect to
such Letter of Credit Obligations of Borrower and, upon the satisfaction in full
of all Letter of Credit Obligations of Borrower, to any other Obligations then
due and payable.
(d) Neither Borrower nor Parent nor any Person claiming on behalf of or
through Borrower or Parent shall have any right to withdraw any of the funds or
Cash Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrower to Agent and Lenders in respect thereof, any funds remaining
in the Cash Collateral Account shall be applied to other Obligations then due
and owing and upon payment in full of such Obligations, any remaining amount
shall be paid to Borrower or as otherwise required by law. Interest earned on
deposits in the Cash Collateral Account shall be for the account of Agent.
Section 2A.4. FEES AND EXPENSES. Borrower agrees to pay to Agent for
the benefit of Lenders, as compensation to Lenders for Letter of Credit
Obligations incurred hereunder, (i) all reasonable costs and expenses incurred
by Agent or any Lender on account of such Letter of Credit Obligations, and (ii)
for each month during which any Letter of Credit Obligation shall remain
outstanding, a fee (the "Letter of Credit Fee") in an amount equal to the
Applicable Eurodollar Margin from time to time in effect multiplied by the then
maximum amount available from time to time to be drawn under the applicable
Letter of Credit. Such fee shall be paid to Agent for the benefit of the Lenders
in arrears, on the first day of each month and on the Maturity Date. In
addition, Borrower shall pay to any L/C Issuer, on demand, such reasonable fees
(including all per annum fees), charges and expenses of such L/C Issuer in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
Section 2A.5. REQUEST FOR INCURRENCE OF LETTER OF CREDIT OBLIGATIONS.
Borrower shall give Agent at least 3 Business Days' prior written notice
requesting the incurrence of any Letter of Credit Obligation. The notice shall
be accompanied by the form of the Letter of Credit (which shall be acceptable to
the L/C Issuer). Notwithstanding anything contained herein to the contrary,
Letter of Credit applications by Borrower and approvals by Agent and the L/C
Issuer may be made and transmitted pursuant to electronic codes and security
measures mutually agreed upon and established by and among Borrower, Agent and
the L/C Issuer.
Section 2A.6. OBLIGATION ABSOLUTE. The obligation of Borrower to
reimburse Agent and 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 Borrower and
Lenders shall be paid strictly in accordance with the terms hereof under all
circumstances including the following:
(i) any lack of validity or enforceability of any Letter of
Credit or the Agreement or the other Loan Documents or any other
agreement;
47
(ii) the existence of any claim, setoff, defense or other
right that 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 the 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);
(iii) 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;
(iv) payment by Agent (except as otherwise expressly provided
in Section 2A.7(b)(C) below) or any L/C Issuer under any Letter of
Credit or guaranty thereof against presentation of a demand, draft or
certificate or other document that does not comply with the terms of
such Letter of Credit or such guaranty;
(v) any other circumstance or event whatsoever, that is
similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default has
occurred and is continuing.
Section 2A.7. INDEMNIFICATION; NATURE OF LENDERS' DUTIES. (a) In
addition to amounts payable as elsewhere provided in the Agreement, Borrower
hereby agrees to pay and to protect, indemnify, and save harmless Agent and each
Lender from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys' fees and
allocated costs of internal counsel) that Agent or any Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the issuance of any
Letter of Credit or guaranty thereof, or (B) the failure of Agent or any Lender
seeking indemnification or of any L/C Issuer 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 (i) to the extent
as a result of the gross negligence or willful misconduct of Agent or such
Lender (as finally determined by a court of competent jurisdiction), and (ii)
with respect to taxes (and amounts relating thereto), the indemnification for
which shall be governed solely and exclusively by Section 2.22.
(b) As between Agent and any Lender and Borrower, Borrower 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 for: (A) 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; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, that may prove to be invalid or ineffective for any reason; (C) 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, that in the
case of any payment by Agent or L/C Issuer under any Letter of Credit or
guaranty thereof, Agent or L/C Issuer 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; (D) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they may be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the transmission or
otherwise of any document required in order to make a payment under any Letter
of Credit or guaranty
48
thereof or of the proceeds thereof; (G) the credit of the proceeds of any
drawing under any Letter of Credit or guaranty thereof; and (H) 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 Agreement.
(c) Nothing contained herein shall be deemed to limit or to expand any
waivers, covenants or indemnities made by Borrower in favor of any L/C Issuer in
any letter of credit application, reimbursement agreement or similar document,
instrument or agreement between Borrower and such L/C Issuer, including an
Application and Agreement for Documentary Letter of Credit or a Master
Documentary Agreement and a Master Standby Agreement entered into with Agent.
SECTION 3. PAYMENTS AND PREPAYMENTS.
Section 3.1. MANDATORY PAYMENTS. (a) If at any time the sum of (i) the
then outstanding principal amount of the Revolving Loan (including the Swing
Line Loan) plus (ii) the outstanding amount of Letter of Credit Obligations
exceeds the Borrowing Limit at such time, the Borrower shall immediately
eliminate such excess by prepaying the Revolving Loan. In the event that
reducing the Revolving Loan to zero will not eliminate such excess, then the
Borrower shall provide to the Agent, cash collateral, on terms and pursuant to
documents and agreements (each of which shall constitute a Security Document)
satisfactory in all respects to the Agent, for all outstanding Letter of Credit
Obligations (hereinafter, "Letter of Credit Cash Collateral") in an amount
sufficient to eliminate such excess, the Letter of Credit Obligations being
deemed reduced by the amount of Letter of Credit Cash Collateral so provided.
(b) In the event that for any reason the Letter of Credit Obligations
exceed $30,000,000 at any time, the Borrower shall immediately provide Letter of
Credit Cash Collateral in an amount sufficient to eliminate such excess, the
Letter of Credit Obligations being deemed reduced by the amount of Letter of
Credit Cash Collateral so provided.
(c) The Borrower shall cause for a period of at least 30 consecutive
days during each Clean Down Period (i) the aggregate outstanding principal
balance of the Revolving Loan to be reduced to an amount equal to $50,000,000 or
less and (ii) the Letter of Credit Obligations to be reduced to an amount equal
to $20,000,000 or less; provided, however, that in the event the Letter of
Credit Obligations exceed $20,000,000 at any time, the Borrower may provide
Letter of Credit Cash Collateral in an amount sufficient to eliminate such
excess and the Letter of Credit Obligations shall be deemed reduced by the
amount of Letter of Credit Cash Collateral so provided.
(d) [Intentionally Omitted.]
---------------------
(e) Any prepayment of principal of the Revolving Loan pursuant to this
Section 3.1 shall be made without premium or penalty but shall be subject to
payment of any applicable indemnity obligations pursuant to Section 2.12 hereof.
Each prepayment of principal of the Revolving Loan required under Section 3.1 or
Section 3.2 hereof shall be accompanied by the payment of interest and fees
accrued and unpaid on the amount of such prepayment through the date of
prepayment.
Section 3.2. CERTAIN PAYMENTS. (a) Upon receipt by either Borrower or
Parent or any of their respective Subsidiaries or by the Agent of any proceeds
of any insurance on any tangible property of the Borrower or any of its
Subsidiaries, there shall become immediately due and payable a prepayment in
respect of principal of the Revolving Loan in the amount of such proceeds.
(b) Upon the receipt by the Borrower or any of its Domestic
Subsidiaries of any Net Cash Proceeds from the sale by the Borrower or any of
its Domestic Subsidiaries of any property, other than sales of Inventory in the
ordinary course of business, there shall become immediately due and
49
payable a prepayment in respect of principal of the Revolving Loan in the amount
of such Net Cash Proceeds.
(c) Upon receipt by the Parent, the Borrower or any of its Domestic
Subsidiaries of any Net Cash Proceeds from any source not referred to in
paragraphs (a), (b) or (f) of this Section 3.2 (other than sales of Inventory in
the ordinary course of business and other than proceeds of Accounts and, in the
case of Parent, dividends and distributions from Borrower to the extent
permitted hereunder and to the extent used by the Parent as set forth
hereunder), there shall become immediately due and payable a prepayment in
respect of principal of the Revolving Loan in the amount of such Net Cash
Proceeds.
(d) In the event that (i) the amount of proceeds or Net Cash Proceeds
in respect of which a prepayment is required to be paid under paragraph (a),
(b), (c) or (f) of this Section 3.2 exceeds the amount of outstanding principal
of the Revolving Loan, then such excess shall be immediately paid to the Agent
to be held as Letter of Credit Cash Collateral and (ii) the excess referred to
in clause (i) of this paragraph (d) exceeds the amount of Letter of Credit
Obligations, then the amount of such excess (whether such excess is created at
the time of establishment of the Letter of Credit Cash Collateral or occurs by
virtue of the reduction of Letter of Credit Obligations or otherwise) shall be
held by the Agent as cash collateral pursuant to the Cash Collateral Agreement
and released from time to time in accordance with paragraph (e) of this Section
3.2. Interest earned and paid on such cash collateral shall be for the account
of the Borrower or its Domestic Subsidiary as provided in the Cash Collateral
Agreement and until release as provided in paragraph (e) of this Section 3.2
shall be added to such cash collateral.
(e) In the event that the Agent is holding cash collateral under clause
(ii) of Section 3.2(d) hereof or Letter of Credit Cash Collateral under clause
(i) of Section 3.2(d) hereof, the Agent shall release all or any portion of same
to the Borrower to the extent requested by the Borrower upon Written Notice to
the Agent, so long as, at the time of such Written Notice by the Borrower, the
Borrower is in compliance with clauses (i) and (ii) of Section 6.1 hereof and so
certifies in its Written Notice and so long as there is no requirement under any
other provision of this Agreement that the Letter of Credit Cash Collateral be
maintained. Notwithstanding the foregoing, the Borrower shall request release of
and exhaust cash collateral held under clause (ii) of Section 3.2(d) hereof
prior to making any request for release of Letter of Credit Cash Collateral and,
notwithstanding anything to the contrary contained in Section 2 hereof, shall
give no notice of borrowing under Section 2.4 hereof while the Agent is holding
any Letter of Credit Cash Collateral or cash collateral under Section 3.2(d)
hereof; provided, however, that the Borrower may give a notice of borrowing in
the event that Letter of Credit Cash Collateral is being held other than as
required under Section 3.2(d) hereof.
(f) Upon receipt by the Parent of any Net Cash Proceeds from any
issuance of Equity Interests permitted by Section 9.6(a), Parent shall
contribute such Net Cash Proceeds to Borrower, and there shall become due and
payable on the date of such receipt a prepayment in respect of principal of the
Revolving Loan in the amount of such Net Cash Proceeds if, and to the extent
permitted by the Senior Debenture Indenture.
(g) None of the prepayments required under this Section 3.2 shall
result in a permanent reduction in the Revolving Credit Facility Commitment. Any
prepayment required under this Section 3.2 shall be deemed paid to the extent
that Proceeds from the transaction in respect of which the requirement for such
prepayment arose shall have been paid into the Payment Account pursuant to
Section 8.22 hereof.
Section 3.3. OPTIONAL PREPAYMENTS. (a) Upon not less than three (3)
Business Days' prior Written Notice to the Agent with respect to Revolving
Advances constituting Eurodollar Advances and Written Notice to the Agent on the
Business Day of prepayment in the case of Base Rate Advances, the Borrower shall
have the right from time to time to prepay in whole or in part, without premium,
fee or charge (except as provided in Section 2.12 and Section 2.5(a)(iii)
hereof), the Revolving
50
Loan, so long as each such prepayment in part is in the amount of $50,000 or an
integral multiple of $50,000 in excess thereof, and so long as, concurrently
with the making of any such prepayment, the Borrower pays any fees, premiums,
charges or costs provided for under Section 2.12 hereof. The provisions of this
Section 3.3 shall not apply to mandatory payments made with respect to the
Revolving Loan pursuant to Section 8.22 of this Agreement.
(b) Upon the giving of notice of prepayment, the amount therein
specified to be prepaid shall be due and payable on the date therein specified
for such prepayment, together with all accrued interest thereon to such date
plus any fees, premiums, charges or costs provided for under Section 2.12 or
Section 2.5(a)(iii) hereof. The Agent shall, promptly after receipt of any
notice of prepayment of any Loan as provided in this Section 3.3, notify each
Lender in writing or by telephone confirmed promptly in writing of the
Borrower's intentions so to prepay all or part of such Loan.
Section 3.4. PROCEDURES FOR PAYMENT. Notwithstanding anything contained
in Section 3.2 hereof, the Agent shall not, to the extent requested in writing
by Borrower, apply any mandatory prepayment under such section to any portion of
the Revolving Loan which constitutes a Eurodollar Advance until the last day of
the respective Interest Period therefor or the earlier maturity of such portion
of such Revolving Loan by acceleration or otherwise, such mandatory prepayment,
until it can be so applied, to be applied to the prepayment of such portion of
the Revolving Loan comprising Base Rate Advances. If there shall remain any
portion of such mandatory prepayment after payment in full of such portion of
the Revolving Loan constituting Base Rate Advances, then until such remaining
portion of the mandatory prepayment can be applied to the Eurodollar Advances as
aforesaid, such remaining portion of such mandatory prepayment shall be invested
and reinvested by and in the name of the Agent in investments of the type
permitted under Section 9.4(b) hereof with the type and maturity of such
investments to be mutually agreed to by the Agent and the Borrower. All interest
earned on such investments shall be for the account and risk of the Borrower.
Interest earned on any portion of principal applied to the Eurodollar Advance
shall be, so long as no Default or Event of Default shall have occurred and be
continuing, and to the extent received by the Agent, turned over to the Borrower
promptly following application of such principal to such Eurodollar Advance, as
the Agent shall determine. As additional collateral security for the
Obligations, the Borrower hereby grants to the Agent a security interest in (x)
any such mandatory prepayments and any investments thereof, including, without
limitation, any certificates or instruments evidencing any such investments, and
all claims and choses in action in respect of the foregoing, (y) any interest or
other payment made in respect of such investments and (z) any and all proceeds
of any of the above and all claims and choses in action in respect of the
foregoing (all of the foregoing constituting part of the Collateral). To the
extent the Agent makes any such investments, the Borrower hereby authorizes the
Agent to hold any certificate or instrument evidencing such investments.
Section 3.5. UNUSED FACILITY FEE. The Borrower shall pay to the Agent
for the account of each Lender on the first day of each month of each calendar
year, in arrears, until the date of the expiration, termination or cancellation
of the Revolving Credit Facility Commitment and on such date, an unused facility
fee for the calendar month or shorter period just ended of thirty-seven and
one-half basis points (37.5 b.p.) per annum on the amount equal to the excess of
(i) the daily average of the maximum dollar amount of the Revolving Credit
Facility Commitment (in any case determined without reference to the limitations
imposed by the Borrowing Base) during such calendar month or longer period over
(ii) the sum of (A) the average daily outstanding principal balance of the
Revolving Loan during such calendar month or longer period and (B) the average
daily Letter of Credit Obligations during such calendar month or longer period.
Section 3.6. FEES. The Borrower shall pay to GE Capital, individually,
the fees specified in the Fee Letter at the times specified for payment therein.
51
SECTION 4. SECURITY AND GUARANTIES.
As security for the full and timely payment and performance of the
Obligations, whether now existing or hereafter arising, and subject to Section
5.3:
Section 4.1. PLEDGE OF STOCK AND NOTES. Each of the Borrower and its
Subsidiaries (other than the Sonab Entities) shall (to the extent of its
interest therein) duly execute and deliver to the Agent one or more pledge
agreements, substantially in the form of Exhibit 4.1(a) hereto (each as amended,
supplemented or otherwise modified from time to time in accordance with its
terms, a "Pledge Agreement"), covering, to the extent of such Person's interest
therein, (i) all Stock of all present and future Subsidiaries (direct and
indirect) of the Borrower (other than the Sonab Entities), now or hereafter
issued, (ii) all Indebtedness evidenced by promissory notes and instruments held
by Borrower or any of its Subsidiaries (other than the Sonab Entities) and (iii)
all proceeds thereof, pursuant to which the Credit Parties (other than the
Parent) shall grant to the Agent for the benefit of the Agent and the Lenders a
valid, perfected and enforceable first priority Lien on all of the foregoing,
together with certificates representing the Stock referred to therein (to the
extent, with respect to any Foreign Subsidiaries, that certificates exist or
certificates representing Stock are customarily issued by corporations
incorporated or formed in the jurisdiction in which such Foreign Subsidiary is
incorporated or formed), accompanied by undated stock powers or assignments
thereof executed in blank. To the extent that the Pledge Agreement may not be
appropriate to create a Lien in favor of the Agent on any Stock of any Foreign
Subsidiary as determined by the Agent or that certain actions as determined by
the Agent which are not contemplated by this Section 4.1 or by the Pledge
Agreement shall be required to perfect a Lien in favor of the Agent in the Stock
of a Foreign Subsidiary, the relevant Credit Party which has an interest in such
Stock shall as soon as reasonably practical, in addition to executing the Pledge
Agreement as provided in this Section 4.1, execute and deliver to the Agent and
cause to be executed and delivered to the Agent such documents and instruments,
in form and substance satisfactory to the Agent, and shall take such actions as
reasonably requested by the Agent, in each instance, in order to grant to the
Agent for the benefit of the Agent and the Lenders a valid, perfected and
enforceable first priority Lien on the Stock of such Foreign Subsidiary to be
pledged to the Agent as provided in this Section 4.1.
Section 4.2. SECURITY AGREEMENT - TRADEMARK, PATENT AND COPYRIGHT. Each
of the Borrower and its Domestic Subsidiaries (other than the Sonab Entities)
shall duly execute and deliver to the Agent one or more security agreements,
substantially in the form of Exhibit 4.2 hereto, covering the Trademarks,
Patents and Copyrights of such Credit Party (each as amended, supplemented or
otherwise modified from time to time in accordance with its terms, a "Trademark,
Patent and Copyright Security Agreement"), now owned and hereafter acquired,
together with notices of trademarks, patents and copyrights and other similar
documents in form suitable for filing with the United States Patent and
Trademark Office, the United States Copyright Office or any other applicable
governmental office or agency, as the case may be, and one or more special
powers of attorney and all other supplementary notices and instruments requested
by the Agent in connection therewith.
Section 4.3. SECURITY AGREEMENTS. (a) Each of the Borrower and its
Domestic Subsidiaries (other than the Sonab Entities) shall duly execute and
deliver to the Agent one or more security agreements, substantially in the form
of Exhibit 4.3(a) hereto (each, as amended, supplemented or modified from time
to time in accordance with its terms, a "Security Agreement", and, together with
the Pledge Agreements, Mortgages, Leasehold Mortgages, the Trademark, Patent and
Copyright Security Agreements, each Assignment of Life Insurance, each
Assignment of Business Interruption Insurance, the Cash Collateral Agreement,
the Collecting Bank Agreements, and any other agreement, now existing or
hereafter created providing collateral security for the payment or performance
of any Obligations, in each case, as amended, modified or supplemented from time
to time, collectively referred to as the "Security Documents"), and to the
extent requested in writing by the Agent (except as provided in Section 8.19(a)
hereof), all consents of third parties necessary to permit the effective
granting of the Liens created in such security agreements (including, without
limitation, a landlord's waiver and certificate (each a "Landlord's
52
Certificate") in respect of each property subject to a Lease), in each case, in
form and substance reasonably satisfactory to the Agent, together with:
(A) evidence of the completion of all recordings and
filings of or with respect to the Security Documents that the
Agent may deem necessary or desirable in order to perfect and
protect the Liens created thereby,
(B) evidence of the insurance required by the terms
of any Security Document or this Agreement,
(C) to the extent requested in writing by the Agent
on or prior to the Closing Date, copies of each assigned
agreement referred to in any Security Document, together with
a consent to such assignment in form and substance reasonably
satisfactory to the Agent, duly executed by each party to such
assigned agreements other than the Borrower, and
(D) evidence that all other action that the Agent may
deem necessary or desirable in order to perfect and protect
the Liens created by the Security Documents (and the priority
of such Liens required hereunder) has been taken.
(b) The Agent shall have received (unless otherwise consented to in
writing by the Agent) acknowledgment copies or stamped receipt copies of proper
financing statements, duly filed on or before the Closing Date under the UCC of
all jurisdictions that the Agent may deem necessary or desirable in order to
perfect and protect the Liens created by the Security Documents, covering the
collateral described in the Security Documents.
Section 4.4. REAL PROPERTY; MORTGAGES; LEASEHOLD MORTGAGES; TITLE
INSURANCE. (a) To the extent requested by the Agent:
(i) each of the Borrower and its Domestic Subsidiaries shall
duly execute and deliver to the Agent mortgages or deeds of trust (each
such mortgage or deed of trust, as it may be amended, modified or
supplemented from time to time in accordance with its terms, a
"Mortgage") in respect of real property owned by such Credit Party so
as to create in the Agent's favor, for the benefit of the Agent and the
Lenders, upon recordation thereof, a valid, perfected and enforceable
first priority Lien on the real property and improvements described
therein (subject only to Liens specifically permitted under Section 9.2
hereof), such Mortgages to be in form and substance reasonably
satisfactory to the Agent (with such changes thereto as may be
necessary to provide that such Mortgages secure Obligations not covered
by such exhibit);
(ii) except with respect to the Leases listed on Schedule
4.4(a)(ii) hereto, each of the Borrower and its Domestic Subsidiaries
shall duly execute and deliver to the Agent leasehold mortgages or
deeds of trust (each such leasehold mortgage or deed of trust, as it
may be amended, modified or supplemented from time to time in
accordance with its terms, a "Leasehold Mortgage") in respect of real
property leased under a Lease by such Credit Party so as to create in
the Agent's favor, for the benefit of the Agent and the Lenders, upon
recordation thereof, a valid, perfected and enforceable first priority
Lien on such Lease and the real property and improvements thereon
leased by such Credit Party (subject only to Liens specifically
permitted under Section 9.2 hereof), such Leasehold Mortgages to be in
form and substance reasonably satisfactory to the Agent (with such
changes thereto as may be necessary to provide that such Leasehold
Mortgages secure Obligations not covered by such exhibit); and
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(iii) each of the Borrower and its Domestic Subsidiaries shall
cause the Mortgages and the Leasehold Mortgages executed and delivered
by it to be duly recorded in the appropriate recording office or
offices and shall pay all fees and taxes payable in connection
therewith.
(b) Each of the Borrower and its Domestic Subsidiaries shall cause to
be executed and delivered to the Agent such amendments to each of the Leases,
such consents of third parties to the Mortgages and the Leasehold Mortgages
executed and delivered by it, and such non-disturbance agreements, estoppel
certificates and waivers as the Agent shall reasonably request (in each case in
form and substance reasonably satisfactory to the Agent).
(c) Each of the Borrower and its Domestic Subsidiaries shall furnish to
the Agent, in sufficient copies for each Lender, for the benefit of the Agent
and the Lenders, at the expense of the Borrower or a Domestic Subsidiary, as
applicable, one or more policies of mortgagee title insurance, in form,
substance and amount satisfactory to the Agent, insuring that each of the
Mortgages and Leasehold Mortgages executed and delivered by it pursuant to
Section 4.4(a) hereof is a valid and perfected first priority Lien in favor of
the Agent on the fee or leasehold interest, as applicable, of such Credit Party
(subject only to Liens specifically permitted under Section 9.2 hereof), in real
property and improvements described therein, and that such Credit Party has good
and marketable title thereto, issued by a title insurance company reasonably
satisfactory to the Agent, together with satisfactory evidence that all title
insurance premiums have been fully paid. Each Credit Party shall furnish to the
Agent, in sufficient copies for each Lender, certified surveys of real property
to be subject to any Mortgage or Leasehold Mortgage to be executed and delivered
by it on or prior to the Closing Date and such other certificates and documents
as the Agent may reasonably request. Each of the Borrower and its Domestic
Subsidiaries shall additionally provide to each Lender with respect to any real
property or leasehold interest to be subject to a Mortgage or Leasehold Mortgage
on or prior to the taking of such Mortgage or Leasehold Mortgage such appraisals
of such real property or leasehold interest as shall be required under
applicable law, including, without limitation, FIRREA.
Section 4.5. ADDITIONAL COLLATERAL. Other than as set forth in any
Security Document, each of the Borrower and its Domestic Subsidiaries (other
than the Sonab Entities) acknowledges that it is its intention to provide the
Agent with a Lien on all its property (personal, real and mixed), whether now
owned or hereafter acquired, subject only to Liens specifically permitted under
Section 9.2 hereof. Without limitation of Section 4.4 hereof, each of the
Borrower and its Domestic Subsidiaries (other than the Sonab Entities) shall
from time to time promptly notify the Agent of the acquisition by it of any
material property in which the Agent does not then hold a perfected Lien, or the
creation or existence of any such property (including, without limitation, the
entering into by the Borrower or any such Domestic Subsidiary of a Lease), and
such Person shall, upon request by the Agent, promptly execute and deliver to
the Agent or cause to be executed and delivered to the Agent pledge agreements,
security agreements, mortgages or other like agreements with respect to such
property, together with such other documents, certificates, title insurance,
surveys, consents of third parties, opinions of counsel and the like as the
Agent shall reasonably request in connection therewith, in form and substance
reasonably satisfactory to the Agent, such that the Agent shall receive valid
and perfected first priority Liens (subject only to Liens specifically permitted
under Section 9.2 hereof) on all such property.
Section 4.6. FILING AND RECORDING. (a) Each of the Borrower and its
Domestic Subsidiaries (other than the Sonab Entities) shall, at their cost and
expense, cause all instruments and documents given as security pursuant to this
Agreement to be duly recorded and/or filed or otherwise perfected in all places
necessary, in the opinion of the Agent, to perfect and protect the Lien of the
Agent in the property covered thereby.
(b) Each of the Borrower and its Domestic Subsidiaries (other than the
Sonab Entities) hereby authorizes the Agent to file one or more financing
statements or continuation statements
54
or amendments thereto or assignments thereof in respect of any Lien created
pursuant to this Agreement and the Security Documents which may at any time be
required or which, in the opinion of the Agent, may at any time be desirable
without the signature of such Credit Party where permitted by law.
(c) In the event that any re-recording or refiling of any financing
statement (or the filing of any statements of continuation or amendment or
assignment of any financing statement) is required to protect and preserve such
Lien, each of the Borrower and its Domestic Subsidiaries (other than the Sonab
Entities) shall, at their cost and expense, cause the same to be recorded and/or
refiled at the time and in the manner requested by the Agent.
Section 4.7. INTERPRETATION OF SECURITY DOCUMENTS. In the case of any
conflict between the terms and provisions of a Security Document and this
Agreement, the terms and provisions of this Agreement shall control, unless the
terms of such Security Document expressly provide otherwise.
Section 4.8. GUARANTIES. (a) On or prior to the Closing Date, all
Subsidiaries of the Borrower (other than the Sonab Entities) shall execute and
deliver to the Agent a guaranty, substantially in the form of Exhibit 4.8
hereto, of all present and future Obligations incurred by the Borrower.
(b) Upon the formation, after the Closing Date, of any Subsidiary of
the Borrower, such Subsidiary shall execute and deliver to the Agent a guaranty,
substantially in the form of Exhibit 4.8 hereto (modified in form and substance
reasonably satisfactory to the Agent), of all then existing or thereafter
incurred Obligations and such other Security Documents and related documents,
instruments and certificates, in form and substance reasonably satisfactory to
the Agent, as the Agent shall request in order to grant to the Agent for the
benefit of the Agent and the Lenders a valid, perfected and enforceable first
priority Lien on all assets of such Subsidiary. Nothing contained in this
Section 4.8 shall permit the Borrower or any Subsidiary of any thereof to form
any Subsidiary which is otherwise prohibited by this Agreement.
Section 4.9. ASSIGNMENTS OF INSURANCE. (a) The Borrower shall duly
execute and deliver to the Agent one or more assignments, substantially in the
form of Exhibit 4.9(a) hereto (each, as amended, supplemented or otherwise
modified from time to time in accordance with its terms, an "Assignment of Life
Insurance"), and such other instruments and documents, in each case, as may be
required by the Agent to grant to the Agent for the benefit of the Agent and the
Lenders a valid, perfected and enforceable first Lien, to the extent of the
Borrower's interest therein, on any key person life insurance policy required
pursuant to Section 8.3(g) hereof, and the issuer of such policy shall have
acknowledged such assignment.
(b) The Borrower shall duly execute and deliver to the Agent one or
more assignments, substantially in the form of Exhibit 4.9(b) hereto (each, as
amended, supplemented or otherwise modified from time to time in accordance with
its terms, an "Assignment of Business Interruption Insurance"), and such other
instruments and documents, in each case, as may be required by the Agent to
grant to the Agent for the benefit of the Agent and the Lenders a valid,
perfected and enforceable first Lien on any business interruption insurance
policy required pursuant to Section 8.3(e) hereof, and the issuer of such policy
shall have acknowledged such assignment.
Section 4.10. CASH COLLATERAL AGREEMENT. The Borrower shall duly
execute and deliver to the Agent a cash collateral agreement, substantially in
form and substance satisfactory to the Agent (as amended, supplemented or
otherwise modified from time to time in accordance with its terms, the "Cash
Collateral Agreement"), and such other instruments and documents, in each case,
as may be required by the Agent to grant to the Agent for the benefit of the
Agent and the Lenders a valid, perfected and enforceable first Lien on the cash
covered thereby, all investments thereof, income thereon, claims, demands,
choses in action in respect thereof and all other proceeds thereof.
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Section 4.11. CONCERNING THE COLLATERAL. Each of the Lenders and the
L/C Issuers hereby directs, in accordance with the terms hereof, the Agent to
release any Lien held by the Agent for the benefit of the Lenders and the L/C
Issuers against any part of the Collateral sold or disposed of by a Credit Party
if such sale or disposition is permitted by this Agreement and so long as no
Default or Event of Default has occurred and is continuing, the Agent agrees to
release such Collateral promptly after the Borrower's request therefor. Each of
the Lenders and the L/C Issuers hereby directs the Agent to execute and deliver
or file such termination and partial release statements and do such other things
as are necessary to release Liens to be released pursuant to this Section 4.11
promptly upon effectiveness of any such release and so long as no Default or
Event of Default has occurred and is continuing, the Agent agrees to execute and
deliver or file such termination and partial release statements and do such
other things as are necessary to release such Liens, at the Borrower's request,
upon or promptly after the Borrower's request therefor.
SECTION 5. CONDITIONS PRECEDENT TO AMENDMENT AND RESTATEMENT.
The effectiveness of this Agreement is subject to the following
conditions precedent being fulfilled to the satisfaction of the Agent in each
instance (or waived in writing by the Majority Lenders):
Section 5.1. OPINIONS OF COUNSEL. The Agent shall have received
favorable opinions of Blank Rome LLP, counsel to the Credit Parties,
substantially in the form attached hereto as Exhibit 5.1 (and such other
opinions of counsel, including, without limitation, of local counsel, each in
form and substance satisfactory to the Agent, as the Agent may request); it
being understood that to the extent that such opinions of counsel shall rely
upon any other opinion of counsel, each such other opinion shall be in form and
substance satisfactory to Agent and shall provide that the Agent and Lenders may
rely thereon.
Section 5.2. QUALIFICATION. Each Credit Party shall be duly qualified
and in good standing in each jurisdiction in which it owns or leases property or
in which the conduct of its business requires it to so qualify, except when the
failure to so qualify would not have a material adverse effect on its business,
operations, liabilities, assets, properties, prospects or condition (financial
or otherwise).
Section 5.3. SECURITY DOCUMENTS AND INSTRUMENTS. The Borrower and its
Domestic Subsidiaries (other than the Sonab Entities) shall have complied with
the provisions of Section 4 hereof and delivered the documents required thereby
(except as relates to the period after the Closing Date). Such document delivery
requirements may be satisfied by (i) the delivery of such documents prior to the
Closing Date in connection with the closing under the Original Credit Agreement
or the First Amended and Restated Credit Agreement or (ii) appropriate
amendments to the documents referred to in clause (i), all as determined by the
Agent in its sole discretion. The foregoing documents shall be in full force and
effect and shall grant or create the Liens, rights, powers, priorities, remedies
and benefits contemplated herein or therein, as the case may be. Further, the
Agent shall have received all necessary consents relating thereto from third
parties so that the same shall be valid and not result in any violation of any
material agreement running in favor of such third party.
Section 5.4. NOTES. Each Lender shall have received its Note, each duly
completed, executed and delivered in accordance with Section 2.3 hereof and
shall have marked the old notes as "cancelled."
Section 5.5. FEES AND EXPENSES. All fees payable to the Agent and the
Lenders with respect to the financing hereunder shall have been paid in full to
the persons entitled thereto in immediately available funds, including, but not
limited to, all fees to be paid by the Borrower pursuant to the Original Credit
Agreement, the First Amended and Restated Credit Agreement or the Fee Letter.
56
Section 5.6. LITIGATION. There shall be no litigation involving any
Credit Party or (relating to this transaction) any Lender, which in the judgment
of the Agent has a reasonable likelihood of being determined adversely to any
such Person, and if so adversely determined, would have a materially adverse
effect on the business, operations, liabilities, assets, properties, prospects
or condition, financial or otherwise, of the Parent and its Subsidiaries taken
as a whole or such Lender, or the ability of the Parent, the Borrower or any
Guarantor to perform its obligations under the Loan Documents and no judgment,
order, injunction or other similar restraint prohibiting any of the other
transactions contemplated under this Agreement.
Section 5.7. COMPLIANCE WITH LAW. The Agent shall be satisfied that (a)
each Credit Party is in compliance with in all material respects, and shall have
obtained appropriate approvals pertaining to, all applicable governmental,
environmental, labor, ERISA and other requirements, regulations and laws; and
(b) the credit facilities herein provided and all other transactions
contemplated herein shall be in compliance in all material respects with all
applicable laws and regulations and shall not contravene any term or condition
of any charter, bylaw, debt instrument or other agreement of any Credit Party.
Section 5.8. PROCEEDINGS; RECEIPT OF DOCUMENTS. All requisite corporate
action and proceedings in connection with the borrowings, the issuance of
Letters of Credit and the execution and delivery of the Loan Documents shall be
satisfactory in form and substance to the Agent and the Agent shall have
received all information and copies of all documents, including, without
limitation, records of requisite corporate action and proceedings, which the
Agent may have requested in connection therewith, such documents where requested
by the Agent to be certified by appropriate corporate Persons or governmental
authorities. Without limiting the generality of the foregoing, the Agent shall
have received on or before the Closing Date the following, each dated such day
(unless otherwise specified), in form and substance satisfactory to the Agent
(unless otherwise specified) and in sufficient copies for each Lender:
(i) A copy of the certificate of incorporation of each Credit
Party, and all amendments thereto, certified (as of a date reasonably
near the Closing Date) by the Secretary of State or other applicable
official of each of their respective states or countries as being a
true and correct copy thereof.
(ii) Certified copies of the resolutions of the Board of
Directors of each Credit Party approving this Agreement, the Notes,
each other Loan Document to which it is a party or by which it is
bound, and of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this Agreement, the
Notes and each other Loan Document.
(iii) A copy of a certificate of the Secretary of State of the
State where each Credit Party is organized dated a date reasonably near
the Closing Date, stating that each Credit Party, as the case may be,
is duly qualified and in good standing as a foreign entity in such
State.
(iv) A certificate of each Credit Party signed on behalf of
such Person by its chairman, president, any vice-president, treasurer,
secretary or assistant secretary, certifying as to (A) the absence of
any amendments to the charter of such Person since the date of the
Secretary of State's (or other official's) certificate for such Person
referred to above and (B) a true and correct copy of the bylaws of such
Person as in effect on the Closing Date.
(v) A certificate of the Secretary or an Assistant Secretary
of each Credit Party certifying the names and true signatures of the
officers of such Person authorized to
57
sign, on behalf of such Person, this Agreement, the Revolving Notes and
each other Loan Document to which such Person is a party or by which it
is bound.
Section 5.9. EVIDENCE OF INSURANCE. The Agent shall have received, in
sufficient copies for each Lender, evidence, in form, scope and substance and
with such insurance carriers reasonably satisfactory to the Agent, of all
insurance policies required pursuant to Section 8.3 hereof. Such insurance
coverage shall have been issued by responsible carriers acceptable to the Agent
and shall include, without limitation, loss payee and additional insurance
endorsements in form and substance satisfactory to the Agent and in any event
which require that at least thirty (30) days' prior written notice be provided
to the Agent in the event of cancellation, nonrenewal or material change
thereof.
Section 5.10. LOCKBOX. On or prior to the Closing Date, the Borrower
and its Domestic Subsidiaries selected by the Agent shall have established a
lock box pursuant to a lock box agreement as required by Section 8.22 hereof,
and which in any event provides to the Agent a perfected first priority security
interest in all Proceeds, now existing or hereafter acquired, of the Borrower
and such Subsidiaries. All deposit accounts of the Borrower and its Domestic
Subsidiaries shall be covered by Collecting Bank Agreements, which shall have
been executed and delivered to the Agent and shall constitute Blocked Accounts.
SECTION 6. CONDITIONS PRECEDENT TO EACH BORROWING AND ISSUANCE OF
LETTERS OF CREDIT.
The obligation of the Lenders to make any Revolving Advance (including
on the Closing Date) (other than any Revolving Advances under Sections 2.1(c)
and 2A.2 hereof) or incur any Letter of Credit Obligations is subject to the
following conditions precedent:
Section 6.1. CONDITIONS. No Lender shall have any obligation to make
any Revolving Advance to Borrower (other than any Revolving Advances under
Section 2A.2 hereof) or to incur any Letter of Credit Obligation unless, in each
instance, (x) with respect to a Revolving Advance (other than a Revolving
Advance under Section 2.1(c) and 2A.2 hereof), the Borrower delivers to the
Agent a Borrower's Certificate dated the date of such Revolving Advance and (y)
the following conditions precedent are fulfilled to the satisfaction of the
Agent (or waived in writing by the Majority Lenders):
(i) all representations and warranties made by each of the
Credit Parties contained herein or otherwise made in any Loan Document
(including, without limitation, each Borrower's Certificate), officer's
certificate or any agreement, instrument, certificate, document or
other writing delivered to the Agent or any Lender in connection
herewith or therewith, shall be true and correct in all material
respects with the same effect as though such representations and
warranties had been made on and as of the date of such borrowing or
issuance of a Letter of Credit (unless any such representation or
warranty speaks as of a particular date, in which case it shall be
deemed repeated as of such date);
(ii) on the date of such borrowing or issuance of a Letter of
Credit there shall exist no Default or Event of Default (either
immediately before or after giving effect thereto);
(iii) the Borrower shall have complied with all procedures and
given all certificates, notices and other documents required hereunder
for such advance or issuance; and
(iv) the Agent shall have received such other approvals of
Governmental Authorities or documents as the Agent may have reasonably
requested.
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Section 6.2. WRITTEN NOTICE. Prior to the time of each Revolving
Advance or the renewal or conversion of any Revolving Advance, or portion
thereof, or of the issuance of a Letter of Credit, the Agent shall have received
Written Notice of such Revolving Advance or the renewal or conversion of such
Revolving Advance, or portion thereof, or of the issuance of such Letter of
Credit, as the case may be, in accordance with and to the extent required by
Section 2 or 2A hereof, as appropriate.
SECTION 7. USE OF PROCEEDS.
(a) [Intentionally Omitted.]
---------------------
(b) From and after the Closing Date, proceeds of Revolving Advances
shall be used (i) for the working capital and general corporate purposes
(including, without limitation, in connection with the operations of eFinlay and
Finlay Merchandising) of the Borrower and its Subsidiaries to the extent such
purposes are permitted hereunder, (ii) to repurchase, acquire or redeem Senior
Notes to the extent such purchases are permitted hereunder and (iii) to pay
dividends to Parent to the extent such dividends are permitted hereunder.
SECTION 8. AFFIRMATIVE COVENANTS.
Each of the Borrower and the Parent covenants and agrees that, so long
as any Revolving Advance or Letter of Credit is outstanding or any Lender has
any Revolving Commitment hereunder, unless specifically waived by the Majority
Lenders in writing:
Section 8.1. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Borrower
or, where applicable, the Parent shall furnish or cause to be furnished to the
Agent and each Lender:
(a) Within 30 days after the end of each fiscal month of the Parent,
(i) a copy of the internally prepared unaudited consolidated balance sheet of
the Parent and its Subsidiaries as of the end of such month and the related
consolidated statement of income for that portion of the Fiscal Year ending as
of the end of such month, and (ii) a copy of the unaudited consolidated
statement of income of the Parent and its Subsidiaries for such month, setting
forth in comparative form in each case referred to in clauses (i) and (ii)
above, actual figures for such period as against budgeted figures (including
variances in dollars and percent) for such period in the current Fiscal Year and
actual figures as against actual figures (including variances in dollars and
percent) for the comparable period during the prior Fiscal Year and accompanied
by (A) management letters, if any, prepared by the Designated Officer of the
Parent or the Borrower explaining any material variances from the corresponding
budgets and prior Fiscal Years' figures related to the foregoing, (B) a schedule
which shows, by License Agreement, each Account which is past due and, to the
extent not available to the Agent by computer on-line (as required by Section
8.7(b)), a schedule detailing write-offs and returns, and (C) upon Agent's
request, copies of any reports generated from the Borrower's investigation into
discrepancies noted in any of the internal inventory control reporting.
(b) Within 45 days after the end of each fiscal month of the Parent,
(i) a copy of the unaudited consolidated balance sheet of the Parent and its
Subsidiaries as of the end of such month and the related consolidated statement
of income and cash flow for that portion of the Fiscal Year as of the end of
such month, each prepared in accordance with GAAP (subject to normal year end
adjustments and without footnotes) and (ii) a copy of the unaudited consolidated
statement of income and cash flow of the Parent and its Subsidiaries for such
month prepared in accordance with GAAP (subject to normal year-end adjustments
and without footnotes) setting forth in comparative form in each case referred
to in clauses (i) and (ii) above, actual figures as against actual figures for
the comparable period during the prior Fiscal Year.
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(c) Within 45 days after each fiscal quarter of the Parent or such
earlier time as may then be required under the Xxxxxxxx-Xxxxx Act, (i) a copy of
the unaudited consolidated and consolidating balance sheets of the Parent and
its Subsidiaries as of the end of such quarter, the related consolidated and
consolidating statements of income and the related consolidated statement of
cash flows for that portion of the Fiscal Year ending as of such quarter, each
prepared in accordance with GAAP (subject to normal year end adjustments and
without footnotes) and (ii) a copy of the unaudited consolidated and
consolidating statements of income and the related consolidated statement of
cash flows of the Parent and its Subsidiaries for such quarter prepared in
accordance with GAAP (subject to normal year end adjustments and without
footnotes) setting forth in comparative form in each case referred to in clauses
(i) and (ii) above for consolidated information only, actual figures for such
period as against actual figures for the comparable period during the prior
Fiscal Year.
(d) For each of (b) and (c) above, the certification of the Designated
Officer of the Parent or Borrower, as applicable, shall accompany such
statements and shall certify that (i) all such statements are complete and
correct in all material respects and are presented fairly in accordance with
GAAP (subject to normal year end adjustments and without footnotes) and (ii) to
the best knowledge of such Designated Officer, no Default or Event of Default
exists as of such time or, if any Default or Event of Default then exists,
specifying the details and anticipated effect thereof.
(e) Within 45 days after the end of each month for which a quarterly
reporting period ends for the Parent, a schedule showing in reasonable detail
the calculations used in determining compliance (for the fiscal quarter ending
on the last day of each such month) with the covenants contained in Section 9.1
and Section 8.17 hereof.
(f) Not later than March 30 in each year, a report detailing the
highest target shortage locations of the Borrower and its Subsidiaries.
(g) Within 90 days after the close of each Fiscal Year or such earlier
time as may then be required under the Xxxxxxxx-Xxxxx Act, a copy of the annual
audited consolidated financial statements of each of the Parent and its
Subsidiaries and the Borrower and its Subsidiaries, consisting of the annual
consolidated balance sheet, statement of income, cash flow and changes in
stockholders' equity, setting forth in comparative form, in each case,
consolidated figures for the prior Fiscal Year, which financial statements shall
be prepared in accordance with GAAP, certified without qualification (other than
a qualification approved by the Agent) by independent certified public
accountants of recognized national standing selected by the Parent and the
Borrower respectively, and acceptable to the Agent (Deloitte & Touche being
acceptable to the Agent), and accompanied by (i) unaudited consolidating
financial statements of the Parent and its Subsidiaries and the Borrower and its
Subsidiaries, consisting of the annual consolidating balance sheets and
statements of income, setting forth in comparative form, in each case,
consolidating figures for the prior Fiscal Year (which financial statements
shall be prepared in accordance with GAAP), (ii) a schedule prepared by the
Borrower and certified by such independent accountants, showing in reasonable
detail the calculations used in determining compliance with the financial
covenants under Section 8.17 hereof, (iii) a report from such accountants to the
effect that in connection with their audit examination, nothing has come to
their attention to cause them to believe that a Default or Event of Default had
occurred or, if they believe a Default or Event of Default has occurred,
specifying the details thereof, and (iv) a certification of the Designated
Officer of the Parent and the Borrower certifying that (A) all such financial
statements are complete and correct in all material respects and present fairly
in accordance with GAAP the consolidated and consolidating financial position
and the consolidated and consolidating results of operations and cash flows of
each of the Parent and its Subsidiaries and the Borrower and its Subsidiaries as
at the end of such Fiscal Year and (B) to the best knowledge of such Designated
Officer, no Default or Event of Default exists as of such time or, if any
Default or Event of Default then exists, specifying the details and anticipated
effect thereof.
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(h) As soon as practicable, but in any event not later than two (2)
Business Days after the Parent and/or the Borrower becomes aware of the
existence of any Default or Event of Default, or any development or other
information which might reasonably be expected to have a Material Adverse
Effect, telephonic or telegraphic notice specifying the nature of such Default
or Event of Default or development or information, including the anticipated
effect thereof, which notice shall be promptly confirmed in writing within five
days.
(i) Not later than March 1 in each year, an annual operating plan for
the Parent and its Subsidiaries for such Fiscal Year (approved by the board of
directors of each of the Parent and the Borrower), in form, scope and substance
reasonably satisfactory to the Agent, setting forth:
(i) projected consolidated balance sheets of the Parent and
its Subsidiaries for such Fiscal Year, on a monthly basis;
(ii) projected consolidated statements of income of the Parent
and its Subsidiaries for such Fiscal Year, on a monthly and quarterly
basis;
(iii) projected consolidated statements of cash flow of the
Parent and its Subsidiaries, including summary details of cash
disbursements, including Capital Expenditures, and projected operating
profit of the Parent and its Subsidiaries for such Fiscal Year, on a
monthly basis; and
(iv) projected Borrowing Base for such Fiscal Year, on a
monthly basis;
together with (x) projections of the nature requested in clauses (i) through
(iv) above, computed on an annual basis for each Fiscal Year remaining until the
Maturity Date and (y) appropriate supporting details as reasonably requested by
any Lender (including, without limitation, same store growth assumptions). The
annual operating plan delivered in connection with this Section 8.1(i) shall be
accompanied by evidence satisfactory to the Agent that such plan shall have been
approved by the boards of directors of each of the Parent and the Borrower.
(j) If requested by the Agent, copies of all federal, state, local and
foreign tax returns and reports in respect of income, franchise or other taxes
on or measured by income (excluding sales, use or like taxes) filed by the
Parent or any of its Subsidiaries.
(k) Concurrently with the delivery of the statements referred to in
Section 8.1(a) hereof, supplements or amendments to Schedules, if any, as
described in Section 8.20 hereof.
(l) As soon as available, but in any event not later than thirty (30)
days after the end of each Fiscal Year of the Parent, a report, in form and
substance satisfactory to the Agent, (i) updating the list of contracts,
agreements and documents of the Parent and its Subsidiaries in existence at the
end of such Fiscal Year which are required to be set forth on Schedule 11.24
hereto so that the representation and warranty made in Section 11.24 hereto
shall be true and correct as of such date and (ii) specifying which contracts,
agreements and documents included on such schedule at any time during the Fiscal
Year just ended have been terminated, entered into or materially modified during
such Fiscal Year, and, promptly after requested by the Agent, copies of any such
new contracts, agreements or other documents and material modifications.
(m) Promptly upon the filing thereof, copies of all reports, if any, to
or other documents filed by the Parent or any of its Subsidiaries with the
Securities and Exchange Commission under the Securities Act of 1933 or the
Securities Exchange Act of 1934 (other than on Form S-8 or 8-A or similar
forms), and all reports, notices or statements sent or received by the Parent or
any of its Subsidiaries to or from the holders of any equity interests of the
Parent or any such Subsidiary or of any
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Indebtedness for Borrowed Money of the Parent or any such Subsidiary registered
under the Securities Act of 1933 or to or from the trustee under any indenture
under which the same is issued.
(n) Promptly upon the commencement thereof, written notice of any
litigation, including arbitrations, and of any proceedings before any
governmental agency, affecting the Parent or any of its Subsidiaries (other than
any described in paragraph (r) below), which would, if successful, materially
adversely affect the Parent or any of its Subsidiaries or where the amount
involved in excess of available insurance, if successful, would reasonably be
expected to exceed $250,000.
(o) With reasonable promptness, such other information respecting the
business, operations and financial condition of the Parent or any of its
Subsidiaries as any Lender may from time to time reasonably request.
(p) (x) not later than Wednesday, 12:00 noon (New York time) of each
week, and (y) within three (3) days following the written request of the Agent,
a certificate dated Friday of the previous week just ended (or with respect to a
request made under clause (y) above, an estimated certificate dated the date of
delivery) from the Borrower, in each case substantially in the form of Exhibit
8.1(p) hereto, each such certificate to be signed by the Designated Officer of
the Borrower (each such certificate, a "Borrowing Base Certificate"). The
delivery of the Borrowing Base Certificate pursuant to clause (x) of this
Section 8.1(p) shall be accompanied by the following, each of which shall be in
form, scope and substance satisfactory to the Agent, (i) a copy of the
receivables aging trial balances of the Borrower and each of its Subsidiaries as
of the end of the prior month, together with an accounts receivable
reconciliation to the Borrowing Base Certificate date, and (ii) a schedule of
Eligible Inventory, valued at the lesser of cost (on a specific identification
basis) or current market value and setting forth the locations of all such
Eligible Inventory (which may be done by reference to the computer information
to which the Agent has on-line access to the extent required by Section 8.7(b)
hereof), including, without limitation, Domestic Inventory in transit and
Domestic Inventory not in the possession of the Borrower and the name of the
Person in possession thereof.
(q) Within 15 days after receipt thereof but in no event later than
June 30 of each year, a copy of all management reports and management letters,
if issued, prepared for each of the Parent and its Subsidiaries and the Borrower
and its Subsidiaries by independent certified public accountants of recognized
national standing selected by the Parent or the Borrower, as applicable and
acceptable to the Agent together with any response by any of the Parent or any
of its Subsidiaries or the Borrower or any of its Subsidiaries, as applicable,
to such management reports or management letters; it being understood that the
Parent and the Borrower shall request from such independent certified public
accountants such management reports and/or management letters with the delivery
of any annual audited financial statements required to be delivered to the Agent
hereunder.
(r) Promptly, and in any event within ten (10) business days thereof,
notice:
(i) of any Environmental Claim or Adverse Environmental
Condition of which any Credit Party has knowledge or any written notice
of an allegation which may reasonably give rise to an Environmental
Claim or Adverse Environmental Condition, where such Environmental
Claim or Adverse Environmental Condition may reasonably be expected to
result in a liability to any Credit Party in excess of $50,000;
(ii) of the occurrence of a Release of a Hazardous Material
upon, under or affecting any Facilities, of which any Credit Party has
knowledge or Hazardous Materials at levels or in amounts that may have
to be reported, remedied or responded to under any Environmental Law,
of which any Credit Party has knowledge, or that have been detected on
or in the soil or groundwater, of which any Credit Party has knowledge,
provided the cost to the Parent or its Subsidiaries of investigating,
remedying, or responding to such Release may reasonably be expected to
exceed $50,000;
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(iii) that a Credit Party is reasonably likely to be liable
for any costs of cleaning up or otherwise responding to a Release of
Hazardous Materials, provided the cost of cleanup or response may
reasonably be expected to exceed $50,000;
(iv) that written notice has been received that any part of
the Facilities is or may be subject to a Lien under any Environmental
Law; and
(v) that a Credit Party will undertake or has undertaken any
Remedial Action with respect to any Hazardous Material, provided the
cost of cleanup or response may reasonably be expected to exceed
$50,000.
(s) Within 30 days after the end of each Fiscal Year and at such other
times as the Agent may request, a list, in detail reasonably satisfactory to the
Agent, of all bank accounts maintained by the Parent, the Borrower and each of
their respective Subsidiaries.
(t) On February 15, May 15, August 15 and November 15 of each year, a
report of the Borrower and its Subsidiaries detailing the amount of "consigned"
or "memo" inventory and owned inventory of the Borrower and its Subsidiaries in
each of the following categories: (i) inventory under two years old, (ii)
inventory between two and three years old, (iii) inventory between three and
four years old and (iv) inventory more than four years old.
(u) On a monthly basis, copies of all Consignment Limit Reports (as
such term is defined in the Gold Consignment Agreement) provided by the Borrower
to Sovereign Bank under or pursuant to the Gold Consignment Agreement.
(v) Commencing six months after the Closing Date and every six months
thereafter, Borrower and each Guarantor shall, unless Agent shall otherwise
consent, provide to Agent a certificate of good standing from its state of
incorporation or organization.
Section 8.2. TAXES AND CLAIMS. The Borrower and the Parent shall and
shall cause their respective Subsidiaries to pay and discharge when due (a) all
taxes, assessments and governmental charges upon or against it or its properties
or assets prior to the date on which penalties attach thereto and (b) all lawful
claims, whether for labor, materials, supplies, services or anything else, which
might or could, if unpaid, become a Lien or charge upon its properties or
assets, unless, in each case, the validity or amount thereof is being contested
in good faith by appropriate proceedings, the Parent or any such Subsidiary has
established adequate reserves in accordance with GAAP with respect thereto,
Liens (other than Liens which, in the aggregate, are permitted under Section
9.2(i) hereof) arising from the non-payment thereof when due have not attached
to any of the property or assets of the Parent or any of its Subsidiaries in a
manner which could have priority over the Lien of the Agent thereon and there is
no imminent risk of the sale of or foreclosure on any property or assets of the
Parent or any of its Subsidiaries by the holder of any Liens arising from the
non-payment thereof when due.
Section 8.3. INSURANCE. (a) Schedule 8.3 lists all insurance of any
nature maintained by the Parent and its Subsidiaries, as well as a summary of
the terms of such insurance. The Borrower or the Parent shall, at its sole cost
and expense, maintain "All Risk" physical damage insurance on all real and
personal property of the Parent and its Subsidiaries including, but not limited
to, fire and extended coverage, boiler and machinery coverage, flood,
earthquake, theft, explosion, collapse, and all other hazards and risks
ordinarily insured against by owners or users of such properties in similar
businesses. All policies of insurance on such real and personal property shall
contain an endorsement, in form and substance acceptable to the Agent, showing
loss payable to the Agent as its interest appears. Such endorsement, or an
independent instrument furnished to the Agent, shall provide that the insurance
companies add the Agent as an additional insured and give the Agent at least 30
days' prior written notice before any significant change in coverage provided by
or cancellation of such policy or policies of insurance and that no act,
omission or default of the Parent or any of its Subsidiaries or any other Person
63
shall affect the right of the Agent or any Lender to recover under such policy
or policies of insurance in case of loss or damages.
(b) The Borrower or the Parent shall, at its sole cost and expense,
maintain commercial general liability insurance covering itself and its
Subsidiaries on an "occurrence basis" (unless such insurance cannot be
reasonably obtained at commercially reasonable rates, in which case such
insurance shall be on a "claims made" basis) against claims for personal injury,
bodily injury and property damage with a minimum limit of $1,000,000 per
occurrence and $1,000,000 in the aggregate. Such coverage shall include but not
be limited to premises/operations, broad form contractual liability,
underground, explosion and collapse hazard, independent contractors, broad form
property coverage, products and completed operations liability.
(c) The Borrower or the Parent shall, at its sole cost and expense,
maintain workers' compensation insurance covering itself and its Subsidiaries
including employer's liability in the minimum amount of $1,000,000 for each
accident, $1,000,000 disease-policy limit, and $1,000,000 disease-each employee
with excess coverage under umbrella liability insurance policies with a minimum
limit of $20,000,000 per occurrence and $20,000,000 in the aggregate.
(d) The Borrower or the Parent shall, at its sole cost and expense,
maintain automobile liability insurance covering itself and its Subsidiaries for
all owned, non-owned or hired automobiles against claims for personal injury,
bodily injury and property damage with a minimum combined single limit of
$1,000,000 per occurrence with excess coverage under umbrella liability
insurance policies with a minimum limit of $20,000,000 per occurrence and
$20,000,000 in the aggregate.
(e) The Borrower or the Parent shall, at its sole cost and expense,
maintain business interruption insurance covering itself and its Subsidiaries
with commercially reasonable policy limits.
(f) All policies of liability insurance required to be maintained under
this Agreement shall name the Agent and each Lender as an additional insured,
contain at least a 30-day notice of significant change in coverage or
cancellation and be in form and with insurers recognized as adequate by the
Agent and, except as required hereby, all such policies shall be in such amounts
as may be reasonably satisfactory to the Agent. Upon the request of the Agent,
the Parent and each of its Subsidiaries shall deliver to the Agent the original
(or certified copy) of each policy of insurance and evidence of payment of all
premiums therefor and of compliance with all provisions of this Agreement. In
addition, the Parent and each of its Subsidiaries shall notify the Agent
promptly of any occurrence causing a material loss or decline in value of any
real or personal property and the estimated (or actual, if available) amount of
such loss or decline. The Parent and each of its Subsidiaries each irrevocably
make, constitute and appoint the Agent (and all officers, employees or agents
designated by the Agent) as the Parent's and each such Subsidiary's true and
lawful attorney (and agent-in-fact), acting at any time after the occurrence and
during the continuance of an Event of Default, for the purpose of making,
settling and adjusting claims under such policies of insurance (provided that
the Agent shall consult with the Parent prior to finally making, settling or
adjusting claims under such policies of insurance), endorsing the name of the
Parent or any such Subsidiary on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance, and for making all
determinations and decisions with respect to such policies of insurance. In the
event the Parent or any Subsidiary at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, the Agent, without waiving or
releasing any obligations or default by the Parent or any of its Subsidiaries
hereunder, may at any time or times thereafter (but shall not be obligated to)
obtain and maintain such policies of insurance and pay such premium and take any
other action with respect thereto which the Agent deems advisable. All sums so
disbursed by the Agent, including reasonable attorneys' fees, court costs,
expenses and other charges relating thereto, shall be payable, on demand, by the
Parent or any of its Subsidiaries to the Agent and shall be Additional
Indebtedness hereunder secured by the Collateral.
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(g) The Borrower shall maintain a key person life insurance policy,
with a responsible insurance carrier and pursuant to an insurance policy
reasonably acceptable to the Agent, covering Xxxxxx X. Xxxxxx in an amount of
not less than $5,000,000.
(h) The Agent reserves the right at any time, upon a change of the
Parent's or any of its Subsidiaries' risk profile or upon the occurrence of an
external event, to require additional forms and limits of insurance which, in
the Agent's reasonable opinion, will adequately protect any Lender's investment.
Section 8.4. BOOKS AND RESERVES. Each of the Borrower and the Parent
shall and shall cause each of their respective Subsidiaries to:
(a) maintain, at all times, true and complete books, records and
accounts in which true and correct entries shall be made of its transactions in
accordance with GAAP; and
(b) by means of appropriate entries, reflect in its accounts and in all
financial statements furnished pursuant to Section 8.1 hereof proper liabilities
and reserves for all taxes and proper provision for depreciation and
amortization of its properties and bad debts, all in accordance with GAAP.
Section 8.5. PROPERTIES IN GOOD CONDITION. Except as permitted in
Section 9.5 hereof, each of the Borrower and the Parent shall keep, and shall
cause each of their respective Subsidiaries to keep, its material properties in
good repair, working order and condition, ordinary wear and tear excepted, and,
from time to time, make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto, so that the business carried
on may be properly and advantageously conducted at all times in accordance with
prudent business management.
Section 8.6. MAINTENANCE OF EXISTENCE, ETC. Except as otherwise
provided in Section 9.5(e) or (h) hereof, each of the Borrower and the Parent
shall preserve and maintain, and cause each of their respective Subsidiaries to
preserve and maintain, its statutory existence, rights and franchises.
Section 8.7. INSPECTION BY THE AGENT AND THE LENDERS. (a) Each of the
Borrower and the Parent shall allow, and shall cause each of their respective
Subsidiaries to allow, any representative of any Lender or of the Agent, at the
Borrower's expense, to visit and visually inspect any of its properties, to
examine its books of account and other records and files (including, without
limitation, computer records and files), to make copies thereof and to discuss
its affairs, business, finances and accounts with its officers and employees and
independent accountants (and each of the Borrower and the Parent hereby
irrevocably authorizes its independent accountants to discuss with the Agent and
the Lenders the financial affairs of the Parent and its Subsidiaries), all at
such reasonable times and as often as any Lender or the Agent may reasonably
request and without any unnecessary interference with the business of the
Borrower and the Parent or any of their respective Subsidiaries.
(b) At all times and upon the Agent's request, the Parent shall allow,
and cause each of its Subsidiaries to allow, the Agent or any representative of
the Agent direct continuous access (including, without limitation, by modem or
any other direct computer linkage means), without any ability to alter any such
records or change or enter any data to all computer records or files concerning
the business or properties of the Borrower or any of its Subsidiaries for the
purpose of monitoring, among other things, the Accounts, Inventory and Consigned
Inventory of the Borrower and its Subsidiaries.
Section 8.8. PAY INDEBTEDNESS TO LENDERS AND PERFORM OTHER COVENANTS.
(a) Borrower shall make full and timely payment of all payments required to be
made by the Borrower in respect of the Obligations, including without
limitation, the Loan, whether now existing or hereafter arising, (b) Borrower
and the Parent shall strictly comply, and cause each of the other Credit Parties
to strictly comply, with all the terms and covenants contained in each Loan
Document to which
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each such Credit Party is a party, all at the times and places and in the manner
set forth therein and (c) Borrower shall, except for the filing of continuation
statements and the making of other filings by the Agent as secured party or
assignee, at all times take all action necessary to maintain the Liens provided
for under or pursuant to this Agreement or any Security Document as valid and
perfected Liens on the property intended to be covered thereby (subject to no
other Liens except those liens expressly permitted under Section 9.2 hereof) and
supply all information to the Agent or the Lenders necessary for such
maintenance.
Section 8.9. NOTICE OF DEFAULT. Each of the Borrower and the Parent
shall promptly, and shall cause each of their respective Subsidiaries to
promptly (and in any event within five (5) days), notify the Agent in writing of
any Default or Event of Default or a default under any other agreement in
respect of Indebtedness for Borrowed Money to which Borrower or Parent or any of
their Subsidiaries is a party, in each case describing the nature thereof and
the action such party proposes to take with respect thereto.
Section 8.10. REPORTING OF MISREPRESENTATIONS. In the event that
Borrower or Parent, or any of their respective Subsidiaries discovers that any
representation or warranty made in any Loan Document by any Credit Party was
incorrect in any material respect when made, such party shall promptly report,
or shall cause such Subsidiary promptly to report, the same to the Agent and
take, or cause to be taken, all available steps to correct such
misrepresentation or breach of warranty.
Section 8.11. COMPLIANCE WITH LAW. Each of the Borrower and the Parent
shall, and shall cause each of their respective Subsidiaries to, comply with and
duly observe in all material respects all laws and regulations and all rules and
orders, in each case, applicable to it and all legal requirements imposed by any
governmental authorities, including, without limitation, ERISA, those regarding
the collection, payment and deposit of employees' income, unemployment and
social security taxes, those relating to public and employee health and safety,
and those relating to environmental matters, except a non-compliance or failure
to observe which would not have a Material Adverse Effect.
Section 8.12. ERISA. (a) Each of the Borrower and the Parent shall pay
and discharge, and shall cause each other Credit Party and each ERISA Affiliate
to pay and discharge, when due (including any permissible extensions) any
material liability imposed upon it pursuant to the provisions of Title IV of
ERISA.
(b) Each of the Borrower and the Parent shall deliver to the Agent
promptly, and in any event within ten (10) days, after
(i) such party knows, or has reason to know, of the occurrence
of any Reportable Event (as defined in Section 4043 of ERISA) with
respect to any Pension Benefit Plan subject to Title IV of ERISA
("Reportable Event"), a copy of the materials that are filed by the
applicable plan administrator with the PBGC, or the materials that
would have been filed if the PBGC had not waived the notice
requirements;
(ii) the receipt of notice by a Credit Party or any ERISA
Affiliate or any administrator of any Pension Benefit Plan who is an
employee of a Credit Party or any ERISA Affiliate from the PBGC of the
PBGC's intention to terminate any such Pension Benefit Plan or to
appoint a trustee to administer any such Pension Benefit Plan, a copy
of such notice;
(iii) the filing thereof with the Internal Revenue Service,
copies of each annual report that is filed on Treasury Form 5500 with
respect to any Pension Benefit Plan subject to Title IV, together with
any actuarial statements on Schedule B to such Form 5500;
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(iv) a Credit Party or any ERISA Affiliate or any
administrator of any Pension Benefit Plan who is an employee of any
Credit Party, or any ERISA Affiliate files with participants,
beneficiaries or the PBGC a notice of intent to terminate any Pension
Benefit Plan, a copy of any such notice;
(v) a Credit Party or any ERISA Affiliate knows or has reason
to know of any event or condition which might constitute grounds under
the provisions of Section 4042 of ERISA for the termination of (or the
appointment of a trustee to administer) any Pension Benefit Plan, an
explanation of such event or condition;
(vi) an application has been made to the Secretary of the
Treasury for a waiver of the minimum funding standard under the
provisions of Section 412 of the Code with respect to any Pension
Benefit Plan, a copy of such application; and
(vii) the receipt by any Credit Party or any ERISA Affiliate
of an assessment of withdrawal liability under Section 4201 of ERISA
from a Multiemployer Plan, a copy of such assessment;
in each case described above, together with a statement signed by an appropriate
officer of such Credit Party or ERISA Affiliate setting forth details as to such
Reportable Event, filing, notice, event or condition, assessment or application
and the action that will be taken with respect thereto.
Section 8.13. FURTHER ASSURANCES. Each of the Borrower and the Parent
shall, and shall cause each of their respective Subsidiaries to, at its cost and
expense, upon request of the Agent, 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 or proper in the
reasonable opinion of the Agent to carry out more effectually the provisions and
purposes of this Agreement or any other Loan Document.
Section 8.14. CONSIGNMENT AGREEMENTS. The Borrower shall deliver to the
Agent Consignor Letters duly executed by consignors of "consigned" or "memo"
inventory (pursuant to any written consignment agreement or otherwise)
representing at least ninety percent (90%) of the "memo" or "consigned"
inventory (based on book value) of the Borrower and at no time following the
Closing Date shall the Borrower suffer or permit more than ten percent (10%) of
its "memo" or "consigned" inventory (based on book value) to be on consignment
from consignors who have not executed and delivered to the Agent Consignor
Letters. The Borrower further agrees to use its best efforts to deliver to the
Agent Consignor Letters from each of its consignors of "memo" or "consigned"
inventory and the Borrower further agrees that it shall not from and after the
Closing Date enter into any consignment agreement or arrangement with any
consignor who has not delivered to the Agent a Consignor Letter. Notwithstanding
the foregoing, no Consignor Letter shall be required to be executed and
delivered by Sovereign Bank (its successors and assigns) in connection with the
Gold Consignment Documents so long as the Intercreditor Agreement is in full
force and effect.
Section 8.15. AUDITS. Each of the Borrower and the Parent shall allow,
and shall cause each of their respective Subsidiaries to allow, the Agent or its
designee to perform such audits of the Parent and its Subsidiaries, at the
Borrower's expense as to reasonable out-of-pocket expenses of the Agent or its
designee, as the Agent may request.
Section 8.16. ENVIRONMENTAL MATTERS, ETC. (a) Each of the Borrower and
the Parent shall, and shall cause each of their respective Subsidiaries to, (i)
comply in all material respects with the Environmental Laws applicable to it,
and (ii) promptly forward to the Agent a copy of any order, notice, Permit, or
any other written communication or report received by the Parent or any of its
Subsidiaries in connection with any Adverse Environmental Condition or
Environmental Claim or any
67
written allegation which may reasonably be expected to give rise to an Adverse
Environmental Condition or Environmental Claim.
(b) The Borrower shall fully and promptly pay, perform, discharge, if
requested, defend, indemnify and hold harmless each Indemnified Party from and
against any action, claim, loss, liability, damage, cost, deficiency, fine,
penalty or expense (including, without limitation, reasonable attorneys' fees,
disbursements, investigation, removal, cleanup and remedial costs and reasonable
Equipment modification costs incurred to permit continued or resumed normal
operation of the Facilities) suffered or incurred by such Indemnified Party,
whether as mortgagee pursuant to any Mortgage or Leasehold Mortgage, as
mortgagee in possession, or as successor in interest to the Borrower or any of
its Subsidiaries as owner, operator or lessee of any Facilities by virtue of
foreclosure or acceptance in lieu of foreclosure or otherwise: (i) under or on
account of the Environmental Laws as they may apply to the Parent, any of its
Subsidiaries or the Facilities, including the assertion of any Lien thereunder;
(ii) with respect to any Environmental Claim, Release or Hazardous Material
affecting such Facilities, whether or not the same originates or emanates from
such Facilities or any contiguous real estate, including any loss of value of
such Facilities as a result of a Release or Hazardous Material; and (iii) with
respect to any other matter affecting such Facilities within the jurisdiction of
any federal, state, or municipal authority administering the Environmental Laws.
The foregoing indemnity shall survive the expiration or earlier termination of
this Agreement and the satisfaction of the Obligations under the Loan Documents.
Further, the foregoing indemnity shall not be available with respect to matters
arising solely out of the gross negligence or willful misconduct of an
Indemnified Party or such Person's employees, successors or assigns. The
indemnification rights provided by this Section 8.16(b) shall constitute the
sole indemnity available to Indemnified Parties with respect to the matters
addressed under this Section.
(c) The Agent and each Lender agree that in the event any
investigation, litigation or proceeding is asserted or threatened in writing or
instituted against it or any Indemnified Party, or any Remedial Action is
requested of it or any Indemnified Party, for which indemnity is available under
Section 8.16(b) and the Agent or any Lender may desire indemnity or defense
hereunder, the Agent or such Lender shall promptly notify the Borrower in
writing, setting forth a description of those elements of which it has
knowledge, but any failure to so notify the Borrower shall not relieve the
Borrower of any of its obligations hereunder, except to the extent such failure
materially interferes with the Borrower's ability to defend the investigation,
litigation, proceeding or requested Remedial Action. The Borrower at the request
of the Agent or any Lender shall have the obligation to defend against such
investigation, litigation or proceeding or requested Remedial Action, and the
Borrower in any event may participate in the defense or settlement thereof with
legal counsel of its choice; provided, however, that the Borrower shall not be
entitled to control the defense described above in the event that the Borrower
shall not have admitted in writing to the Agent and the Lenders that as between
the Borrower, on the one hand, and the Agent and the Lenders on the other hand,
the Borrower is liable to the Agent and Lenders as to such investigation,
litigation, proceeding or Remedial Action or there are defenses available to the
Indemnified Party which are not available to the Borrower. In the event that the
Agent or any Lender requests the Borrower to defend against such investigation,
litigation or proceeding or requested Remedial Action, such party shall promptly
do so and the Agent or the affected Lender shall have the right to participate
in such defense, at such party's expense, with legal counsel of its choice, and
shall cooperate with the Borrower in the conduct of such defense. No Indemnified
Party shall settle any such investigation, litigation or proceeding or requested
Remedial Action as to which it is controlling the defense without the consent of
the Borrower, which consent shall not be unreasonably withheld or delayed. In
the event that the Borrower controls such defense, the Borrower and the
Indemnified Party or Parties shall cooperate in the conduct of such defense, and
the Borrower shall not settle any such investigation, litigation or proceeding
or requested Remedial Action without the consent of the Indemnified Party or
Parties, which consent shall not be unreasonably withheld. No action taken by
legal counsel chosen by the Agent, the Agent or any Lender in defending against
any such investigation, litigation or proceeding or requested Remedial Action
shall vitiate or impair the Borrower's obligation and duty hereunder to
indemnify and hold harmless the Indemnified Parties. Any and all amounts payable
by the Borrower as indemnification under this Section 8.16(c) shall be due and
payable within thirty days of receipt of written notice to the
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Borrower and, after such thirty day period, shall be added, together with
interest thereon at the rate set forth in Section 2.6(c) hereof, to the
Obligations.
(d) In the event of any Adverse Environmental Condition affecting any
Facilities, whether or not the same originates or emanates from such Facilities
or any contiguous real estate, and if the Parent or any Subsidiary shall fail to
comply in all respects with any of the requirements of the applicable
Environmental Laws, or, in the case of a leasehold, if required to do so under
the applicable lease, the Agent (at its option or at the direction of the
Majority Lenders) may, but shall not be obligated to, cause such work to be
performed or take actions reasonably necessary to remedy such Adverse
Environmental Condition or cure such failure to comply after providing written
notice to the Borrower of an intent to do so, allowing a reasonable time after
receipt of such notice for the Borrower to cure such failure. Any amounts paid
by the Agent as a result thereof, together with interest thereon at the rate set
forth in Section 2.6(c) hereof, shall be due and payable by the Borrower within
thirty days of receipt of an invoice and supporting documentation and, after
such thirty day period, shall be added to the Obligations. Nothing in this
Agreement shall be construed as limiting or impeding the Parent's or any of its
Subsidiary's rights or obligations to take any and all actions necessary or
desirable to remedy any Adverse Environmental Condition. Any partial exercise by
the Agent of the remedies hereinabove set forth or any partial undertaking on
the part of the Agent to cure the Parent's failure or the failure of any
Subsidiary thereof to comply with the Environmental Laws, shall not obligate the
Agent to complete the actions taken or require the Agent to expend further sums
to cure the Parent's or any such Subsidiary's noncompliance; neither shall the
exercise of any such remedy operate to place upon the Agent or any Lender any
additional responsibility for the operation, control, care, management or repair
of the Real Estate or make the Agent or any Lender the "owner" or "operator" of
the Real Estate or "owner" or "generator" of Hazardous Materials within the
meaning of the Environmental Laws.
(e) If an Event of Default occurs and is continuing, or if an Adverse
Environmental Condition should arise which would reasonably be expected to
result in a Material Adverse Effect, the Agent (at its option or at the
direction of the Majority Lenders) in the reasonable exercise of its discretion
and with reasonable notice under the circumstances, may at any time, and at the
Borrower's sole cost and expense (which shall be added to the Obligations), take
any action to incur any reasonable expense, including without limitation, to
cause one or more environmental assessments of the Real Estate to be undertaken.
Environmental assessments may include a detailed visual inspection of the Real
Estate, including, without limiting the generality of the foregoing, all storage
areas, storage tanks, drains, dry xxxxx, and leaching areas, as well as the
taking of soil samples, surface water samples, and ground water samples, and
such other investigation or analysis as is reasonably necessary or appropriate
for a complete assessment of the compliance of the Real Estate and the use and
operation thereof with all Environmental Laws; provided, however, any such
inspection and sampling shall be performed by a qualified, and if necessary
licensed, environmental consultant, retained by Agent and provided, further,
that no such inspection and sampling shall take place on any real property
leased to the Parent or any of its Subsidiaries that requires the consent of the
landlord for such inspection and sampling without first obtaining such consent
(the Borrower agreeing to use its best efforts to obtain such consent). The
Borrower shall be given the opportunity to review and comment upon the scope of
work and work plan developed by the consultant for the environmental assessment
prior to such assessment; provided that such review and comments shall not be
unreasonably withheld or delayed. The Agent shall give the Borrower three (3)
Business Days' advance notice that the consultant intends to enter the Real
Estate for the purpose of conducting an environmental assessment. A
representative of the Borrower shall have the right to accompany the consultant
as the consultant performs any portion of the environmental assessment, provided
such representative is reasonably available, and the consultant shall provide
split samples to the Borrower's representative upon request. The consultant
shall take all reasonable measures to restore the property to the condition in
which the property was found prior to the environmental assessment.
69
The Agent promptly shall provide the Borrower with a copy of any
reports (including draft reports) and analytical data prepared or gathered by
the consultant relating to the environmental assessment of the Real Estate.
(f) The Borrower shall, and shall cause each of its Domestic
Subsidiaries to, without regard to whether any Credit Party is in default, and
at such party's sole cost and expense, cause one or more "phase I" environmental
assessments to be undertaken by an environmental consultant satisfactory to the
Agent (and in any event, in form and substance sufficient to entitle the Agent
and the Lenders to an exemption under any applicable state or federal law for
lenders or financial institutions holding a lien or security interest) before
any such party shall (i) enter into a contract for the purchase of any real
property or (ii) enter into any lease with a term in excess of six months;
provided, however, that no such "phase I" environmental assessments shall be
required prior to entry into a lease of real property to be used solely for
retail or office purposes. If any such "phase I" environmental assessment shall
identify any Adverse Environmental Condition or Environmental Claim with respect
to such real property, such party shall refrain from entering into such contract
or lease, as the case may be, unless such party shall ensure to the satisfaction
of the Agent that such further Remedial Action as any Lender may reasonably
request is undertaken at the sole expense of such party or a third party.
Section 8.17. FINANCIAL COVENANTS. (a) Leverage Ratio. The Parent shall
maintain, or cause to be maintained, a Leverage Ratio, as of the end of each
period of four consecutive quarters of the Parent ending on or about the dates
set forth below, of not more than the ratio set forth below opposite such date:
Four Fiscal Quarters
Ending On or About Ratio
------------------ -----
January 31, 2003 3.20
April 30, 2003 4.30
July 31, 2003 4.30
October 31, 2003 4.30
January 31, 2004 3.05
April 30, 2004 4.00
July 31, 2004 4.00
October 31, 2004 4.00
January 31, 2005 2.85
April 30, 2005 3.70
July 31, 2005 3.70
October 31, 2005 3.70
January 31, 2006 2.65
April 30, 2006 3.50
July 31, 2006 3.50
October 31, 2006 3.50
January 31, 2007 2.50
April 30, 2007 3.50
July 31, 2007 3.50
October 31, 2007 3.50
70
(b) Fixed Charge Coverage Ratio. The Parent shall maintain, or cause to
be maintained, as of the end of each period of four consecutive fiscal quarters
of the Parent ending on or about the dates set forth below, a Fixed Charge
Coverage Ratio of not less than:
Four Fiscal Quarters
Ending On or About Ratio
------------------ -----
January 31, 2003 1.50
April 30, 2003 1.60
July 31, 2003 1.60
October 31, 2003 1.60
January 31, 2004 1.70
April 30, 2004 1.65
July 31, 2004 1.65
October 31, 2004 1.65
January 31, 2005 1.70
April 30, 2005 1.65
July 31, 2005 1.65
October 31, 2005 1.65
January 31, 2006 1.70
April 30, 2006 1.70
July 31, 2006 1.70
October 31, 2006 1.70
January 31, 2007 1.80
April 30, 2007 1.70
July 31, 2007 1.70
October 31, 2007 1.70
(c) EBITDA. The Parent shall maintain, or cause to be maintained,
EBITDA for each period of four consecutive fiscal quarters of the Parent ending
on or about the dates set forth below of not less than the amount set forth
below opposite such date:
Four Fiscal Quarters
Ending On or About Amount
------------------ ------
January 31, 2003 $72,000,000
April 30, 2003 $69,000,000
July 31, 2003 $69,000,000
October 31, 2003 $70,000,000
January 31, 2004 $74,000,000
April 30, 2004 $75,000,000
July 31, 2004 $75,000,000
71
October 31, 2004 $76,000,000
January 31, 2005 $79,000,000
April 30, 2005 $80,000,000
July 31, 2005 $81,000,000
October 31, 2005 $81,000,000
January 31, 2006 $84,000,000
April 30, 2006 $85,000,000
July 31, 2006 $85,000,000
October 31, 2006 $86,000,000
January 31, 2007 $89,000,000
April 30, 2007 $89,000,000
July 31, 2007 $89,000,000
October 31, 2007 $89,000,000
Section 8.18. LEASES; NEW REAL ESTATE. Within five Business Days after
becoming a party thereto, the Borrower shall provide, or shall cause the
applicable Subsidiary to provide, the Agent with copies of all Leases of real
property or similar agreements (and all amendments thereto) entered into by the
Borrower or any Domestic Subsidiary of the Borrower after the Closing Date,
whether as lessor or lessee. The Borrower shall comply and shall cause each of
its Domestic Subsidiaries to comply in all material respects with all of its and
their material obligations under all Leases now existing or hereafter entered
into by it or them with respect to real property including, without limitation,
all Leases listed on Schedule 11.5 hereto. The Borrower shall, or shall cause
the appropriate Subsidiary to, (i) provide the Agent with a copy of each notice
of default received by the Borrower or such Subsidiary under any such lease
immediately upon receipt of any such notice and deliver to the Agent a copy of
each notice of default sent by the Borrower or such Subsidiary under any such
lease simultaneously with its delivery of such notice under such lease; (ii)
notify the Agent at least 14 days prior to the date the Borrower or such
Subsidiary takes possession of any new leased premises or becomes liable under
any Lease having a term of greater than six months, whichever is earlier; and
(iii) if requested by the Agent, obtain and deliver to the Agent a Landlord's
Certificate, and with respect to any leasehold in which the Agent has obtained
or expects to obtain a Leasehold Mortgage, such consents and other agreements
from landlords relating to, among other things, mortgageability and such
non-disturbance agreements from mortgagees of the landlord, as the Agent may
request, each in form and substance reasonably satisfactory to the Agent, prior
to entering into any new lease.
Section 8.19. LICENSE AGREEMENTS. (a) If a Specified Default occurs and
is continuing, the Borrower shall, upon the request of the Agent, use its best
efforts to grant to the Agent for the benefit of the Agent and the Lenders
pursuant to security agreements and/or collateral assignments each in form and
substance satisfactory to the Agent, a valid, perfected and enforceable first
priority Lien on all right, title and interest of the Borrower in, to and under
all Unapproved License Agreements and License Agreements as to which the Agent
shall have not heretofore received such a valid, perfected and enforceable first
priority Lien (together with any legal opinions reasonably requested by the
Agent as to the validity, enforceability and perfection of such Liens). In
connection therewith, the Borrower shall use its best efforts to obtain all
consents of third parties (including, without limitation, any licensor consents)
necessary to permit the effective granting of such Liens. In the event such
security agreements or collateral assignments (together any legal opinions
requested by the Agent and third party consents deemed necessary by the Agent to
permit the granting of such Liens) are not delivered to the Agent within 45 days
after the Agent's request therefor and the Agent has not otherwise received a
valid, perfected and enforceable first priority security interest in such
Unapproved License Agreements and License
72
Agreements, such failure on the part of any Credit Party shall constitute an
Event of Default hereunder in addition to any other Default or Event of Default
existing at such time.
(b) The Borrower shall promptly (i) upon entering into any Unapproved
License Agreement or License Agreement provide the Agent with copies of same (or
if such Unapproved License Agreement or License Agreement is not in writing a
written description thereof), (ii) upon entering into any amendment to any
Unapproved License Agreement or License Agreement provide the Agent with a copy
of same, it being understood that the Borrower shall not need the approval of
the Agent or any Lender to enter into or terminate any Unapproved License
Agreement or License Agreement, (iii) promptly upon entering into any Unapproved
License Agreement or License Agreement after the Closing Date, provide to the
Agent an internally generated projection of gross revenues for any such
Unapproved License Agreement or License Agreement for the twelve month period
following the first date of operation under such Unapproved License Agreement or
License Agreement, (iv) comply in all material respects with all Unapproved
License Agreements or License Agreements now existing or hereafter entered into
by it (including, without limitation, those License Agreements listed on
Schedule 11.25 hereof), and (v) provide the Agent with Written Notice of any
default under any Unapproved License Agreement or License Agreement immediately
upon becoming aware of any default thereunder and of any termination of an
Unapproved License Agreement or License Agreement.
Section 8.20. SUPPLEMENTAL DISCLOSURE. From time to time as may be
necessary (in the event that such information is not otherwise delivered by the
Parent or the Borrower to the Lenders pursuant to this Agreement), the Borrower
and the Parent will promptly supplement or amend each Schedule or representation
herein with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedule or as an exception to such representation or
which is necessary to correct any information in such Schedule or representation
which has been rendered inaccurate thereby in any material respect. No such
supplement shall cure any Default arising from any misrepresentation being
corrected, unless such supplement has been approved by the Majority Lenders.
Section 8.21. AGREEMENTS. Each of the Borrower and the Parent shall,
and shall cause each of their respective Subsidiaries to, perform, within all
required time periods (after giving effect to any applicable grace periods), all
of its obligations and enforce all of its rights under each agreement to which
it is a party, including, without limitation, any leases to which any such
company is a party, where the failure to so perform and enforce is reasonably
likely to have a Material Adverse Effect. The Parent shall not, and shall not
suffer or permit any of its Subsidiaries to, terminate or modify in any manner
adverse to any such party any provision of any agreement to which it is a party
which termination or modification is reasonably likely to have a Material
Adverse Effect.
Section 8.22. COLLECTION AND PAYMENT; LOCK BOX; BANK ACCOUNTS. (a) The
Borrower shall enter into, and cause its Domestic Subsidiaries to enter into, a
lock box agreement, in form, scope and substance satisfactory to the Agent, with
each Collecting Bank. Pursuant to each such lock box agreement, on each Business
Day, all items deposited in the applicable lock box shall be credited to the
Blocked Account (other than a Disbursement Account) maintained by such
Collecting Bank. On each Business Day, each Collecting Bank shall transfer to
the Payment Account all amounts collected in good funds on such Business Day in
the Blocked Account maintained by such Collecting Bank. The Borrower shall not
nor shall the Borrower suffer or permit any Domestic Subsidiary to terminate,
alter or suffer or permit to be terminated or to lapse any such lock box
agreement.
(b) Subject to the provisions of Section 2.19(b) hereof, the Borrower
shall, and shall cause its Domestic Subsidiaries to, deposit, on the Business
Day immediately following the Business Day of receipt, in such Blocked Account
all Proceeds in the identical form received, whether in cash or by check or
otherwise. Subject to the provisions of Section 2.19(b) hereof, upon the request
of the Agent, the Borrower shall, and shall cause its Domestic Subsidiaries to,
cause all Proceeds to be directly deposited in such lockbox by each of the
account debtors of the Borrower and its Domestic Subsidiaries
73
(including, without limitation, each licensor or lessor of a store location to
the Borrower or any of its Domestic Subsidiaries).
(c) All items and all cash in the lock box and all funds, deposits,
earnings and claims in respect thereof in the Blocked Accounts shall be the sole
and exclusive property of the Agent, subject to the sole dominion and control of
the Agent, in accordance with the provisions of Section 2.19(b) hereof and of
the lock box agreement and Collecting Bank Agreements.
(d) The Borrower shall cause each Collecting Bank to execute and
deliver to the Agent a Collecting Bank Agreement and shall instruct each
Collecting Bank to transfer, prior to the close of business on any Business Day
on which Proceeds are received by such Collecting Bank, such Proceeds (to the
extent collected in good funds) in accordance with the terms of the Collecting
Bank Agreement.
(e) The Borrower shall pay to the Agent all fees, costs and expenses
which the Agent pays or incurs in connection with maintaining or opening the
Blocked Accounts, collecting and depositing for collection all checks and items
of payment received or delivered to any Collecting Bank for deposit in the
Blocked Accounts and shall reimburse the Agent for all amounts which the Agent
may pay to any Collecting Bank arising from obligations undertaken by the Agent
under the Collecting Bank Agreement.
Notwithstanding clauses (a) through (e) above, so long as the Gold
Consignment Documents and Intercreditor Agreement are in full force and effect,
the deposit account established and maintained by the Borrower with Sovereign
Bank (referred to as the "Cash Collateral Account" in the Cash Collateral
Agreement, as such term is defined in the Gold Consignment Agreement) holding
the Cash Deposits (as defined in the Gold Consignment Agreement) and the
investments of funds in such account in Time Deposits (as such term is defined
in the Cash Collateral Agreement), in each instance, pursuant to the Cash
Collateral Agreement shall not be subject to the collection, payment and lockbox
arrangements required by this Section 8.22.
Section 8.23. EMPLOYMENT AGREEMENTS. After the Closing Date, the
Borrower and the Parent shall obtain the written approval of the Agent prior to
entering into any Employment Agreement with an Affiliate of the Parent, the
Borrower or any of their respective Subsidiaries.
Section 8.24. ASSIGNMENT OF FACTORING CREDIT BALANCES AGREEMENTS.
Within 60 days of the Closing Date, the Borrower shall use commercially
reasonable efforts to obtain a duly executed Assignment of Factoring Credit
Balances Agreement, in form and substance satisfactory to the Agent, from the
credit insurance company under the Factor Guaranties. Contemporaneously with the
execution of any future Factor Guaranties, Borrower shall obtain duly executed
Assignment of Factoring Credit Balances Agreements, in form and substance
satisfactory to the Agent.
Section 8.25. MORTGAGE. Within 30 days of the Closing Date, the
Borrower shall deliver to the Agent an executed Second Amended and Restated
Mortgage.
Section 8.26. NEW STORES. The Borrower shall deliver written notice to
the Agent at least five business days (or such shorter period as the Agent may
agree) prior to the Borrower or any of its Subsidiaries opening or operating any
new fine jewelry department; provided, however, that the Borrower shall provide
the Agent with a list of projected fine jewelry department openings on a
biweekly basis.
Section 8.27. [Intentionally Omitted.]
---------------------
Section 8.28. INTERCOMPANY CHARGES AND MANDATORY DIVIDENDS RELATING TO
FINLAY MERCHANDISING. The Borrower shall cause all payments (net of amounts
(which may be paid in cash) equal to the reasonable, ordinary course operating
expenses of Finlay Merchandising including, without limitation, payroll expenses
for employees of Finlay Merchandising) to be made by the Borrower to Finlay
Merchandising in respect of amounts owed under the Trade Name
74
License Agreement and the Services Agreement to be made by means of appropriate
intercompany charges. Finlay Merchandising shall within thirty days (30)
following the end of each fiscal quarter during which payments to Finlay
Merchandising are made by the Borrower by means of intercompany charges, declare
and distribute to the Borrower as a dividend an amount equal to the amount of
such payments (net of reasonable operating expenses for the then current and
immediately succeeding calendar month (which may be paid in cash) of Finlay
Merchandising including, without limitation, payroll expenses for employees of
Finlay Merchandising).
Section 8.29. INTERCOMPANY CHARGES AND MANDATORY DIVIDENDS RELATING TO
eFINLAY. Each of the Borrower and Finlay Merchandising, as the case may be,
shall account for all charges, fees, rent and other amounts owing to it by
eFinlay pursuant to the eFinlay Agreements (the "eFinlay Agreement Expenses") as
an intercompany receivable and eFinlay shall pay the outstanding amount of the
eFinlay Agreement Expenses to the Borrower and Finlay Merchandising, as the case
may be, on a monthly basis to the extent cash is available (net of reasonable
operating expenses of eFinlay for the then current and immediately succeeding
calendar month (which may be paid in cash) including, without limitation,
payroll expenses for employees of eFinlay) (and any amounts not paid shall be
paid as soon as cash becomes available). eFinlay shall, within thirty days (30)
following the end of each fiscal quarter, declare and distribute to the Borrower
as a dividend any excess amounts retained by eFinlay after payment of the
eFinlay Agreement Expenses (net of reasonable operating expenses of eFinlay for
the then current and immediately succeeding calendar month (which may be paid in
cash) including, without limitation, payroll expenses for employees of eFinlay).
SECTION 9. NEGATIVE COVENANTS. The Borrower and the Parent covenant and
agree that, so long as any Revolving Loan or Letter of Credit Obligation is
outstanding or any Lender has any Revolving Commitment hereunder, they shall
not, and shall not suffer or permit any of their Subsidiaries (and with respect
to Section 9.11, shall not suffer or permit any ERISA Affiliate) to, without the
prior written consent of the Majority Lenders:
Section 9.1. CAPITAL EXPENDITURES. Make Capital Expenditures in any
Fiscal Year of the Parent ending on or about the dates set forth below in excess
of the corresponding amount set forth below:
Fiscal Year
Ending On or About Amount
------------------ ------
January 31, 2003 $15,000,000
January 31, 2004 $15,000,000
January 31, 2005 $17,000,000
January 31, 2006 $17,000,000
January 31, 2007 $18,000,000
January 31, 2008 $18,000,000
Section 9.2. LIENS. Create, incur, assume or suffer to exist any Lien
upon or defect in title to or restriction upon the use of any of its properties
or assets of any character, whether owned at the date hereof or hereafter
acquired, or hold or acquire any property or assets of any character under
conditional sales, finance lease or other title retention agreements, other
than:
(a) Liens in favor of the Agent or the Lenders pursuant to this
Agreement or the Security Documents;
(b) (i) Liens for taxes, assessments or governmental charges or levies,
provided payment thereof shall not at the time be required in accordance with
the provisions of Section 8.2 hereof;
75
(ii) deposits, Liens or pledges to secure payments of
workmen's compensation and other payments, unemployment and other
insurance, old-age pensions or other social security obligations, or
the performance of bids, tenders, leases, contracts (other than
contracts for the payment of money), public or statutory obligations,
surety, stay or appeal bonds, or other similar obligations arising in
the ordinary course of business;
(iii) mechanics', workmen's, repairmen's, warehousemen's,
vendors', suppliers', materialmen's or carriers' Liens, or other
similar Liens arising in the ordinary course of business and securing
sums which are not past due or which are being contested in good faith
(and there shall be no material risk of forfeiture of the property
subject to such Lien or foreclosure of such Lien), or deposits or
pledges to obtain the release of any such Liens;
(iv) zoning restrictions, easements, rights of way, licenses
and restrictions on the use of real property or minor irregularities in
title thereto, which do not materially impair the use of such property
in the normal operation of the business of the Parent or any of its
Subsidiaries or the value of such property for the purpose of such
business;
(c) existing Liens set forth in Schedule 9.2 hereof and any renewals
thereof, but not any increase in amount thereof and not any extension thereof to
other property;
(d) purchase money mortgages or other purchase money Liens (including,
without limitation, Capital Leases), or any refinancing of any thereof, in favor
of non-Affiliates of the Parent and its Subsidiaries upon any fixed or capital
assets hereafter acquired by the Borrower or any Subsidiary thereof constituting
real property interests or related machinery and Equipment, or purchase money
mortgages (including, without limitation, Capital Leases) on any such assets
hereafter acquired or existing at the time of acquisition of such assets by the
Borrower or any Subsidiary thereof, whether or not assumed, so long as (i) any
such Lien does not extend to or cover any other asset of the Borrower or any of
its Subsidiaries, (ii) such Lien secures the obligation to pay the purchase
price of such asset (or the obligation under such Capital Leases), interest
thereon and other customary incidental obligations relating thereto only, and
(iii) the original principal amount (or in the case of Capital Leases, notional
principal amount) of the aggregate Indebtedness secured by all such purchase
money Liens (and Capital Leases) shall not exceed $3,000,000 at any time;
(e) Liens in favor of HSBC Bank USA (formerly known as Marine Midland
Bank) pursuant to the Security and Pledge Agreement;
(f) Liens on Consignment Inventory in favor of any Person who retains
title to such Consignment Inventory;
(g) Liens granted to lessors or licensors of store locations with
respect to Fixtures and Equipment at store locations leased or licensed from
such lessors or licensors not to exceed $2,000,000 in the aggregate at any time;
(h) Liens for judgments, attachments, seizures or levies not to exceed
$500,000 in the aggregate outstanding at any time;
(i) Liens on property other than Inventory, Accounts or Proceeds of
either, not exceeding $100,000 in the aggregate outstanding at any time;
(j) Liens in favor of Sovereign Bank (or any successor or assignee
thereof) pursuant to the Gold Consignment Documents, subject to the provisions
of the Intercreditor Agreement and subject
76
to there being no filings of financing statements under the Uniform Commercial
Code with respect thereto other than financing statements containing collateral
descriptions in the form of Exhibit 9.2(j) hereto; and
(k) Liens in favor of the credit insurance provider on certain account
receivables pursuant to the Factor Guaranties.
Section 9.3. INDEBTEDNESS. Create, incur, assume or suffer to exist
contingently or otherwise, any Indebtedness (including, without limitation, any
intercompany Indebtedness), other than:
(a) Indebtedness under the Loan Documents;
(b) unsecured Current Liabilities incurred in the ordinary course of
business other than unsecured Current Liabilities for Indebtedness for Borrowed
Money (other than Current Liabilities for the Senior Notes in the 12-months
preceding the scheduled maturity date for such Senior Notes);
(c) Indebtedness of the Borrower or any Subsidiary thereof secured by
Liens permitted by Sections 9.2(b), (c) and (d) hereof;
(d) Indebtedness to the extent expressly permitted by Sections 9.4 and
9.16 hereof;
(e) [Intentionally Omitted];
(f) existing Indebtedness of the Borrower and the Parent and their
respective Subsidiaries listed on Schedule 9.3 hereof (but not any increase
thereof or any refinancings, renewals, extensions, replacements or exchanges of
any thereof except refinancings, renewals, extensions, replacements or exchanges
on terms no less favorable to the Borrower or any Subsidiary thereof than that
being refinanced, renewed, extended, replaced or exchanged);
(g) Indebtedness of the Borrower and the Parent arising under the Tax
Allocation Agreement;
(h) Indebtedness of the Borrower evidenced by the Senior Notes;
(i) Indebtedness of the Parent evidenced by the Senior Debentures;
(j) Indebtedness of the Borrower under (i) any Hedge Agreement of the
Borrower which is not speculative in nature, which is designed to hedge against
fluctuations in the price of gold, and which is in the ordinary course of
business in keeping with the Borrower's past practices and (ii) any Hedge
Agreement which is designed to hedge against fluctuations in interest rates;
provided, however, that in the case of any Hedge Agreement constituting an
interest rate swap for which a Credit Party has swapped away exposure on a fixed
rate in exchange for taking on exposure on a floating rate, such Hedge Agreement
covers a notional principal amount of not more than $50,000,000;
(k) Indebtedness of the Borrower or any Subsidiary thereof to lessors
or licensors of store locations with respect to fixtures and equipment located
at such store location not to exceed $2,000,000 in the aggregate outstanding at
any time;
(l) Indebtedness of the Borrower or any Subsidiary thereof to lessors
or licensors of store location with respect to Inventory purchased from such
lessors or licensors not to exceed $2,000,000 in the aggregate outstanding at
any time;
(m) Indebtedness of the Borrower or any Subsidiary thereof for
judgments, attachments, seizures or levies not to exceed $500,000 in the
aggregate outstanding at any time;
77
(n) to the extent such expenses have not been paid by the Borrower
through a dividend to the Parent permitted under Section 9.6 hereof,
Indebtedness of the Borrower to the Parent for expenses of the Parent incurred
in the ordinary course of business not to exceed in the aggregate in any Fiscal
Year of the Parent 0.25% of the Borrower's net sales as indicated in the
Borrower's audited annual financial statements for the immediately preceding
Fiscal Year (it being understood that such Indebtedness shall not be evidenced
by a promissory note, bond, debenture or other instrument);
(o) Indebtedness of the Borrower and its Subsidiaries not to exceed
$1,000,000 in the aggregate outstanding at any time;
(p) subject to Section 9.6(a)(ii) hereof, Indebtedness of the Parent
under the Shareholders Agreement and the Xxxxxx Employment Agreement (or under
any option agreement executed pursuant to the Long Term Incentive Plan); and
(q) [Intentionally Omitted.]
---------------------
(r) Indebtedness of the Borrower under the Gold Consignment Documents
not to exceed $50,000,000 at any time in respect of the aggregate outstanding
amount of Consigned Precious Metal (as such term is defined in the Gold
Consignment Agreement).
Nothing contained in this Section 9.3 shall be deemed to permit the Borrower or
any of its Subsidiaries to incur, create or suffer or permit to be outstanding
any Indebtedness for Borrowed Money owing by the Borrower to the Parent.
Section 9.4. LOANS, INVESTMENTS AND GUARANTEES. Lend or advance money
or credit to any Person, or invest in (by capital contribution, creation of
Subsidiaries or otherwise), or purchase or repurchase the stock or Indebtedness,
or all or a substantial part of the assets or properties, of any Person, or
enter into any exchange of securities with any Person, or guarantee, assume,
endorse or otherwise become responsible for (directly or indirectly or by any
instrument having the effect of assuring any Person's payment or performance or
capability) the Indebtedness, performance, obligations, stock or dividends of
any Person (each of the foregoing, an "Investment"), or agree to do any of the
foregoing, other than:
(a) endorsement of negotiable instruments for deposit or collection in
the ordinary course of business;
(b) Investments, subject to Control Letters in favor of Agent for the
benefit of Lenders or otherwise subject to a perfected security interest in
favor of Agent for the benefit of Lenders, in (i) marketable direct obligations
issued or unconditionally guaranteed by the United States of America or any
agency thereof maturing within one year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one year from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Ratings Group or Xxxxx'x Investors Service, Inc., (iii) certificates of
deposit maturing no more than one year from the date of creation thereof issued
by commercial banks incorporated under the laws of the United States of America,
each having combined capital, surplus and undivided profits of not less than
$300,000,000 and having a senior unsecured rating of "A" or better by a
nationally recognized rating agency (an "A Rated Bank"), (iv) time deposits
maturing no more than 30 days from the date of creation thereof with A Rated
Banks and (v) mutual funds that invest solely in one or more of the investments
described in clauses (i) through (iv) above;
(c) Investments representing stock or obligations issued to the Parent
or any of its Subsidiaries in settlement of claims against any other Person by
reason of a composition or readjustment of debt or a reorganization of any
debtor of the Parent or such Subsidiary;
78
(d) Investments representing the Indebtedness of any Person owing as a
result of the sale by the Borrower or any of its Subsidiaries in the ordinary
course of business of products or services (on customary trade terms);
(e) Investments in the stock of (i) any Subsidiary existing on the
Closing Date (other than the Sonab Entities, Investments in which are expressly
prohibited, except for existing investments) or (ii) any other Subsidiary
created with the prior written consent of the Majority Lenders, but for each of
the foregoing, not any additional investments therein other than additional
Investments approved in writing by the Majority Lenders and increases in
Investments solely by reason of increases in the retained earnings of such
Subsidiary;
(f) the Guaranties;
(g) Investments outstanding on the date hereof and described on
Schedule 9.4 hereto, but not any additional investments therein;
(h) Investments represented by the Blocked Accounts and the other bank
accounts, if any, permitted hereunder;
(i) Investments by the Borrower with respect to its officers, directors
or employees not to exceed at any time $20,000 in the aggregate to any one
individual or $150,000 in the aggregate outstanding at any time, plus (i)
advances to employees for travel and entertainment in the ordinary course of
business, (ii) advances to employees for relocation expenses not to exceed at
any time $50,000 in the aggregate to any one individual or $200,000 in the
aggregate at any one time outstanding, and (iii) advances to employees in
respect of bonuses actually earned by such employees so long as a Designated
Officer has certified in writing to the Agent that such bonuses were actually
earned by such employees and that at the time of each such advance or advances
no Default or Event of Default was continuing; provided, in each case, that such
Investments do not violate the Xxxxxxxx-Xxxxx Act of 2002;
(j) payments required pursuant to the Tax Allocation Agreement;
(k) advances to consignment vendors in the ordinary course of business
consistent with past practices (net of interim sales of such vendor's consigned
inventory) not to exceed $25,000,000 outstanding at any one time provided that
(i) the amount of such advances made to any one Person and its Affiliates does
not exceed (x) $10,000,000 (net of interim sales of such vendor's consigned
inventory) at any one time outstanding and (y) the amount outstanding at any
time will not exceed 50% of the book value at such time of such Person's (or
Affiliate's) "memo" or "consigned" inventory as shown on the Borrower's books or
computer records, (ii) within thirty (30) days following the end of each month,
at Agent's request, the Borrower shall deliver to the Agent a detailed Schedule
showing all outstanding advances under this Section 9.4(k) in form and content
satisfactory to the Agent and (iii) the Borrower shall put in place a system
satisfactory to the Agent to set appropriate credit limits, track its credit
experience and obtain financial information from Persons to whom advances are
made under this Section 9.4(k);
(l) Investments constituting Initial License Expense not exceeding
$1,500,000 in the aggregate in any Fiscal Year of the Parent;
(m) Investments as a result of any transaction permitted pursuant to
Section 9.6 hereof;
(n) Investments of the Borrower as a result of any Hedge Agreement
which is not speculative in nature, which is designed to hedge against
fluctuations in the price of gold and which is in the ordinary course of
business in keeping with the Borrower's past practices; and
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(o) Investments of the Borrower as a result of any other Hedge
Agreement which is not prohibited under the terms of this Agreement.
Section 9.5. MERGER, SALE OF ASSETS, DISSOLUTION, ETC. Enter into any
transaction of merger or consolidation, change its name, acquire all or a
substantial portion of the assets of any Person, or transfer, sell, assign,
lease, or otherwise dispose of (other than sales by the Borrower or any of its
Subsidiaries of Inventory in the ordinary course of business) all or any part of
its properties or assets, or any of its notes or Accounts (including, without
limitation, Eligible Receivables), or any stock or Indebtedness of the Borrower
or any of its Subsidiaries, or wind up, liquidate or dissolve, or agree to do
any of the foregoing, except:
(a) sales in the ordinary course of business of assets and properties
of the Borrower and its Subsidiaries no longer necessary for the proper conduct
of their respective businesses having a value, together with the value of all
other such property of the Borrower and its Subsidiaries so sold in the same
Fiscal Year of the Parent, of not greater than $250,000;
(b) sales by the Borrower and its Subsidiaries of worn out or obsolete
personal property of the Borrower or such Subsidiary having a value, together
with the value of all other such property of the Borrower and its Subsidiaries
so sold in the same Fiscal Year of the Parent, of not greater than $250,000 plus
sales of obsolete jewelry, watches or other merchandise which the Borrower
believes cannot be advantageously sold in the ordinary course of business;
(c) sales of Inventory, Equipment and Fixtures in connection with the
termination of License Agreements (or similar agreements or arrangements
regarding the operation of jewelry departments or stores by the Borrower) as to
any one or more locations, to the extent such Inventory, Equipment and Fixtures
were used or retained at such locations in the ordinary course of business;
(d) the abandonment of any assets and properties of the Borrower or any
of its Subsidiaries which are no longer useful in its business and cannot be
sold;
(e) the merger of a wholly-owned Domestic Subsidiary of the Borrower
with the Borrower (so long as the Borrower is the sole survivor of such merger)
or with another wholly owned Domestic Subsidiary of the Borrower or the transfer
or sale of any assets from any Subsidiary of the Borrower to the Borrower or to
a Domestic Subsidiary;
(f) upon thirty days prior written notice to the Agent, the Borrower
and any of its Subsidiaries may change its name provided that such entity
executes all documentation reasonably requested by the Agent (including, without
limitation, UCC financing statements) in order to protect the Agent's interest
in the Collateral or any other interest of the Agent under the Loan Documents;
(g) the sale, transfer or assignment of collateral subject to the
"Pledge Agreement" referred to in Section 9.2(e) hereof by virtue of the
exercise of remedies by the pledgee thereunder;
(h) the winding down and dissolution of Sonab, Sonab Holdings and Sonab
International; and
(i) assignments under, and in accordance with, the Factor Guaranties.
Section 9.6. DIVIDENDS, REDEMPTIONS AND OTHER PAYMENTS. (a) Declare or
make any dividend payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any of its capital stock, or
purchase, redeem, retire, defease or otherwise acquire for value any capital
stock of the Parent, the Borrower or such Subsidiaries or any other equity
securities or any warrants, rights or options to acquire any such capital stock
or other securities, whether now or hereafter outstanding, except that (and with
respect to the Parent, subject to Section 3.2(f)):
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(i) any wholly-owned Subsidiary of the Borrower may declare or
pay cash dividends to the Borrower or to any other wholly-owned
Subsidiary of the Borrower which is its shareholder;
(ii) so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom, (A) the Borrower
may declare or pay dividends to the Parent on an annual basis to pay
expenses of the Parent incurred in the ordinary course of business of
the Parent not to exceed in the aggregate in any Fiscal Year of the
Parent 0.25% of the Borrower's net sales as indicated in the Borrower's
audited annual financial statements for the immediately preceding
Fiscal Year and (B) the Borrower and/or the Parent may purchase,
repurchase, redeem, retire or acquire Equity Interests from former
employees, officers and directors pursuant to the Long Term Incentive
Plan, Employment Agreements, the Shareholders Agreement or other
written agreements permitted hereby and may make payments in respect of
promissory notes or other Indebtedness or evidence thereof issued or
incurred in connection with any such purchase, repurchase, redemption,
retirement or acquisition, and the Borrower may pay dividends to the
Parent in an amount sufficient to make such purchases, repurchases,
redemptions, retirements and acquisitions so long as the amount of such
purchases, repurchases, redemptions, retirements and acquisitions
(including, without limitation, amounts paid in respect of promissory
notes or other Indebtedness or evidence thereof issued or incurred in
connection with any such purchase, repurchase, redemption, retirement
or acquisition) does not exceed in the aggregate in any Fiscal Year the
sum of $1,000,000 plus the amount of cash received by the Parent from
employees, officers and directors in respect of purchases of stock
during such Fiscal Year; provided, however, that the portion, if any,
of such sum which is not applied to such purchases, repurchases,
redemptions, retirements or acquisitions (or to the payment of
dividends by the Borrower to the Parent therefor) in any Fiscal Year
may be applied to purchases, repurchases, redemptions, retirements or
acquisitions of Equity Interests from former employees of the Borrower
whose employment was terminated in such Fiscal Year (and for the
payment of dividends by the Borrower to Parent therefor) so long as
such application (and payment) is made during the first three months of
the immediately succeeding Fiscal Year, and any such portion so paid
during such first three months as permitted by this proviso shall not
be included in calculating the sum for such succeeding Fiscal Year;
(iii) the Parent may redeem, repurchase, retire or otherwise
acquire any Equity Interest of the Parent in exchange for, or out of
net proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Parent) of, other Equity Interests (other than
Disqualified Stock) of the Parent;
(iv) so long as no Default or Event of Default is continuing,
on any tax payment date, the Borrower may make payments to the Parent
of amounts required to be paid on such tax payment date under sections
4(c) and 5 of the Tax Allocation Agreement; provided, however, that (x)
no payment on any tax payment date made by the Borrower to the Parent
shall exceed the amount payable by the Parent to any taxing authority
on such tax payment date, and (y) in any taxable year (or portion
thereof), the aggregate amount payable by the Borrower to the Parent
under this Section 9.6(a)(iv) in respect of federal, state and local
income taxes shall not exceed the lesser of (A) the federal, state and
local income tax liability that would have been payable by the Borrower
for such taxable year (or portion thereof) determined as if the
Borrower had filed separate federal, state and local income tax returns
for such taxable year (or portion thereof) and for all previous taxable
years beginning after October 31, 1992, computed in accordance with
actual elections, conventions and other determinations with respect to
the Borrower reflected in the consolidated or combined returns of the
Parent and including any carryforwards of tax attributes from all prior
taxable years (as limited under the Code)
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and (B) the consolidated or combined federal, state and local income
tax liability of the consolidated or combined group that includes the
Borrower and the Parent. For purposes of subsection (y) above the
provisions relating to state and local income taxes shall only apply if
and to the extent the Borrower and the Parent file consolidated or
combined income tax returns in such jurisdictions;
(v) the Borrower may pay dividends to the Parent to make
principal or interest payments on, or to repurchase, acquire or redeem
Senior Debentures, in each case as permitted by Section 9.6(b) hereof;
provided, that immediately after giving effect to any such repurchase,
acquisition or redemption of Senior Debentures, the Borrower shall have
the ability to draw an additional Revolving Advance in the amount of at
least $15,000,000; and
(vi) the Borrower may pay dividends to the Parent for the
repurchase, acquisition or redemption by the Parent of up to $7,000,000
of its common stock in open market or privately negotiated transactions
(which may be with Affiliates of the Parent) and/or the payment of
dividends by the Parent during the period from the Closing Date to and
including September 29, 2003; provided, that immediately after giving
effect to any stock repurchase the Borrower shall have the ability to
draw an additional Revolving Advance in the amount of at least
$30,000,000; provided, further, that the Parent shall give the Agent
monthly notice, in arrears, of each repurchase made by it pursuant to
this clause (vi), specifying the amount of such repurchase and the
source from which the Borrower obtained the funds to be used to
effectuate such repurchase.
(b) Make any payment or prepayment of principal or interest on account
of, or purchase, defease, acquire or redeem, any Indebtedness for Borrowed Money
(or give any notice thereof or establish a sinking fund, reserve or like set
aside of funds or other property therefor) other than (i) the Obligations, (ii)
regular, scheduled payments by the Borrower and the Parent, respectively of
interest on, and required payments of principal of (in each case to the extent
due and payable), the Senior Notes and the Senior Debentures, respectively, and
(iii) payments of Indebtedness of the Borrower permitted under paragraphs (b),
(c), (d), (f), and (g) of Section 9.3, in each case, to the extent due and
payable and except that:
(i) [Intentionally Omitted];
(ii) the Borrower may, from time to time, repurchase, acquire
or redeem Senior Notes; provided, that such Senior Notes are
repurchased at prices deemed favorable by the Borrower's board of
directors; provided, further, that the amount of Senior Notes
repurchased under this clause (ii) and Senior Debentures repurchased
pursuant to the succeeding clause (iii) shall not exceed $25,000,000
plus the Additional Repurchase Amount in the aggregate;
(iii) the Parent may, from time to time, repurchase, acquire
or redeem Senior Debentures; provided, that such Senior Debentures are
repurchased at prices deemed favorable by the Parent's board of
directors; provided, further, that the amount of Senior Debentures
repurchased under this clause (iii) and Senior Notes repurchased
pursuant to the preceding clause (ii) shall not exceed $25,000,000 plus
the Additional Repurchase Amount in the aggregate; and
(iv) the Borrower may at any time and from time to time make
payments and prepayments under the Gold Consignment Documents.
Section 9.7. TRANSACTIONS WITH AFFILIATES. Except for transactions
specifically required or permitted by the terms of this Agreement (including,
without limitation, the transactions
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contemplated pursuant to the Tax Allocation Agreement, the Management Agreement,
the Shareholders Agreement, the Registration Rights Agreement, the Stock
Purchase Agreement, the Trade Name License Agreement and the Services Agreement,
in each case, as in effect on the Closing Date or as amended in accordance with
Section 9.12 hereof, the Parent's Restated Certificate of Incorporation in
effect on the Closing Date or as amended in accordance with Section 9.12 hereof
and the Indemnification Agreements or as amended in accordance with Section 9.12
hereof), enter into or perform any transaction, including, without limitation,
the purchase, leasing, sale or exchange of property or assets or the rendering
of any service, with any Affiliate of the Xxx Group or the Parent, except (i)
for any transaction which is in the ordinary course of business of the Borrower
and any Subsidiary thereof, and which transaction is upon fair and reasonable
terms no less favorable to the Borrower and such Subsidiary than each party to
such transaction could obtain in a comparable arm's length transaction with a
Person not an Affiliate of such Person, (ii) with respect to any transaction
between the Borrower and any of its Subsidiaries which is on terms more
favorable to the Borrower than the Borrower could obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Borrower or (iii)
for the eFinlay Agreements.
Section 9.8. BLOCKED ACCOUNTS. Suffer or permit (a) without the prior
written consent of the Agent, any Blocked Account to be closed or terminated, or
the Collecting Bank Agreement relating thereto to be terminated or no longer in
full force and effect, or (b) any deposit, checking or other account to be
maintained at any bank, savings and loan association or other financial
institution which accepts deposits, other than (i) Blocked Accounts, (ii)
payroll, disbursement and health benefit accounts, (iii) the Sovereign Cash
Collateral Account and (iv) the other accounts set forth on Schedule 11.19 which
such other accounts described in this clause (iv) shall not have an aggregate
balance at any time in excess of $500,000.
Section 9.9. MANAGEMENT COMPENSATION AND OTHER PAYMENTS. Except as
specifically permitted under Section 9.6 and 9.7 hereof, pay, directly or
indirectly, any management, consulting or similar fees, make any other payments
of any kind in respect of employment, management, consulting, servicing or
similar services or in respect of any non-competition or similar agreement or
make any other kind of payment of any nature to, any Affiliate of the Parent,
the Xxx Group or to any officer, director, member of management, stockholder or
partner of the Parent or any Subsidiary of the Parent or any Affiliate of any
thereof, other than (i) payments of salary and ordinary course of business
compensation (excluding bonuses and incentive compensation other than sales
commission) to full time employees of the Borrower in the ordinary course of
business and consistent with past practices and severance payments which have
accrued and become payable in the ordinary course of business of the Borrower
and the Parent, (ii) payments of bonuses and incentive compensation to full time
employees of the Borrower and its Domestic Subsidiaries so long as such bonuses
and incentive compensation (x) are consistent with the Borrower's historical
practices, and (y) are paid in accordance with Employment Agreements or the Long
Term Incentive Plan or, if not paid under an Employment Agreement or the Long
Term Incentive Plan, are paid in accordance with other policies a description of
which is attached as Schedule 9.9 hereto, as such policies may be amended,
supplemented or replaced from time to time with the approval of the Board of
Directors of the Borrower or Parent so long as no such amendment, supplement or
replacement represents a material increase in bonus levels or calculations,
(iii) so long as there shall be continuing no Default or Event of Default in the
payment of principal of any Revolving Advance or any interest thereon, (x) fees
payable to Xxxxxx X. Xxx Capital, LLC (or any Affiliate thereof) by the Borrower
pursuant to the terms of the Management Agreement, not exceeding $90,000 plus
reasonable expenses in the aggregate in any Fiscal Year and (y) amounts payable
by the Parent or the Borrower under the Registration Rights Agreement and to the
extent permitted by Section 9.6 hereof, under the Shareholders Agreement in each
case, as such payments are required pursuant to such documents as in effect on
the Closing Date, (iv) payments of fees, expense reimbursements or other amounts
to independent directors or consultants (which are not Affiliates of the Parent
or the Borrower) in the ordinary course of business and (v) amounts payable by
the Borrower and the Parent under the Indemnification Agreements.
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Section 9.10. COMPROMISE OF RECEIVABLES. Compromise or adjust any of
the Receivables or other accounts (or extend the time for payment thereof) or
grant any discounts, allowances or credits thereon other than, so long as there
exists no Default or Event of Default, discounts, adjustments, allowances and
credits granted with respect to accounts in the ordinary course of business.
Section 9.11. NONCOMPLIANCE WITH ERISA. (a) Engage in any transaction
in connection with which a Credit Party or any ERISA Affiliate could be
reasonably expected to be subject to either a material civil penalty assessed
pursuant to the provisions of Section 502(i) of ERISA or a material tax imposed
under the provisions of Section 4975 of the Code;
(b) adopt an amendment to any Pension Benefit Plan requiring the
provision of security under Section 307 of ERISA or Section 401(a)(29) of the
Code;
(c) terminate any Pension Benefit Plan under Section 4041(c) of ERISA
without the prior consent of the Agent;
(d) fail in any material respect to make payment when due (including
permissible extensions) of all amounts which, under the provisions of any
Employee Plan or Multiemployer Plan, it is required to pay as contributions
thereto or as premiums to the PBGC, or, with respect to any Pension Benefit
Plan, permit to exist any material "accumulated funding deficiency" (within the
meaning of Section 302 of ERISA and Section 412 of the Code); or
(e) enter into a new agreement or agreements that would obligate a
Credit Party or any ERISA Affiliate to make contributions to a Multiemployer
Plan subject to subtitle (e) of Title IV of ERISA in excess of $50,000 per year
or $250,000 in the aggregate during the term of this Agreement, or to create,
extend or increase an obligation to provide health or medical benefits for
retirees (other than at retiree's sole expense) of a Credit Party or an ERISA
Affiliate.
Section 9.12. AMENDMENT AND MODIFICATION OF CERTAIN DOCUMENTS. (a)
Directly or indirectly, amend, modify, supplement, waive compliance with, seek a
waiver under, or assent to noncompliance with, any term, provision or condition
of the Senior Note Indenture or any Senior Note, the Senior Debenture Indenture,
the pledge agreement thereunder or any Senior Debenture, the Tax Allocation
Agreement, the articles or certificate of incorporation or by-laws (other than
to increase the number of authorized shares of common stock of the Parent) of
the Parent, the Borrower or any Subsidiary thereof or any certificate of
designation of preferred stock of any thereof or, in a manner adverse to the
Agent or any Lender, any material term or provision of (i) any Employment
Agreement with any Person who is, without regard to such Employment Agreement or
duties or roles thereunder, an Affiliate of the Parent, the Borrower or any of
their respective Subsidiaries, (ii) the Shareholders Agreement, (iii) the
Registration Rights Agreement, (iv) the Management Agreement, (v) the
Indemnification Agreements, or (vi) any one or more of the Gold Consignment
Documents (other than modifying the advance rate percentages set forth in the
definition of "Consignment Limit" and modifying the percentage in clause (b) of
the definition of "Consignment Fixed Rate" to a percentage not exceeding three
percent (3%)).
(b) Directly or indirectly, amend, modify, supplement, waive compliance
with, seek a waiver under, or assent to noncompliance with, any material term or
provision of any other agreement, instrument or document to which the Parent or
any of its Subsidiaries is a party (including, without limitation, the Long Term
Incentive Plan) in a manner that will have a Material Adverse Effect.
Section 9.13. FISCAL YEAR. Change its Fiscal Year.
Section 9.14. CHANGE OF BUSINESS. Alter the nature of its business in
any material respect or except as provided in Sections 9.5(a), (b) and (c)
hereof, sell any Inventory other than Inventory sold under a License Agreement
and Unapproved License Agreements.
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Section 9.15. NO NEGATIVE PLEDGES. Enter into or become subject to,
directly or indirectly, including, without limitation, as a non-party Subsidiary
of a party to any agreement, any agreement other than agreements entered into on
or before the Closing Date (including, without limitation, the Restated
Certificate of Incorporation of the Parent, the Gold Consignment Documents, the
Senior Debenture Indenture and the Senior Note Indenture) (a) prohibiting or
restricting, in any manner (including, without limitation, by way of covenant,
representation or event of default), (i) the incurrence, creation or assumption
of any Indebtedness, or any Lien upon any property of any Credit Party, except
restrictions in a Capital Lease or other purchase money financing agreement
permitted hereunder relating to the asset financed and except restrictions in
any software or other intellectual property license agreement pertaining to such
licensed software or intellectual property thereunder, (ii) the sale,
disposition or pledge of any asset of any Credit Party, except restrictions in a
Capital Lease or other purchase money financing agreement permitted hereunder
relating to the asset financed thereunder, (iii) any investments of any Credit
Party, (iv) any Capital Expenditures by any Credit Party, (v) any acquisition,
merger or consolidation involving any Credit Party, (vi) any change in control
of any Credit Party, or (vii) any amendment or supplement to or waiver under
this Agreement or any other Loan Document or other document relating to the
Obligations, or (b) which provides that any default by any Credit Party which is
not a party to such agreement of any obligation not arising under such agreement
is a default under such agreement.
Section 9.16. RENTAL OBLIGATIONS. Incur, create, assume or permit to
exist, in respect of leases of real or personal property, (a) obligations in any
amount in respect of percentage rentals, except under the License Agreements, or
(b) rental obligations or other commitments thereunder (other than Capitalized
Lease Obligations) to make any direct or indirect payment, whether as rent or
otherwise, for fixed or minimum rentals (including minimum payments (and
excluding all other payments) under the License Agreements) in excess of (i)
$15,000,000 for the Parent and its Subsidiaries for any Fiscal Year.
Section 9.17. LEASE-BACKS. Enter into any arrangements, directly or
indirectly, with any Person, whereby the Parent or any Subsidiary thereof shall
sell or transfer any property, whether now owned or hereafter acquired, used or
useful in its business, in connection with the rental or lease of the property
so sold or transferred or of other property which the Parent or any Subsidiary
thereof intends to use for substantially the same purpose or purposes as the
property so sold or transferred.
Section 9.18. CAPITAL STOCK. Issue or sell, or permit any of its
Subsidiaries to issue or sell, any of its capital stock or any rights, warrants
or options to acquire any of its capital stock, or sell or otherwise dispose of,
or permit any of its Subsidiaries to sell or otherwise dispose of, any capital
stock of any of its Subsidiaries other than, subject to Section 10.1(j) hereof,
issuances or sales by the Parent of common stock or warrants or other rights to
purchase common stock of the Parent.
Section 9.19. DEBT INCURRENCE AND PAYMENTS TO THE PARENT. Incur, agree
to incur or suffer to exist the incurrence of any obligation to or for the
account of the Parent or any Subsidiary thereof or make, agree to make or suffer
to exist the making of any (i) payment, (ii) distribution or (iii) transfer or
other disposition of assets or property, in each instance of any kind (whether
in cash, assets, stock or otherwise), to or for the account of the Parent or any
Subsidiary thereof (whether in the form of a dividend, loan, return of capital,
management or consulting fee or otherwise), other than as expressly permitted
under this Agreement.
Section 9.20. THE PARENT. Except as permitted under Section 9.6 hereof,
the Parent shall engage in no business other than ownership of stock of the
Borrower, and shall not own, acquire or lease any property, other than such
stock.
Section 9.21. INDENTURE GUARANTEES. Other than as set forth in Schedule
9.21 hereto, engage in any transaction (or series of related transactions) which
would cause any Subsidiary of the Parent to be obligated to guarantee the
obligations of the Parent or the Borrower under the Senior Debentures or the
Senior Notes, as the case may be.
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Section 9.22. [Intentionally Omitted.]
Section 9.23. [Intentionally Omitted.]
---------------------
Section 9.24. SONAB. Each of Sonab, Sonab Holdings and Sonab
International shall not engage in any business or own any assets (other than in
respect of winding down, dissolution or liquidation).
SECTION 10. DEFAULTS AND REMEDIES.
Section 10.1. EVENTS OF DEFAULT. If any one or more of the following
events (herein called "Events of Default") shall occur for any reason whatsoever
(and whether such occurrence shall be voluntary or involuntary or come about or
be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default shall be made in the due and punctual payment of the
principal of the Revolving Loan or in the due and punctual reimbursement of any
payments made by any L/C Issuer under any Letter of Credit or of any payments
made by any Agent or any Lender to such L/C Issuer in respect of indemnity or
guaranty obligations of such Agent or Lender to such L/C Issuer with respect to
a Letter of Credit, when and as the same shall become due and payable whether
pursuant to Section 2 or 2A, at maturity, by acceleration or otherwise; or
(b) default shall be made in the due and punctual payment of any amount
of interest on the Loan or of any fee or other amount owing to any Lender, any
L/C Issuer, or the Agent pursuant to any of the Loan Documents, when and as such
amount of interest, fee or other amount shall become due and payable and such
default shall continue unremedied for three (3) days; or
(c) default shall be made in the performance or observance of, or shall
occur under, any covenant, agreement or provision (other than as described in
clause (a) or (b) above) contained in this Agreement or any other Loan Document
or in any instrument or document evidencing or creating any obligation, guaranty
or Lien in favor of the Agent or delivered to the Lenders, any L/C Issuer or the
Agent in connection with or pursuant to this Agreement or any Obligations, and,
except in the case of the agreements and covenants contained in Sections 8.1,
8.2, 8.3, 8.6 through and including 8.14, 8.16, 8.17 and 8.19 through and
including 8.22 and Section 9 (as to each of which Sections no notice or grace
period shall apply), continuance of such default for a period of thirty (30)
days following Written Notice to the Borrower, or if this Agreement or any other
Loan Document or any such other instrument or document shall terminate or be
terminated or become void or unenforceable for any reason whatsoever or any Lien
created under any Security Document shall cease to be a valid and perfected
first priority Lien (except as otherwise permitted by this Agreement) in any of
the Collateral purported to be covered thereby; or
(d) (i) one or more defaults shall occur in the payment of any
principal, interest or premium with respect to any Indebtedness for Borrowed
Money or any obligation which is the substantive equivalent of Indebtedness for
Borrowed Money (including, without limitation, obligations under conditional
sales contracts, Capital Leases and the like) of which any Credit Party is
principal, guarantor or other surety, and such default shall continue for more
than the period of grace, if any, specified therefor in the documents governing
same, or (ii) one or more defaults shall occur under any agreement or instrument
under or pursuant to which any such Indebtedness for Borrowed Money or
obligation may have been issued, created, assumed, guaranteed or secured by any
Credit Party and, in the case of clause (ii) of this Subsection 10.1(d), such
default shall continue for more than the period of grace, if any, therein
specified, or (iii) any such Indebtedness for Borrowed Money or obligation shall
be declared due and payable prior to the stated maturity thereof; and the
aggregate principal amount of all such Indebtedness for Borrowed Money and
obligations as to which any such matters under clauses (i), (ii) or (iii) occur
shall exceed $500,000; or
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(e) any information contained in any Borrowing Base Certificate is
untrue or incorrect in any respect, or any representation, warranty or other
statement of fact given herein or in any writing, certificate, report or
statement at any time furnished to any Lender, any L/C Issuer or the Agent
pursuant to or in connection with this Agreement, any other Loan Document, or
any other document or instrument furnished to any Lender, any L/C Issuer or the
Agent relating to the transactions contemplated by this Agreement (other than a
Borrowing Base Certificate, and otherwise including, without limitation, a
Borrower's Certificate), shall be false in any material respect when given or
deemed given; or
(f) any Credit Party shall (i) be unable to pay its debts generally as
they become due or admit in writing its inability to pay its debts generally;
(ii) file a petition to take advantage of any insolvency act; (iii) make an
assignment for the benefit of its creditors; (iv) commence a proceeding for the
appointment of a receiver, trustee, liquidator or conservator of itself or of
the whole or any substantial part of its property; (v) file a petition or answer
seeking reorganization or arrangement or similar relief under the Federal
Bankruptcy Code or any other applicable law or statute of the United States of
America, any state or commonwealth thereof or otherwise; or (vi) by appropriate
proceedings of the board of directors of any Credit Party or other governing
body, authorize the filing of any such petition, making of such assignment or
commencement of such a proceeding; or
(g) a court of competent jurisdiction shall enter an order, judgment or
decree appointing a custodian, receiver, trustee, liquidator or conservator of
any Credit Party or of the whole or any substantial part of its properties, or
approve a petition filed against any Credit Party seeking reorganization or
arrangement or similar relief under the Federal Bankruptcy Code or any other
applicable law or statute of the United States of America, any state or
commonwealth thereof or otherwise; or if, under the provisions of any other law
for the relief or aid of debtors, a court of competent jurisdiction shall assume
custody or control of any Credit Party or of the whole or any substantial part
of its properties; or if there is commenced against any Credit Party any
proceeding for any of the foregoing relief and such proceeding or petition
remains undismissed for a period of thirty (30) days; or if any Credit Party by
any act indicates its consent to or approval of any such proceeding or petition;
or
(h) (i) a final judgment shall be rendered against a Credit Party
which, by itself or with other outstanding final judgments against such Credit
Party, exceeds in the aggregate $500,000 and if, within thirty (30) days after
entry thereof, such judgment shall not have been discharged or execution thereof
stayed pending appeal, or if, within thirty (30) days after the expiration of
any such stay, such judgment shall not have been discharged; or (ii) any of the
assets of a Credit Party shall be attached, seized, levied upon or subject to an
injunction, execution, writ or distress warrant and shall remain unstayed or
undismissed for a period of thirty (30) days, which by itself or together with
all other attachments, seizures, levies, injunctions, executions, writs or
distress warrants against properties of such Credit Party remaining unstayed or
undismissed for a period of thirty (30) days, is for an amount in excess of
$500,000; or (iii) any final non-monetary judgment or order shall be rendered
against a Credit Party that might reasonably be expected to have a Material
Adverse Effect and if, within thirty (30) days after entry thereof, such
non-monetary judgment or order shall not have been discharged or execution
thereof stayed pending appeal, or if, within thirty (30) days after the
expiration of any such stay, such judgment or order shall not have been
discharged; or
(i) (i) a Reportable Event shall have occurred with respect to a
Pension Benefit Plan other than a Reportable Event as to which the provision of
30 days notice to the PBGC is waived under applicable provisions;
(ii) any Credit Party or any ERISA Affiliate or an
administrator of any Pension Benefit Plan shall have filed a notice of
intent to terminate a Pension Benefit Plan in a "distress termination"
under the provisions of Section 4041(c) of ERISA;
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(iii) any Credit Party or any ERISA Affiliate or an
administrator of a Pension Benefit Plan shall have received a notice
that the PBGC has instituted proceedings to terminate (or appoint a
trustee to administer) a Pension Benefit Plan;
(iv) any other event or condition exists which might
reasonably be expected, in the reasonable opinion of the Majority
Lenders, to constitute grounds under the provisions of Section
4042(a)(1) or (2) of ERISA for the termination of (or the appointment
of a trustee to administer) any Pension Benefit Plan by the PBGC;
(v) any Credit Party or any ERISA Affiliate has incurred or is
likely to incur a liability under the provisions of Section 4063, 4064
or 4201 of ERISA;
(vi) any Person shall engage in any transaction in connection
with which any Credit Party or any ERISA Affiliate could be subject to
either a civil penalty assessed pursuant to the provisions of Section
502(i) of ERISA or a tax imposed under the provisions of Section 4975
of the Code; or
(vii) any Credit Party or any ERISA Affiliate fails to pay the
full amount of any installment due under Section 412(m) of the Code or
any "accumulated funding deficiency" (within the meaning of Section 302
of ERISA and Section 412 of the Code) shall exist with respect to any
Pension Benefit Plan;
and in each case in clauses (i) through (vii) above, in the opinion of the
Majority Lenders, such event or condition, together with all other such events
or conditions, could reasonably be expected to subject a Credit Party or any
ERISA Affiliate to any tax, penalty or other liabilities which in the aggregate
would be material in relation to the business, operations, liabilities, assets,
properties, prospects or condition (financial or otherwise) of such Credit Party
or such ERISA Affiliate; or
(j) a Change of Control shall occur; or
(k) Borrower or Parent shall suspend the operation of a material
portion of its business as presently conducted or there shall occur the loss,
theft, substantial damage to, condemnation of, exercise of right of eminent
domain with respect to or destruction of, any Collateral not fully covered by
insurance (except for deductibles), which by itself or with other such losses,
thefts, damage, condemnation or destruction of, or exercise of right of eminent
domain with respect to, Collateral, shall constitute a Material Adverse Effect;
or
(l) (A) (i) any Unapproved License Agreement or License Agreement shall
be cancelled, terminated (other than termination at the end of the originally
scheduled or renewed or extended term of an Unapproved License Agreement or
License Agreement) or no longer in full force or effect (excluding any License
Agreement which continues to be an arrangement approved in writing by the Agent,
whether or not such approval has been rescinded) or the licensor or licensors
under such Unapproved License Agreement or License Agreement shall be debtors
under any Chapter of the Federal Bankruptcy Code (any of the foregoing events, a
"License Termination Event"), (ii) as of the date three months following such
License Termination Event, the excess of (x) the amount of the gross revenues of
the Borrower arising from such Unapproved License Agreement or License Agreement
plus the gross revenues arising from Unapproved License Agreements and License
Agreements as to which previous License Termination Events shall have occurred
during the period beginning on the Closing Date and ending on the date of
determination (gross revenues being calculated by the Agent, in the case of any
Unapproved License Agreement or License Agreement which had been in effect for
at least twelve calendar months as of the end of such period, for such period of
twelve calendar months, and, in the case of any Unapproved License Agreement or
License Agreement which had been in effect for less than twelve calendar months
as of the end of such period, on a seasonally adjusted twelve month pro forma
basis based upon results for the number of full calendar months during which
such Unapproved License
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Agreement or License Agreement was in effect), over (y) the amount of gross
revenues of the Borrower arising from any Unapproved License Agreements and
License Agreements entered into within the period beginning on the Closing Date
and ending on such date of determination, and remaining in full force and effect
as of such date of determination (gross revenues being calculated by the Agent,
in the case of any Unapproved License Agreements or License Agreements which
have been in effect for at least twelve months, on a seasonally adjusted twelve
month pro forma basis based upon results for the number of full calendar months
during which such Unapproved License Agreement or License Agreement was in
effect, and, in the case of any Unapproved License Agreement or License
Agreement which has been in effect for less than twelve months, based upon the
Borrower's internally generated projection of gross revenues for such Unapproved
License Agreement or License Agreement for the twelve month period following the
first date of operation under such Unapproved License Agreement or License
Agreement as delivered to the Agent under Section 8.19(b) hereof) shall equal or
exceed 10% of the gross revenues of the Borrower for the period of twelve
consecutive full calendar months (treating the month ending on the last Saturday
of January as a full calendar month) ending on or nearest preceding such date of
determination and (iii) such License Termination Event shall represent a
Material Adverse Effect or (B) there shall occur a License Termination Event
with respect to an Unapproved License Agreement or License Agreement that
accounted for, in any fiscal period of twelve consecutive full calendar months
(treating the month ending on the last Saturday of January as a full calendar
month), more than 20% of the gross revenues of the Borrower; or
(m) any "Event of Default" under and as defined in the Gold Consignment
Agreement shall occur;
then, and in any such event and at any time thereafter, if such or any other
Event of Default shall then be continuing:
(A) either or both of the following actions may be
taken: (i) the Agent may, at its option, or, the Agent shall,
upon the direction of the Majority Lenders, declare any
obligation to lend or issue or cause the issuance of Letters
of Credit hereunder terminated, whereupon such obligation to
make further loans or issue or cause the issuance of Letters
of Credit hereunder, as the case may be, shall terminate
immediately, and (ii) the Agent may, at its option, or, the
Agent shall, upon the direction of the Majority Lenders,
declare any or all of the Obligations to be due and payable,
and the same, all interest accrued thereon and all other
obligations of the Borrower to the Agent, each L/C Issuer and
the Lenders under or in connection with the Loan Documents
shall forthwith become due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived, anything contained herein or in any
instrument evidencing the Obligations to the contrary
notwithstanding; provided, however, that notwithstanding the
above, if there shall occur an Event of Default under
paragraph (f) or (g) above (other than under clause (i) of
paragraph (f)), then the obligation of the Lenders to lend and
of any L/C Issuer to issue or cause the issuance of any
Letters of Credit hereunder shall automatically terminate and
any and all of the Obligations shall be immediately due and
payable without any action by the Agent, any L/C Issuer or any
Lender;
(B) the Agent shall have and may exercise all rights
and remedies of a mortgagee or a secured party under the UCC
in effect in the State of New York at such time, whether or
not applicable to the affected Collateral, and otherwise,
including, without limitation, the right to foreclose the
Liens granted herein or in any of the Security Documents by
any available judicial procedure and/or to take possession of
any or all
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of the Collateral, the other security for the Obligations and
the books and records relating thereto, with or without
judicial process; for the purposes of the preceding sentence,
the Agent may enter upon any or all of the premises where any
of the Collateral, such other security or books or records may
be situated and take possession and remove the same therefrom;
and
(C) the Agent shall have the right, in its sole
discretion, to determine which rights, Liens or remedies it
shall at any time pursue, relinquish, subordinate, modify or
take any other action with respect thereto, without in any way
modifying or affecting any of them or any of the Lenders' or
any L/C Issuer's rights hereunder; and any moneys, deposits,
Accounts (including, without limitation, Eligible
Receivables), balances or other property which may come into
any Lender's, any L/C Issuer's or the Agent's hands at any
time or in any manner, may be retained by such Lender, any L/C
Issuer or the Agent and applied to any of the Indebtedness of
the Credit Parties to the Agent any L/C Issuer and the Lenders
hereunder.
Section 10.2. SUITS FOR ENFORCEMENT. In case any one or more Events of
Default shall occur and be continuing, the Agent on behalf of the Agent, each
L/C Issuer and the Lenders may proceed to protect and enforce their rights or
remedies either by suit in equity or by action at law, or both, whether for the
specific performance of any covenant, agreement or other provision contained
herein or in any document or instrument delivered in connection with or pursuant
to this Agreement or any other Loan Document, or to enforce the payment of the
Obligations or any other legal or equitable right or remedy.
Section 10.3. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon the Lenders, any Issuer Lender or the Agent is intended to be
exclusive of any other right or remedy contained herein or in any instrument or
document delivered in connection with or pursuant to this Agreement or any other
Loan Document, and every such right or remedy shall be cumulative and shall be
in addition to every other such right or remedy contained herein and therein or
now or hereafter existing at law or in equity or by statute, or otherwise.
Section 10.4. RIGHTS AND REMEDIES NOT WAIVED. No course of dealing
between any of the Credit Parties and any Lender, any L/C Issuer or the Agent or
any failure or delay on the part of any Lender, any L/C Issuer or the Agent in
exercising any rights or remedies hereunder shall operate as a waiver of any
rights or remedies of the Lenders, any L/C Issuer or the Agent and no single or
partial exercise of any rights or remedies hereunder shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
Section 10.5. APPLICATION OF PROCEEDS. After the occurrence of an Event
of Default and acceleration of the Obligations as herein provided, the proceeds
of the Collateral and of property of Persons other than the Credit Parties
securing the Obligations and collections from each Guaranty shall be applied by
the Agent to payment of the Obligations in the following order, unless a court
of competent jurisdiction shall otherwise direct:
(i) FIRST, to payment of all costs and expenses of the Agent,
each L/C Issuer and the Lenders incurred in connection with the
preservation, collection and enforcement of the Obligations or any
Guaranties, or of any of the Liens granted to the Agent pursuant to the
Security Documents or otherwise, including, without limitation, any
amounts advanced by the Agent or the Lenders to protect or preserve the
Collateral;
(ii) SECOND, to payment of that portion of the Obligations
constituting accrued and unpaid interest and fees and indemnities
payable under Sections 2, 2A and 3
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hereof, ratably amongst the Agent, each L/C Issuer and the Lenders in
accordance with the proportion which the accrued interest and fees and
indemnities payable under Sections 2, 2A and 3 hereof constituting the
Obligations owing to the Agent, each L/C Issuer and each such Lender at
such time bears to the aggregate amount of accrued interest and fees
and indemnities payable under Sections 2, 2A and 3 hereof constituting
the Obligations owing to the Agent, each L/C Issuer and all of the
Lenders at such time until such interest, fees and indemnities shall be
paid in full;
(iii) THIRD, to the Agent in an amount equal to the then
aggregate contingent Letter of Credit Obligations (to the extent that
such obligations exceed Letter of Credit Cash Collateral securing the
payment of same) to be held by the Agent for the payment of such Letter
of Credit Obligations when and if due and payable;
(iv) FOURTH, to payment of the principal of the Obligations
(which shall exclude all contingent Letter of Credit Obligations and
shall include all the other unpaid Letter of Credit Obligations),
ratably amongst the Lenders and each L/C Issuer in accordance with the
proportion which the principal amount of such Obligations owing to each
such Lender and L/C Issuer bears to the aggregate principal amount of
such Obligations owing to all of such Lenders and L/C Issuers until
such principal of such Obligations shall be paid in full;
(v) FIFTH, to the payment of all other Obligations, ratably
amongst the Lenders in accordance with the proportion which the amount
of such other Obligations owing to each such Lender bears to the
aggregate principal amount of such other Obligations owing to all of
the Lenders until such other Obligations shall be paid in full; and
(vi) SIXTH, the balance, if any, after all of the Obligations
has been satisfied, shall, except as otherwise provided in the Security
Documents, be deposited by the Agent in an operating account of the
Borrower with the Agent designated by the Borrower, or paid over to
such other Person or Persons as may be required by law.
In the event that the amount of monies received by the Agent under
clause (iii) above with respect to a Letter of Credit for which there are
contingent Letter of Credit Obligations at the time of the Agent's receipt of
such monies shall, together with any Letter of Credit Cash Collateral securing
such contingent Letter of Credit Obligations which is not securing other Lenders
Debt, exceed the amount of actual payments the applicable L/C Issuer shall have
made with respect to such Letter of Credit after the Agent's receipt of such
monies, which determination shall be made after such Letter of Credit has been
terminated or has expired, then the Agent shall apply such excess monies and
Letter of Credit Cash Collateral in accordance with this Section 10.5.
SECTION 11. REPRESENTATIONS AND WARRANTIES.
Each of the Parent and the Borrower hereby represents and warrants as
follows (which representations and warranties shall survive the execution and
delivery of this Agreement and the making of each Revolving Advance and shall be
deemed to be incorporated in each Borrower's Certificate submitted to the Agent
pursuant to Section 2.4 hereof, and shall be deemed repeated and confirmed with
respect to, and as of the date of (except that a representation or warranty
expressly made as of a specific date shall be deemed repeated and confirmed as
of such date), each borrowing hereunder (whether requested by Borrower or deemed
requested by Borrower) and of each issuance of a Letter of Credit):
Section 11.1. CORPORATE STATUS. (a) Each Credit Party is a duly
organized and validly existing corporation in good standing under the laws of
the state of its incorporation with
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perpetual corporate existence, and has the corporate power and authority to own
its properties and to transact the business in which it is engaged or presently
proposes to engage.
(b) Each Credit Party is qualified as a foreign corporation and in good
standing in each other jurisdiction in which it owns or leases property of a
nature, or transacts business of a type, that would make such qualification
necessary, except where the failure to so qualify would not have a Material
Adverse Effect.
(c) The capital stock of the Borrower and its subsidiaries is owned as
set forth on Schedule 11.1 hereto (which shall be updated from time to time upon
the formation of any new Subsidiary of the Parent and delivered to the Agent and
each Lender). The capital stock of the Borrower and its Subsidiaries is owned
free and clear of all Liens, except (i) Liens in favor of the Agent for the
benefit of the Lenders and (ii) with respect to the capital stock of the
Borrower, Liens in favor of the trustee under the Senior Debenture Indenture.
(d) None of the Credit Parties has any Subsidiaries except as set forth
on Schedule 11.1 hereto, which Schedule 11.1 correctly sets forth the name of
each such Subsidiary, its jurisdiction of incorporation and a statement of the
outstanding capitalization and ownership of capital stock of each such
Subsidiary as of the date of delivery of such Schedule 11.1. Except as set forth
on Schedule 11.1, other than Finlay Jewelry, Inc., Finlay Merchandising and
eFinlay, no Subsidiary of the Borrower engages in any business operations or
owns any real or personal property.
Section 11.2. POWER AND AUTHORITY. Each of the Credit Parties has the
corporate power and authority to execute, deliver and perform the terms and
provisions of this Agreement and the other Loan Documents to which it is a party
and all instruments and documents delivered by it pursuant hereto and thereto
and each of the Credit Parties has duly taken or caused to be duly taken all
necessary corporate action (including, without limitation, the obtaining of any
consent of stockholders required by law or its certificate of incorporation or
by-laws), to authorize the execution, delivery and performance of this Agreement
and each other Loan Document, in each case to which it is a party, and the
instruments and documents delivered by it pursuant hereto and thereto. Each of
this Agreement, the other Loan Documents, and each of the other instruments and
documents executed and delivered by any of the Credit Parties pursuant hereto
and thereto to which it is a party constitutes a legal, valid and binding
obligation of such Person, and is enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and by general equity principles.
Section 11.3. NO VIOLATION OF AGREEMENTS. None of the Credit Parties is
in violation of any provision of its certificate or articles of incorporation,
as the case may be, or its by-laws or is in default under any indenture,
mortgage, deed of trust, agreement or other instrument to which any of them is a
party or by which any of them may be bound, which default is reasonably likely
to have a Material Adverse Effect. Neither the execution and delivery of this
Agreement, the other Loan Documents, or any of the instruments and documents to
be delivered pursuant hereto or thereto, the consummation of the transactions
herein and therein contemplated nor the compliance with any of the provisions
hereof or thereof, will violate any provision of the certificate or articles of
incorporation, as the case may be, or by-laws of any Credit Party or any law or
regulation, or any order or decree of any court or governmental instrumentality,
or will (i) conflict with, or result in the breach of, or constitute a default
or permit termination under, any material lease, indenture, mortgage, deed of
trust, agreement or other instrument to which any Credit Party is a party or by
which any of them or their respective properties may be bound, or (ii) except
for (x) Liens in favor of the Agent for the benefit of the Lenders and (y) Liens
in favor of HSBC Bank USA pursuant to the Security and Pledge Agreement covering
the capital stock of the Borrower, result in the creation or imposition of any
Lien on any property of any Credit Party.
Section 11.4. NO LITIGATION. (a) There are no actions, suits or
proceedings pending, or, to the best knowledge of the Parent or the Borrower
threatened, against any of the Credit Parties or any of
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their respective Subsidiaries before any court, arbitrator or governmental or
administrative body or agency which challenge the validity or propriety of the
transactions contemplated under this Agreement, the other Loan Documents, or the
documents, instruments and agreements executed or delivered in connection
herewith, therewith or related thereto, and which, if adversely determined,
might reasonably be expected to have a Material Adverse Effect.
(b) No Credit Party or any Subsidiary thereof is in default in any
material respect under any applicable statute, rule, order, decree or regulation
of any court, arbitrator or governmental body or agency having jurisdiction over
such Credit Party or Subsidiary.
(c) No judgment, order, injunction or other similar restraint with
respect to any Credit Party or any Subsidiary thereof exists which prohibits any
of the other transactions contemplated hereby or in connection therewith or
herewith.
Section 11.5. GOOD TITLE TO PROPERTIES. (a) Except as set forth on
Schedule 11.5 hereto, neither the Credit Parties nor any of their respective
Subsidiaries own title to any real estate. Schedule 11.5 hereto correctly
identifies, categorized by the Borrower or Subsidiary of the Borrower, each
parcel of real estate leased or owned by or to the Borrower or any Subsidiary of
the Borrower, together in each case with an accurate street address and
description of the use of such parcel, and each other interest in real property
owned, leased or granted to or held by the Borrower or any Subsidiary of the
Borrower. All real property leased or owned by the Borrower and its Subsidiaries
is set forth on Schedule 11.5. Neither the Borrower nor its Subsidiaries is
lessor under any leases other than as set forth on Schedule 11.5. With respect
to each such leased property (it being understood that the provisions of clauses
(i) and (iii) below shall only apply to leases covering entire facilities or
structures and not space leases) except as set forth on Schedule 11.5:
(i) no structure owned or leased by the Borrower or any
Subsidiary of the Borrower fails to conform in any material respect
with applicable ordinances, regulations, zoning laws and restrictive
covenants (including in any such case and without limitation those
relating to environmental protection) nor encroaches upon property of
others, nor is any such real property encroached upon by structures of
others in any case in any manner that would reasonably likely have a
Material Adverse Effect;
(ii) no charges or violations have been filed, served, made or
threatened, to the knowledge of the Borrower and its Subsidiaries,
against or relating to any such property or structure or any of the
operations conducted at any such property or structure, as a result of
any violation or alleged violation of any applicable ordinances,
requirements, regulations, zoning laws or restrictive covenants
(including in any such case and without limitation those relating to
environmental protection) or as a result of any encroachment on the
property of others where the effect of same is reasonably likely to
have a Material Adverse Effect;
(iii) other than pursuant to applicable laws, rules,
regulations or ordinances, covenants that run with the land or
provisions in the applicable leases or matters described on Schedule
11.5, there exists no restriction on the use, transfer or mortgaging of
any such property;
(iv) the Borrower and each of its Subsidiaries has adequate
permanent rights of ingress to and egress from any such property used
by it for the operations conducted thereon;
(v) there are no developments affecting any of the real
property or interests therein identified on Schedule 11.5 pending or
threatened which might reasonably be
93
expected to curtail or interfere in any material respect with the use
of such property for the purposes for which it is now used;
(vi) neither the Borrower nor any of its Subsidiaries has any
option (other than under any lease disclosed on Schedule 11.5) in, or
any right or obligation to acquire any interest in, any real property;
(vii) all permits, licenses and approvals from governmental
bodies, agencies or authorities having jurisdiction over each such
property which are necessary and required to be obtained by the tenant
to permit the use and occupancy of such property for the purposes for
which it is now used have been duly and validly issued and are in full
force and effect, except for permits, licenses or approvals which, if
not in full force and effect would not have a Material Adverse Effect;
(viii) the Borrower or its Subsidiaries have all the right,
title and interest of the lessee in each such lease and presently
occupy the property leased by them as lessee under each such lease to
the extent not subleased; no consent under any such lease is necessary
for the consummation of the transactions contemplated hereby; no event
has occurred which (with the giving of notice or passage of time or
both) would impair any right of such party to exercise and obtain the
benefits of any options contained in any such lease; and there is no
default under or any reasonable basis for acceleration or termination
of, nor has any event occurred which (with the giving of notice or
passage of time or both) would constitute a default under, any such
lease, except for any such default which would not have a Material
Adverse Effect; and
(ix) municipal water service, storm sewer, sanitary sewer
facilities, and telephone, electric and/or gas service are available to
serve all parcels of real property identified on Schedule 11.5 at the
lot lines of such parcels, except where the failure to have such
availability would not have a Material Adverse Effect.
(b) The buildings, improvements and fixtures, if any, of the Borrower
and its Subsidiaries are in all material respects structurally sound with no
known material defects and are in good operating condition and repair, normal
wear and tear excepted.
(c) Neither the whole nor any portion of the property or leaseholds of
the Borrower or any of its Subsidiaries described on Schedule 11.5 is subject to
any governmental decree or order to be sold or is being condemned, expropriated
or otherwise taken by any governmental body or other entity with or without
payment of compensation therefor, nor has any such condemnation, expropriation
or taking been proposed to the Borrower or any of its Subsidiaries.
(d) Each of the Borrower and its Subsidiaries owns good and marketable
title to, or valid leasehold interests in or license rights in, all of the
property and assets necessary to properly conduct its business subject to no
Liens except the Liens permitted pursuant to Section 9.2 hereof.
(e) As to any fee simple title any of the Credit Parties and their
respective Subsidiaries shall hereafter acquire, each of them shall be deemed,
as of the date of such acquisition and as of the date of each Revolving Advance
thereafter to have repeated the representations and warranties contained in (a)
through (d) above with respect to such property.
Section 11.6. FINANCIAL STATEMENTS AND CONDITION. (a) Each of the
Financial Statements presents fairly in accordance with GAAP (i) the financial
position of the Parent and its Subsidiaries as of the date of such financial
statements and (ii) the results of operations of the Parent and its Subsidiaries
for such period. Neither the Parent nor its Subsidiaries had any material direct
or indirect contingent liabilities as of the date of the Financial Statements
which are not reserved for therein or which
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in accordance with GAAP would have to be included in footnotes thereto. Each of
the Financial Statements has been prepared in accordance with GAAP applied on a
basis consistently maintained throughout the period involved (except as
described therein). There has been no material adverse change in the business,
operations, liabilities, assets, properties, prospects or condition (financial
or otherwise) of the Parent and its Subsidiaries, taken as a whole, since the
Reference Date.
(b) The Agent has been furnished projections of the future performance
of the Parent and its Subsidiaries. The projections and pro forma financial
information contained in such materials are based upon good faith estimates and
assumptions believed by the Parent and the Borrower to be reasonable at the time
made, it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by such projections may differ from the projected results. No
fact is known to any Credit Party as of the Closing Date which would have a
Material Adverse Effect, that has not been set forth in the financial statements
referred to in this Section 11.6 or disclosed herein or otherwise disclosed to
the Agent in writing prior to the Closing Date.
Section 11.7. TRADEMARKS, PATENTS, ETC. Except as set forth on Schedule
11.7, each of the Credit Parties owns or possesses all the Intellectual Property
adequate for the conduct of its business, without, to the best of its knowledge,
conflict with the rights or claimed rights of others.
Section 11.8. TAX LIABILITY. All federal income tax returns required to
be filed by the Parent and its Subsidiaries (and each Affiliate with which the
Parent or its Subsidiaries files consolidated, combined or unitary returns) and
all other material tax returns, reports and statements, domestic or foreign,
have been filed with the appropriate governmental agencies in all jurisdictions
in which such returns, reports and statements are required to be filed, and all
Charges and other impositions shown thereon to be due and payable have been paid
prior to the date in which any fine, penalty, interest, of late charge or loss
may be added thereto for nonpayment thereof, or any such fine, penalty,
interest, late charge or loss has been paid. Each of the Parent and its
Subsidiaries (and each such Affiliate) has paid when due and payable all
material Charges required to be paid by it. Proper and accurate amounts have
been withheld by the Parent and its Subsidiaries (and each such Affiliate) from
their respective employees for all periods in full and complete compliance with
the tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective governmental agencies. Schedule 11.8 sets forth, for each
of the Parent and its Subsidiaries (and each such Affiliate), those taxable
years for which its tax returns have been for all periods after December 1, 1994
or are being audited as of the date hereof by the Internal Revenue Service or
any other applicable Governmental Authority. No issue has been raised in writing
or, if not in writing, to the Borrower's knowledge in any such examination that,
by application of similar principles, reasonably may be expected to result in
assertion of a material deficiency for any other taxable year not so examined
that has not been accrued on the Financial Statements that would be required to
be so accrued in accordance with GAAP. Except as set forth in Schedule 11.8
hereto, neither the Parent nor any of its Subsidiaries has, as of the date
hereof, executed or filed with the Internal Revenue Service or, to its
knowledge, 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 set forth on Schedule 11.8 hereto, neither
the Parent nor any of its Subsidiaries has agreed or has been requested to make
any adjustment under Code Section 481(a) by reason of a change in accounting
method initiated by the Borrower or any of its Subsidiaries. Except for the Tax
Allocation Agreement, neither the Parent nor any of its Subsidiaries has any
obligation under any tax sharing agreement.
Section 11.9. GOVERNMENTAL ACTION. No action of, or filing with, any
governmental or public body or authority (other than normal reporting
requirements or filing as to Collateral under the provisions of Section 4
hereof) is required to authorize, or is otherwise required in connection with,
the execution, delivery or performance by the Borrower and the Parent or any of
their respective Subsidiaries of this Agreement, the Security Documents, any
Guaranty, the Notes, the other Loan Documents or any of
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the instruments or documents to be delivered pursuant hereto or thereto, except
such as have been made or will be made as contemplated by such agreements.
Section 11.10. DISCLOSURE. Neither the Schedules hereto, nor the
Financial Statements, nor the certificates, statements, reports or other
documents furnished to any Lender or the Agent by or on behalf of any of the
Credit Parties in connection herewith or in connection with any transaction
contemplated hereby, nor this Agreement or any other Loan Document, contains, at
the time furnished, any untrue statement of a material fact or omits to state
any material fact (known to any such Person in the case of any document not
furnished by it) necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same were
made.
Section 11.11. REGULATION U. None of the Credit Parties or any of their
respective Subsidiaries owns any "margin stock" as such term is defined in
Regulation U, as amended (12 C.F.R. Part 221), of the Board. The proceeds of the
borrowings made hereunder will be used only for the purposes set forth in
Section 7 hereof. None of the proceeds will be used, directly or indirectly, for
the purpose of purchasing or carrying any margin stock or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry margin stock or for any other purpose which might constitute the Loan
under this Agreement a "purpose credit" within the meaning of said Regulation U
or Regulation X (12 C.F.R. Part 224) of the Board. None of the Credit Parties or
any of their respective Subsidiaries or any agent acting in its behalf has taken
or will take any action which might cause this Agreement or any of the documents
or instruments delivered pursuant hereto to violate any regulation of the Board
or to violate the Securities Exchange Act of 1934 or any applicable state
securities laws.
Section 11.12. INVESTMENT COMPANY. None of the Credit Parties or any of
their respective Subsidiaries is an "investment company," or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended (15 U.S.C. Sections 80a-1, et seq.). None of the transactions
contemplated by this Agreement or the other Loan Documents shall violate the
Investment Company Act of 1940, as amended.
Section 11.13. EMPLOYEE BENEFIT PLANS. Neither any Credit Party nor any
ERISA Affiliate maintains or contributes to any Employee Plan or any
Multiemployer Plan other than those listed on Schedule 11.13 hereto. Each plan
of any Credit Party or any ERISA Affiliate which is not a Multiemployer Plan and
which is intended to be tax qualified under Code Section 401(a), has been
determined by the Internal Revenue Service to qualify under Code Section 401(a),
and the trusts created thereunder have been determined to be exempt from tax
under the provisions of Code Section 501(a). Nothing has occurred with regard to
any such plan which would cause the loss of such qualification or the imposition
of any Code or ERISA tax liability or penalty to any Credit Party, or any ERISA
Affiliate. Except as set forth on Schedule 11.13 hereto, with respect to each
Employee Plan, all material reports required under ERISA or any other applicable
law or regulation to be filed by any Credit Party or any ERISA Affiliate with
the relevant Governmental Authority have been duly filed and all such reports
are true and correct in all material respects as of the date given. Neither any
Credit Party nor any ERISA Affiliate has engaged in a "prohibited transaction,"
as such term is defined in Code Section 4975 and Title I of ERISA, in connection
with any Employee Plan which would subject any Credit Party or any ERISA
Affiliate (after giving effect to any exemption) to a tax or penalty on
prohibited transactions imposed by Code Section 4975 or Section 502 of ERISA
which is either material or is attributable to a knowing violation of either of
such sections. No Pension Benefit Plan has incurred an ERISA Event, nor has any
material accumulated funding deficiency (as defined in Code Section 412(a)) been
incurred (without regard to any waiver granted under Code Section 412), nor has
any funding waiver from the Internal Revenue Service been received or requested
with respect to any Pension Benefit Plan. The value of the assets of each
Pension Benefit Plan subject to Title IV of ERISA equalled or exceeded the
present value of the "benefit liabilities," as defined in Title IV of ERISA of
such plan as of the end of the preceding plan year using plan actuarial
assumptions as in effect for such plan year. The funding methods used in
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connection with each Pension Benefit Plan are acceptable under ERISA and the
actuarial assumptions and methods used in connection with such funding are
reasonable. There are no claims (other than claims for benefits in the normal
course), actions or lawsuits asserted in writing or instituted against, and
neither any Credit Party nor any ERISA Affiliate has knowledge of any threatened
litigation or claims (other than claims for benefits in the ordinary course),
which would result in material liability against (i) the assets of any Pension
Benefit Plan or against any fiduciary of such Plan with respect to the operation
of such Plan or (ii) the assets of any employee welfare benefit plan (other than
a Multiemployer Plan) within the meaning of ERISA Section 3(l) or against any
fiduciary thereof with respect to the operation of any such plan. Neither any
Credit Party nor any ERISA Affiliate has incurred (a) any material liability to
the PBGC (other than routine claims and premium payments), (b) any material
withdrawal liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such material liability) under
Section 4201 of ERISA as a result of a complete or partial withdrawal (within
the meaning of Section 4203 or 4205 of ERISA) from a Multiemployer Plan or (c)
any material liability under ERISA Section 4062 to the PBGC, or to a trustee
appointed under ERISA Section 4042. No Credit Party or ERISA Affiliate has been
notified or otherwise has knowledge that any Multiemployer Plan is insolvent or
in reorganization within the meanings of Sections 4245 and 4241 of ERISA.
Neither any Credit Party nor any ERISA Affiliate nor any organization to which
any Credit Party or any such ERISA Affiliate is a successor or parent
corporation within the meaning of ERISA Section 4069(b) has engaged in a
transaction within the meaning of ERISA Section 4069(a). Neither any Credit
Party nor any ERISA Affiliate maintains an established welfare benefit plan
within the meaning of Section 3(1) of ERISA, other than those listed on Schedule
11.13 hereto, which provides for continuing benefits or coverage for any
participant or any beneficiary of a participant after such participant's
termination of employment except as may be required by the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), and the regulations
thereunder or by applicable federal or other statutory law or regulation
(whether domestic or foreign). Each Credit Party and each ERISA Affiliate
maintaining a welfare benefit plan (other than a Multiemployer Plan) within the
meaning of Section 3(1) of ERISA has complied with the notice and continuation
coverage requirements of COBRA and the regulations thereunder so as not to
result in any material loss of deduction under Section 162 of the Code or any
material tax, penalty or liability to any such Credit Party or any such ERISA
Affiliate.
Section 11.14. NEW SENIOR DEBENTURE COLLATERAL. The Liens in favor of
the trustee for the holders of the Senior Debentures if any, secure only the
obligations of the Parent under or with respect to the Senior Debentures.
Section 11.15. PERMITS, ETC. (a) Each Credit Party and each Subsidiary
thereof possesses all material permits, licenses, approvals and consents of
Federal, state and local governments and regulatory authorities required to
conduct its business as presently conducted and proposed to be conducted;
(b) Each such permit, license, approval and consent is and will be in
full force and effect, and no event has occurred which permits the revocation or
termination of any such permit, license, approval or consent or the imposition
of any restriction thereon of such nature as may materially limit the operation
of the business covered thereby;
(c) All approvals, applications, filings, registrations, consents or
other actions required of any local, state or Federal authority to enable each
Credit Party and the Subsidiaries thereof to use any such permit, license,
approval or consent has been obtained or made;
(d) No Credit Party nor any Subsidiary of any Credit Party (i) is in
violation of any duty or obligation required by law or any rule or regulation
applicable to the operation of any of its businesses, or (ii) has received any
written notice from the granting body or any other Governmental Authority with
respect to any material breach of any covenant under, or any material default
with respect to, any such permit, license, approval or consent;
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(e) Before and upon giving effect to this Agreement, the Notes and the
other Loan Documents, no material default shall have occurred and be continuing
under any such permit, license, approval or consent;
(f) All consents and approvals of, filings and registrations with, and
all other actions in respect of, all governmental agencies, authorities or
instrumentalities required to maintain any such permit, license, approval or
consent in full force and effect prior to the scheduled date of expiration
thereof has been, or, prior to the time when required, will have been, obtained,
given, filed or taken and are or will be in full force and effect;
(g) There is not pending or threatened, any action to revoke, cancel,
suspend, modify or refuse to renew any such permit, license, approval or consent
and each business covered by each such permit, license, approval or consent is
being operated in substantial compliance with such permit, license, approval or
consent;
(h) There is not now issued or outstanding or threatened any notice of
any hearing, violation or complaint against such Credit Party or Subsidiary
thereof with respect to any such permit, license, approval or consent and no
Credit Party or Subsidiary thereof has any knowledge that any Person intends to
contest the renewal of any such permit, license, approval or consent;
and in the case of clauses (a) through (h) of this Section 11.15, the breach of
which will not reasonably be expected to have a Material Adverse Effect.
Section 11.16. ENVIRONMENTAL STATUS. Except as disclosed on Schedule
11.16 hereto, (i) the operations of the Borrower and each of its Subsidiaries
comply in all material respects with all applicable Environmental Laws; (ii) the
Borrower and each of its Subsidiaries have no environmental, health and safety
Permits and to the best of the Borrower's knowledge, no such permits are
necessary for its operation; (iii) the Borrower and each of its Subsidiaries and
all of their present Facilities or operations, as well as to the knowledge of
the Borrower and its Subsidiaries their past Facilities or operations, are not
subject to any outstanding written order or agreement with any Governmental
Authority or private party respecting (a) any Environmental Laws, (b) any
Remedial Action, or (c) any Environmental Claims arising from the Release of a
Hazardous Material into the environment; (iv) none of the operations of the
Borrower or any of its Subsidiaries is subject to any judicial or administrative
proceeding under any Environmental Law; (v) to the best of the knowledge of the
Borrower and its Subsidiaries, none of the operations of the Borrower or any of
its Subsidiaries is the subject of any Federal or state investigation evaluating
whether any Remedial Action is needed to respond to a Release of any Hazardous
Material into the environment in violation of any Environmental Law; (vi)
neither the Borrower nor any of its Subsidiaries or to the knowledge of the
Borrower and its Subsidiaries any predecessor of the Borrower or any Subsidiary
has filed any notice under Environmental Law indicating past or present
treatment, storage, or disposal of a hazardous waste in violation of any
Environmental Law or reporting a Release of a Hazardous Material into the
environment; (vii) to the best of the knowledge of the Borrower and its
Subsidiaries, neither the Borrower nor any of its Subsidiaries has any
contingent liability in connection with any Release of any Hazardous Material
into the environment; (viii) none of the Borrower's or any Subsidiary's
operations involve the generation, transportation, treatment or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any applicable
state equivalent; (ix) neither the Borrower nor any of its Subsidiaries has
disposed of any Hazardous Material by placing it in or on the ground or waters
of any premises owned, leased or used by the Borrower or such Subsidiary and to
the knowledge of the Borrower and its Subsidiaries neither has any lessee, prior
owner, or other person; (x) to the best knowledge of the Borrower no underground
storage tanks or surface impoundments, as referred to in the Environmental Laws,
are on the Borrower's or any of its Subsidiaries' Facilities; and (xi) to the
best knowledge of the Borrower no Lien in favor of any Governmental Authority
for (A) any liability under Environmental Laws or regulations, or (B) damages
arising from or costs incurred by such Governmental Authority in response to a
Release of a Hazardous Material into the environment, has been filed or attached
to the Borrower's or any of its Subsidiaries'
98
Facilities; provided that a breach of a representation under this Section 11.16
by the Borrower or any of its Subsidiaries shall not constitute an Event of
Default under Section 10.1 unless such breach may reasonably be expected to
result in liability to the Borrower or any of its Subsidiaries in excess of
$100,000 or result in a Material Adverse Effect. The foregoing representations
and warranties shall survive the expiration or earlier termination of this
Agreement until such time as the environmental indemnity referred to in Section
8.16 hereof is terminated.
Section 11.17. SOLVENCY. The Borrower is Solvent.
Section 11.18. PROJECTIONS. The Parent's or the Borrower's, as
applicable, (i) monthly forecasts on a consolidated basis for each Fiscal Year
and (ii) annual forecasts on a consolidated basis, consolidated results of
operations and cash flows and balance sheets for each Fiscal Year, copies of
which have been delivered to Agent on or prior to the Closing Date, disclose all
material assumptions expressly made in formulating such projections. No facts
exist on the Closing Date which would result in any material change in any of
such projections. The projections are based upon reasonable estimates and
assumptions, all of which are reasonable in light of the conditions which
existed at the time the projections were made, have been prepared on the basis
of the assumptions stated therein, and reflect as of the date thereof the
reasonable estimate of each of the Borrower and the Parent of the results of
operations and other information projected therein, it being recognized that
such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by such projections may
differ from the projections.
Section 11.19. BANK ACCOUNTS. The names and addresses of all the banks
holding one or more Blocked Accounts, together with the account numbers of the
Blocked Accounts at such banks, are specified in Schedule 11.19 hereto. The
Credit Parties have no bank accounts other than as set forth on Schedule 11.19
hereto.
Section 11.20. EMPLOYMENT AGREEMENTS. Except as set forth on Schedule
11.20 hereto, the Employment Agreements constitute all executive employment
agreements and compensation arrangements (including without limitation bonus and
stock options), employee or management incentive plans and consulting or
management arrangements (including without limitation the fees payable in
connection therewith) and executive or management confidentiality agreements and
non-compete agreements, between any Credit Party and any such executive, member
of management or employee, as applicable, a true and complete copy of each of
which has been furnished to the Agent.
Section 11.21. LABOR MATTERS. There are no strikes or other labor
disputes against the Borrower or any of its Subsidiaries pending or threatened
which would have a Material Adverse Effect. Hours worked by and payment made to
employees of the Borrower and its Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable law dealing with such matters
the violation of which would have a Material Adverse Effect. All payments due
from the Borrower or any of its Subsidiaries on account of employee health and
welfare insurance which would have a Material Adverse Effect if not paid have
been paid or accrued as a liability on the books of the Borrower or such
Subsidiary. Except as set forth on Schedule 11.21 hereto, there are no
collective bargaining or other labor agreements covering any employees of the
Borrower or any of its Subsidiaries.
Section 11.22. OTHER VENTURES. Except as set forth on Schedule 11.22,
neither the Parent nor any Subsidiary thereof is engaged in any joint venture or
partnership with any other Person.
Section 11.23. BROKERS AND CONSULTANTS. No broker, finder or consultant
acting on behalf of the Parent or any of its Subsidiaries brought about the
obtaining, making or closing of the loans made pursuant to this Agreement, and
neither the Parent nor any Subsidiary thereof has any obligation to any Person
in respect of any finder's, consulting or brokerage fees in connection with the
Loan contemplated by this Agreement.
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Section 11.24. MATERIAL CONTRACTS. Schedule 11.24 sets forth all the
contracts, agreements and documents (other than those set forth on any other
Schedule hereto or constituting an Exhibit hereto) that materially affect or
relate to the business or operations of the Parent and its Subsidiaries.
Section 11.25. LICENSE AGREEMENTS. Schedule 11.25 sets forth all the
License Agreements of the Borrower, and each of the License Agreements listed
thereon is in full force and effect (or have been approved in writing (which
approval has not been rescinded in writing) as an acceptable arrangement by the
Agent), and except as disclosed by the Borrower in writing to the Agent from
time to time, the Borrower is in compliance with the material terms thereof and
there exists no default on the part of the Borrower under any of the License
Agreements.
Section 11.26. UNWRITTEN AGREEMENTS. Neither the Borrower nor any
Subsidiary thereof is party to any arrangement which, if approved by the Agent
would constitute a License Agreement or Consignment Agreement and which is not
evidenced by a written agreement other than those previously disclosed to the
Agent.
Section 11.27. UCC FINANCING STATEMENTS. Any documents (including,
without limitation, financing statements) required to be filed (if any) in order
to create in favor of the Agent for the benefit of the Lenders, a perfected
security interest in the Collateral with respect to which a security interest
may be perfected by a filing under the UCC have been duly executed and delivered
by the Borrower on or prior to the Closing Date and have been or will be
(immediately after the Closing Date) properly filed in each jurisdiction
required in order to create in favor of the Agent for the benefit of the Lenders
a perfected Lien on the Collateral immediately following the Closing Date.
SECTION 12. MISCELLANEOUS
Section 12.1. COLLECTION COSTS. If an Event of Default occurs, the
Borrower shall pay all court costs and costs of collection paid or incurred by
the Agent and Lenders in connection with the Obligations, the Collateral and the
Loan Documents, including, without limitation, reasonable fees, expenses and
disbursements of counsel employed in connection with any and all collection
efforts. The attorney's fees arising from such services, including those of any
appellate proceedings, and all expenses, costs, charges and other fees incurred
by such counsel in any way or with respect to or arising out of or in connection
with or relating to any of the events or actions described in this Section 12.1
shall be payable by the Borrower to the Agent, each L/C Issuer and each Lender,
as the case may be, on demand, and shall be additional obligations under this
Agreement. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include: recording costs, appraisal costs, paralegal
fees, costs and expenses; accountants' fees, costs and expenses; court costs and
expenses; photocopying and duplicating expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram
charges; telecopier charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with any of the
foregoing.
Section 12.2. AMENDMENT, MODIFICATION AND WAIVER. (a) No amendment,
modification or waiver of any provision of the Loan Documents and no consent by
the Agent, any L/C Issuer or any Lender to any departure therefrom by any of the
Credit Parties shall be effective unless such amendment, modification or waiver
shall be in writing and signed by a duly authorized officer of the appropriate
Credit Parties, the Agent, the Lenders, each L/C Issuer or the Majority Lenders,
as the case may be (as more fully described below), and the same shall then be
effective only for the period and on the conditions and for the specific
instances and purposes specified in such writing.
(b) No notice to or demand on any of the Credit Parties in any case
shall entitle any of the Credit Parties to any other or further notice or demand
in similar or other circumstances.
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(c) Any term or provision of any Loan Document may be amended or
modified and the observance of any provision of any Loan Document may be waived
with the written consent of the Credit Parties being a party to such Loan
Document and the Majority Lenders; provided, however, that no such amendment,
modification or waiver shall, without the prior written consent of the Agent,
amend or waive any of the provisions of Section 3.6, 12.13 or 12.15 of this
Agreement, or otherwise change any of the rights or obligations of the Agent
under any of the Loan Documents; provided, further, that no such amendment,
modification or waiver shall, without the prior written consent of each L/C
Issuer which has any Letters of Credit, or any Commitment to issue Letters of
Credit, outstanding, amend or waive any of the provisions of Section 2A of this
Agreement or otherwise materially adversely affect any of the rights or
obligations of such L/C Issuer under any of the Loan Documents; and provided,
further, that no such amendment, modification or waiver shall, without the prior
written consent of all of the Lenders:
(i) extend the due date of any principal of any Loan, or
portion thereof, extend the final scheduled maturity of any Loan or the
Revolving Credit Facility Commitment, reduce the rate of interest on
any Loan, or portion thereof, reduce the amount of any principal or
accrued interest payable on any Loan, or portion thereof, or reduce the
fees payable to any Lender hereunder;
(ii) except as set forth in Section 4.11 hereof, substitute,
discharge, release or surrender any Collateral (which defined term for
purposes of this clause (ii) shall include any Guaranties of any or all
the Obligations) with a value exceeding $5,000,000 in the aggregate;
provided, that any substitution, discharge, release or surrender of
Collateral with a value not exceeding $5,000,000 in the aggregate or
under Section 9.6 shall be subject solely to the prior written consent
of the Agent.
(iii) except as provided in Sections 2.14(e) and 12.15 hereof,
change the proportion of any Lender's Revolving Commitment to the
aggregate Revolving Commitments of all Lenders or the amount of any
Lender's Revolving Commitment;
(iv) modify any provision of this Section 12.2 or any other
provision which expressly requires the consent of all Lenders;
(v) amend the definition of "Majority Lenders"; or
(vi) amend the last sentence of Section 4.4(c) hereof or amend
Section 10.5 hereof.
(d) From and after the Closing Date, "Obligations" arising under or in
connection with the Original Credit Agreement or the First Amended and Restated
Credit Agreement shall continue to be "Obligations" arising under or in
connection with this Agreement.
(e) If, in connection with any proposed amendment, modification, waiver
or termination requiring the consent of all Lenders, the consent of Majority
Lenders is obtained, but the consent of other Lenders whose consent is required
is not obtained (any such Lender whose consent is not obtained as described in
this clause (e) being referred to as "Non Consenting Lender"), then, so long as
Agent is not a Non Consenting Lender, at Borrower's request Agent, or a Person
reasonably acceptable to Agent, shall have the right with Agent's consent and in
Agent's sole discretion (but shall have no obligation) to purchase from such Non
Consenting Lenders, and such Non Consenting Lenders agree that they shall, upon
Agent's request, sell and assign to Agent or such Person, all of the Revolving
Commitments of such Non Consenting Lenders for an amount equal to the principal
balance of all Loans held by the Non Consenting Lenders and all accrued interest
and fees with respect thereto through the date of sale, such purchase and sale
to be consummated pursuant to an executed Assignment Agreement.
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Section 12.3. NEW YORK LAW. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 12.4. NOTICES. All notices, requests, demands or other
communications provided for herein shall be in writing (unless otherwise
expressly provided herein) and shall be deemed to have been given (a) if by
registered or certified mail, return receipt requested, four (4) Business Days
following the date when sent, (b) if by telex, when sent and answerback
received, (c) if by overnight courier, when received, (d) if by telecopier, when
sent, or (e) if personally delivered or delivered by messenger, when receipted
for, in each case, addressed to the appropriate Credit Party or to the Agent,
any L/C Issuer or any Lender, at its respective office under its name on the
signature pages of this Agreement and to the attention of the Person so
designated, or to such Person or address as any party hereto shall designate to
the other from time to time in writing forwarded in like manner. All notices,
requests, demands or other communications given or deemed given to either of
Borrower or Parent shall be deemed given to both Borrower and Parent.
Section 12.5. FEES AND EXPENSES. The Borrower shall pay all reasonable
out-of-pocket costs and expenses paid or incurred by the Agent or GE Capital in
connection with the Loan Documents and the financing contemplated thereunder,
including but not limited to appraisal fees, reasonable syndication fees
(excluding fees payable to any syndicate member taking an assignment from GE
Capital of any portion of the Loan or Commitment of GE Capital hereunder), title
insurance fees, audit fees, recording fees, travel and transportation fees,
search and filing fees, and the reasonable fees and expenses of Weil, Gotshal &
Xxxxxx LLP, special counsel, and all local counsel to the Agent or GE Capital
and of any industry, environmental, tax, accounting and other consultants
retained by the Agent or GE Capital. Such expenses shall also include, without
limitation, any costs paid or incurred by the Agent or GE Capital in connection
with the administration of the financial accommodations herein provided
(including of any Collateral), any waivers, amendments, modifications,
extensions, renewals, renegotiations or "work-outs" of this Agreement or any
instrument or document delivered in connection herewith and any consents or
approvals provided hereunder or otherwise requested by any Credit Party. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include, to the extent they are out-of-pocket as to the Agent or GE Capital:
recording costs, appraisal costs, paralegal fees, costs and expenses;
accountants' fees, costs and expenses; photocopying and duplicating expenses;
long distance telephone charges; air express charges; telegram charges;
telecopier charges; secretarial overtime charges; and expenses for travel,
lodging and food paid or incurred in connection with any of the foregoing.
Section 12.6. [Intentionally Deleted]
Section 12.7. WAIVER OF JURY TRIAL AND SET-OFF. In any litigation in
any court with respect to, in connection with, or arising out oF this Agreement,
any of the Revolving Advances, any of the Notes or other Loan Documents, the
Collateral, or any instrument or document delivered pursuant to this Agreement,
or the validity, protection, interpretation, collection or enforcement thereof,
or any other claim or dispute howsoever arising, between any Credit Parties and
any of the Lenders, any L/C Issuer party hereto or the Agent, (a) EACH OF THE
CREDIT PARTIES HEREBY, to the fullest extent it may effectively do so, waives
the right to interpose any set-off, recoupment, counterclaim or cross-claim in
connection with any such litigation, irrespective of the nature of such set-off,
recoupment, counterclaim or cross-claim, unless such set-off, recoupment,
counterclaim or cross-claim could not, by reason of any applicable Federal or
State procedural laws, be interposed, pleaded or alleged in any other action and
(b) EACH OF THE CREDIT PARTIES AND THE LENDERS, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, WAIVES TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION.
EACH OF THE CREDIT PARTIES AGREES THAT THIS SECTION 12.7 IS A SPECIFIC AND
MATERIAL ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES THAT NONE OF THE LENDERS
WOULD EXTEND TO THE COMPANY
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ANY FINANCIAL ACCOMMODATIONS HEREUNDER IF THIS SECTION 12.7 WERE NOT PART OF
THIS AGREEMENT.
Section 12.8. TERMINATION OF AGREEMENT. (a) The financing arrangements
contemplated hereby shall be in effect until the Maturity Date, and the Loans
and all other Obligations shall be automatically due and payable in full, and
this Agreement shall be terminated, on such date. The Agent on behalf of the
Lenders shall have the right to, or the Agent upon the direction of the Majority
Lenders shall, terminate this Agreement immediately, at any time, during the
continuance of an Event of Default under Section 10 hereof.
(b) The termination of this Agreement shall not affect any rights of
the Credit Parties, any Lender, any L/C Issuer or the Agent or any obligation of
any of the Credit Parties, any Lender, any L/C Issuer or the Agent to the
others, arising on or prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all Obligations and
obligations of the Credit Parties hereunder incurred on or prior to such
termination have been paid and performed in full.
(c) Upon the giving of notice of termination of this Agreement, all
Obligations (including, without limitation, the Revolving Loan and amounts in
respect of Letters of Credit) shall be due and payable on the date of
termination specified in such notice.
(d) The Liens and rights granted to the Agent on behalf of the Agent
and the Lenders hereunder shall continue in full force and effect,
notwithstanding the termination of this Agreement, until all of the Obligations
have been paid (or in the case of Letter of Credit Obligations, cash
collateralized in accordance with Section 2A.3) in full or the Credit Parties
have furnished the Lenders, each L/C Issuer and the Agent with an
indemnification satisfactory to the Lenders, such L/C Issuers and the Agent;
provided that notwithstanding anything herein or in any other Loan Document to
the contrary in the event that all Obligations are paid (or in the case of
Letters of Credit Obligations, cash collateralized in accordance with Section
2A.3) in full (or such satisfactory indemnification is provided) and this
Agreement is terminated, the Liens in favor of the Agent shall terminate (and
the Agent shall authorize in accordance with the requirements of the UCC, the
filing of appropriate UCC-3 termination statements and execute and deliver such
other lien termination documents as may be reasonably requested by the
Borrower).
(e) All representations, warranties, covenants, waivers and agreements
contained herein shall survive termination hereof unless otherwise provided.
(f) Notwithstanding the foregoing, if after receipt of any payment of
all or any part of the Obligations, the Agent, any L/C Issuer or any Lender is
for any reason compelled to surrender such payment to any Person or entity
because such payment is determined to be void or voidable as a preference, an
impermissible set-off, a diversion of trust funds or for any other reason, this
Agreement shall continue in full force, and the Credit Parties, as appropriate,
shall be liable to, and shall indemnify and hold such Lender, such L/C Issuer or
the Agent, as the case may be, harmless for, the amount of such payment
surrendered until such Lender, such L/C Issuer or the Agent, as the case may be,
shall have been finally and irrevocably paid in full. The provisions of the
foregoing sentence shall be and remain effective notwithstanding any contrary
action which may have been taken by the Lenders, such L/C Issuer or the Agent in
reliance upon such payment, and any such contrary action so taken shall be
without prejudice to the Lenders', such L/C Issuer's or the Agent's rights under
this Agreement and shall be deemed to have been conditioned upon such payment
having become final and irrevocable. For the avoidance of doubt, this Section
12.8(f) shall not apply to any taxes and amounts relating thereto (payment with
respect to which shall be governed by Section 2.22).
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(g) All indemnities provided for under this Agreement and the other
Loan Documents, including, without limitation, under Sections 2.12 and 12.5
hereof and this Section 12.8, shall survive the termination of this Agreement
and the payment in full of the Obligations.
Section 12.9. CAPTIONS. The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
Section 12.10. LIEN; SET-OFF BY LENDERS. Each of the Credit Parties
hereby grants to each Lender and the Agent a continuing Lien for all Obligations
upon any and all monies, securities and other property of such Credit Party and
the proceeds thereof, now or hereafter held or received by, or in transit to,
such Lender or the Agent from or for such Credit Party, whether for safekeeping,
custody, pledge, transmission, collection or otherwise, and also upon any and
all deposits (general or special) and credits of such Credit Party with, and any
and all claims of such Credit Party against, any Lender or the Agent, at any
time existing (which shall constitute part of the Collateral). Upon the
occurrence and during the continuance of an Event of Default, each Lender and
the Agent is hereby authorized at any time and from time to time, without notice
to such Credit Party, to set-off, appropriate and apply any or all items
hereinabove referred to against all Obligations under the Loan Documents;
provided that no Lender may exercise such set-off rights without the Agent's
consent.
Section 12.11. PAYMENT DUE ON NON-BUSINESS DAY. Whenever any payment to
be made hereunder or under any other Loan Document or on any Revolving Advance
shall be stated to be due and payable, or whenever the last day of any Interest
Period would otherwise occur, on a day which is not a Business Day, such payment
shall be made and the last day of such Interest Period shall occur on the next
succeeding Business Day and such extension of time shall in such case be
included in computing interest on such payment; provided, however, if such
extension would cause a payment of a Eurodollar Advance to be made, or the last
day of such Interest Period for a Eurodollar Advance to occur, in the next
following calendar month, such payment shall be made and the last day of such
Interest Period shall occur on the next preceding Business Day.
Section 12.12. SERVICE OF PROCESS. Each of the Credit Parties hereby
irrevocably consents to the jurisdiction of the courts of the State of New York
and of any Federal Court located in the City of New York in connection with any
action or proceeding arising out of or relating to this Agreement, any Guaranty,
any of the Security Documents, all or any of the Obligations, the Collateral,
all or any of the Notes, any other Loan Document or any document or instrument
delivered pursuant to this Agreement. In any such litigation, each of the Credit
Parties waives, to the fullest extent it may effectively do so, personal service
of any summons, complaint or other process and agrees that the service thereof
may be made by certified or registered mail directed to any Credit Party at its
address set forth in Section 12.4 hereof. Each of the Credit Parties hereby
waives, to the fullest extent it may effectively do so, the defenses of forum
non conveniens and improper venue.
Section 12.13. GENERAL ELECTRIC CAPITAL CORPORATION, AS AGENT. (a) Each
Lender hereby irrevocably designates and appoints GE Capital as the agent of
such Lender under each of the Loan Documents in which GE Capital is named as
agent, and each such Lender hereby irrevocably authorizes GE Capital, as the
agent for such Lender to take such action on behalf of each Lender under the
provisions of the Loan Documents and to exercise such powers and perform such
duties as are expressly delegated to the Agent by the terms of the Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in the Loan Documents,
the Agent shall not have any duties or responsibilities except those expressly
set forth in the Loan Documents, nor any fiduciary relationship with any Lender
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Loan Documents or otherwise exist against the
Agent.
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(b) The Agent may execute any of its duties under the 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. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
(c) Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with the Loan Documents (except for its or such Person's own gross
negligence or wilful misconduct), or (ii) responsible in any manner to any
Lender for any recitals, statements, representations or warranties made by any
of the Credit Parties or any of their respective Subsidiaries or any officer
thereof contained in the 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 the Loan Documents, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of the Loan Documents
or for any failure of any of the Credit Parties or any of their respective
Subsidiaries to perform its obligations under the Loan Documents. 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, the Loan Documents, or to inspect the properties, books or
records of any of the Credit Parties or any of their respective Subsidiaries.
(d) 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 reasonably 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.
(e) The Agent shall be fully justified in failing or refusing to take
any action under the Loan Documents unless it shall first receive such advice or
concurrence of the Majority Lenders 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 the Loan Documents in accordance with a request
of the Majority Lenders (or where required by the terms of this Agreement, the
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.
(f) 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 shall
have received notice from a Lender or one of the Credit Parties 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 give prompt 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 Majority Lenders; provided that, unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
(g) 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
hereafter taken, including any review of the affairs of any of the Credit
Parties or any of their respective Subsidiaries, 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 of the Credit Parties and their respective
Subsidiaries, and made its own decision to make its loans and other financial
accommodations
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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 to make such investigation
as it deems necessary to inform itself as to the business, operations,
liabilities, assets, properties and condition (financial or otherwise) and
creditworthiness of each of the Credit Parties and their respective
Subsidiaries. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Agent hereunder, 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 any of the Credit Parties or any of their
respective Subsidiaries which may come into the possession of the Agent or any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
(h) Each Lender agrees to indemnify the Agent in its capacity as such
(to the extent not reimbursed by the Credit Parties and without limiting the
obligation of the Credit Parties to do so), ratably according to the total loan
percentages set forth opposite its name on Exhibit A hereto 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 the Loan Documents, the financing thereunder
or any of the transactions contemplated 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 from the Agent's gross negligence or willful
misconduct. The agreements in this Section 12.13(h) shall survive the payment of
the Notes and the Obligations.
(i) The Agent and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Credit Parties as
though the Agent were not the Agent hereunder. With respect to its pro rata
share of the Revolving Advances made or renewed by it and any Note issued to it,
the Agent shall have the same rights and powers under this Agreement as any
Lender and may exercise the same as though it were not the Agent. The terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.
(j) The Agent may resign as Agent upon thirty (30) days' written notice
to the Lenders. In the event that the Agent shall enter receivership or a
proceeding in bankruptcy or insolvency shall be commenced by or against the
Agent, then the Lenders (other than the Lender which is the acting as Agent, if
applicable) may by unanimous consent of such Lenders, remove the Agent under
this Agreement. If the Agent shall give a notice of its intention to resign as
Agent under this Agreement or the Agent shall be removed, then the Majority
Lenders shall appoint a successor agent for the Lenders, 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 retiring
Agent's resignation hereunder as Agent or any Agent's removal, the provisions of
this Section 12.13 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
(k) Each Lender agrees that (i) all obligations of the Credit Parties
to each Lender under this Agreement and under the Notes rank pari passu in all
respects with each other, and (ii) if any Lender shall, through the exercise of
a right of banker's lien, set-off, counterclaim or otherwise, obtain payment
with respect to its Revolving Commitment which results in its receiving more
than its pro rata share of the aggregate payments in respect of the Aggregate
Revolving Commitments, then (A) such Lender shall be deemed to have
simultaneously purchased from each of the other Lenders a share in its Revolving
Advances so that the amount of the Revolving Advances of all Lenders shall be
pro rata and
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(B) such other adjustments shall be made from time to time as shall be equitable
to insure that all Lenders share such payments ratably. If all or any portion of
any such excess payment is thereafter recovered from the Lender which received
the same, the purchase provided in this Section 12.13(k) shall be deemed to have
been rescinded to the extent of such recovery, without interest. Each of the
Credit Parties expressly consents to the foregoing arrangements and agrees that
each Lender so purchasing a portion of another Lender's loan may exercise all
rights of payment (including, without limitation, all rights of set-off,
banker's lien or counterclaim) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(l) The Agent agrees that it shall promptly deliver to each Lender
copies of all notices, demands, statements and communications which the Agent
gives to the Credit Parties, except for routine notices of payments due under
the Loan Documents and other miscellaneous notices, demands, statements and
communications, which are not material to the interests of any Lender. The Agent
shall have no liability to any Lender, nor shall a cause of action arise against
the Agent, as a result of the failure of the Agent to deliver to any Lender any
such notice, demand, statement or communication.
(m) The Agent shall endeavor to exercise the same care in administering
the Loan Documents as it exercises with respect to similar transactions in which
it is involved and where no other co-lenders or participants are involved;
provided that the liability of the Agent for failing to do so shall be limited
as provided in the preceding paragraphs of this Section 12.13.
(n) (i) If at any time or times it shall be necessary or prudent in
order to conform to any law of any jurisdiction in which any of the
Collateral shall be located, or the Agent shall be advised by counsel,
that it is so necessary or prudent in the interest of the Lenders, or
the Agent shall deem it necessary for its own protection in the
performance of its duties hereunder, the Agent and (to the extent
required by the Agent) each Credit Party shall execute and deliver all
instruments and agreements reasonably necessary or proper to constitute
another bank or trust company, or one or more individuals approved by
the Agent (to the extent necessary or requested by the Agent) (each an
"Approved Delegate"), either to act as co-agent or co-agents or trustee
of all or any of the Collateral, jointly with the Agent originally
named herein or any successor, or to act as separate agent or agents or
trustee of any such Collateral. In the event that any of the Credit
Parties shall not have joined in the execution of such instruments or
agreements with any Approved Delegate within thirty (30) Business Days
after the receipt of a written request from the Agent to do so, or in
case an Event of Default shall have occurred and be continuing, each of
the Credit Parties hereby irrevocably appoints the Agent as its agent
and attorney to act for it under the foregoing provisions of this
Section 12.13(n) in such contingency.
(ii) Every separate agent and every co-agent and every
trustee, other than any agent which may be appointed as successor to
the Agent, shall, to the extent permitted by applicable law, be
appointed to act and be such, subject to the following provisions and
conditions, namely:
(A) except as otherwise provided herein, all rights,
remedies, powers, duties and obligations conferred upon,
reserved or imposed upon the Agent in respect of the custody,
control and management of moneys, paper or securities shall be
exercised solely by the Agent hereunder;
(B) all rights, remedies, powers, duties and
obligations conferred upon, reserved to or imposed upon the
Agent hereunder shall be conferred, reserved or imposed and
exercised or performed by the Agent except to the extent that
the instrument appointing such separate agent or separate
agents or co-agent or co-agents or trustee shall
107
otherwise provide, and except to the extent that under any law
of any jurisdiction in which any particular act or acts are to
be performed, the Agent shall be incompetent or unqualified to
perform such act or acts, in which event such rights,
remedies, powers, duties and obligations shall be exercised
and performed by such separate agents or co-agent or co-agents
to the extent specifically directed in writing by the Agent;
(C) no power given hereby to, or which it is provided
hereby may be exercised by, any such separate agent or
separate agents or co-agent or co-agents or trustee shall be
exercised hereunder by such separate agent or separate agents
or co-agent or co-agents or trustee except jointly with, or
with the consent in writing of, the Agent, anything herein
contained to the contrary notwithstanding;
(D) no separate agent or co-agent or trustee
constituted under this Section 12.13(n) shall be personally
liable by reason of any act or omission of any other agent,
separate agent, co-agent or trustee hereunder; and
(E) the Agent, at any time by an instrument in
writing, executed by it, may accept the resignation of or
remove any such separate agent or co-agent or trustee, and in
that case, by an instrument in writing executed by the Agent
and the Credit Parties (to the extent necessary or requested
by the Agent) jointly, may appoint a successor to such
separate agent or co-agent or trustee, as the case may be,
anything herein contained to the contrary notwithstanding. In
the event that any of the Credit Parties shall not have joined
in the execution of any such instrument with a Person or
entity within ten (10) days after the receipt of a written
request from the Agent to do so, or in the case an Event of
Default shall have occurred and be continuing, the Agent,
acting alone, may appoint a successor and may execute any
instrument in connection therewith, and the Credit Parties
hereby irrevocably appoint the Agent its agent and attorney to
act for it in such connection in either or such contingencies.
Section 12.14. NON-RECOURSE TO PARENT. Notwithstanding the fact that
the Parent is a signatory to this Agreement and is referred to in this Agreement
and the other Loan Documents, neither the Agent nor any Lender shall have any
recourse to the Parent or any of its directly owned assets for the payment or
performance of any Obligations of any Credit Party (other than the Parent) nor
shall the Parent have any personal liability therefor; provided, however, that
the Loans shall be fully recourse to the Borrower, the Guarantors and their
respective assets.
Section 12.15. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS.
(a) This Agreement shall be binding upon and inure to the benefit of the parties
hereto, and their respective successors and assigns, except that the obligation
of the Lenders and any L/C Issuer hereto to make Revolving Advances and other
financial accommodations hereunder shall not inure to the benefit of any
successors and assigns of the Borrower.
(b) Neither Borrower nor Parent may assign or transfer any of its
interest hereunder without the prior written consent of the Lenders. Each of the
Lenders may make, carry or transfer its pro rata share of the Revolving Advances
at, to or for the account of any of its branch offices or the office of one or
more of its Affiliates.
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(c) Subject to the terms of this Section 12.15, any Lender may make an
assignment to a Qualified Assignee of, or sale of participations in, at any time
or times, the Loan Documents, Revolving Advances, Letter of Credit Obligations
and any Revolving Commitment or any portion thereof or interest therein,
including any Lender's rights, title, interests, remedies, powers or duties
thereunder. Any assignment by a Lender shall: (i) require the consent of Agent
(which consent shall not be unreasonably withheld or delayed with respect to a
Qualified Assignee) and the execution of an assignment agreement (an "Assignment
Agreement") substantially in the form attached hereto as Exhibit 12.15(c) and
otherwise in form and substance reasonably satisfactory to, and acknowledged by,
Agent; (ii) be conditioned on such assignee Lender representing to the assigning
Lender and Agent that it is purchasing the applicable Revolving Advances to be
assigned to it for its own account, for investment purposes and not with a view
to the distribution thereof; (iii) after giving effect to any such partial
assignment, the assignee Lender shall have a Revolving Commitment in an amount
at least equal to $5,000,000 and the assigning Lender shall have retained a
Revolving Commitment in an amount at least equal to $5,000,000; (iv) include a
payment to Agent of an assignment fee of $3,500 and (v) so long as no Event of
Default has occurred and is continuing, require the consent of Borrower as to
the identity of the Qualified Assignee Lender of the type described in clause
(b) of the definition of "Qualified Assignee", which shall not be unreasonably
withheld or delayed; provided that no such consent shall be required for an
assignment to a Qualified Assignee of the type described in clause (a) of the
definition of "Qualified Assignee"; and provided further that an assignment will
not be effective unless it is recorded by Agent in the Loan Account. In the case
of an assignment by a Lender under this Section 12.15, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
all other Lenders hereunder. The assigning Lender shall be relieved of its
obligations hereunder with respect to its Revolving Commitment or assigned
portion thereof from and after the date of such assignment. Borrower hereby
acknowledges and agrees that any assignment shall give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a "Lender". In all instances, each Lender's liability to make Revolving
Advances hereunder shall be several and not joint and shall be limited to such
Lender's pro rata share of the aggregate Revolving Commitment. In the event
Agent or any Lender assigns or otherwise transfers all or any part of the
Obligations, Agent or any such Lender shall so notify Borrower and Borrower
shall, upon the request of Agent or such Lender, execute new Notes in exchange
for the Notes, if any, being assigned. Notwithstanding the foregoing provisions
of this Section 12.15(c), (i) any Lender may at any time pledge the Obligations
held by it and such Lender's rights under this Agreement and the other Loan
Documents to a Federal Reserve Bank provided, that no such pledge to a Federal
Reserve Bank shall release such Lender from such Lender's obligations hereunder
or under any other Loan Document, and (ii) any Lender that is an investment fund
may assign the Obligations held by it and such Lender's rights under this
Agreement and the other Loan Documents to another investment fund managed by the
same investment advisor, provided that such Lender shall notify Agent of any
such assignment for purposes of maintaining the Loan Account in accordance with
Section 2.21 hereof, and such assignment will become effective only if such
assignment is recorded in the Loan Account.
(d) Any participation by a Lender of all or any part of its Revolving
Commitment shall be made with the understanding that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or fees payable with respect to, any Revolving Advance in which
such holder participates, (ii) any extension of the scheduled amortization of
the principal amount of any Revolving Advance in which such holder participates
or the final maturity date thereof, and (iii) any release of all or
substantially all of the Collateral (other than in accordance with the terms of
this Agreement, the Security Documents or the other Loan Documents). Solely for
purposes of Sections 2.9, 2.10, 2.11, 2.12, 2.15 and 2.22, Borrower acknowledges
and agrees that a participation shall give rise to a direct obligation of
Borrower to the participant and the participant shall be considered to be a
"Lender". Except as set forth in the preceding sentence neither Borrower nor any
other Credit Party shall have any obligation or duty to any participant. Neither
Agent nor any Lender (other than the Lender selling a participation) shall have
any duty to any participant and may continue to deal solely with the Lender
selling a participation as if no such sale had occurred. In addition, each
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Lender granting a participation under this Section 12.15(d) shall keep a
register, meeting the requirements of Treasury Regulation Section 5f.103-1(c),
of each participant, specifying such participant's entitlement to payments of
principal and interest with respect to such participation, and for the avoidance
of doubt, each participant shall be obligated to comply with Section 2.22 as if
it were a "Lender."
(e) Except as expressly provided in this Section 12.15, no Lender
shall, as between Borrower and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Revolving Advances, the Notes or other Obligations owed to such
Lender.
(f) Each Credit Party executing this Agreement shall assist any Lender
permitted to sell assignments or participations under this Section 12.15 as
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be reasonably
requested and the preparation of informational materials for, and the
participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their respective affairs contained in any selling materials provided by it
and all other information provided by it and included in such materials, except
that any projections delivered by Borrower shall only be certified by Borrower
as having been prepared by Borrower in compliance with the representations
contained in Section 11.18.
(g) A Lender may furnish any information concerning Credit Parties in
the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants); provided that such Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 12.18.
(h) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender"), may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing by the Granting Lender to Agent and
Borrower, the option to provide to Borrower all or any part of any Revolving
Advance that such Granting Lender would otherwise be obligated to make to
Borrower pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPC to make any Revolving Advance; and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide all or any
part of such Revolving Advance, the Granting Lender shall be obligated to make
such Revolving Advance pursuant to the terms hereof. The making of a Revolving
Advance by an SPC hereunder shall utilize the Revolving Commitment of the
Granting Lender to the same extent, and as if such Revolving Advance were made
by such Granting Lender. No SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender). Any SPC may (i) with notice to, but without the prior
written consent of, Borrower and Agent and without paying any processing fee
therefor assign all or a portion of its interests in any Revolving Advances to
the Granting Lender or to any financial institutions (consented to by Borrower
and Agent) providing liquidity and/or credit support to or for the account of
such SPC to support the funding or maintenance of Revolving Advances and (ii)
disclose on a confidential basis any non-public information relating to its
Revolving Advances to any rating agency, commercial paper dealer or provider of
any surety, guarantee or credit or liquidity enhancement to such SPC. This
Section 12.15(h) may not be amended without the prior written consent of each
Granting Lender, all or any of whose Revolving Advances are being funded by an
SPC at the time of such amendment. For the avoidance of doubt, the Granting
Lender shall for all purposes, including without limitation, the approval of any
amendment or waiver of any provision of any Loan Document or the obligation to
pay any amount otherwise payable by the Granting Lender under the Loan
Documents, continue to be the Lender of record hereunder. In addition, each
Granting Lender (i) shall keep a register, meeting the requirements of Treasury
Regulation Section 5f.103-1(c), of each SPC which has funded all or any part of
any Loan that such Granting Lender would otherwise be obligated to make to
Borrower pursuant to this Agreement, specifying such SPC's entitlement to
payments of principal and interest with respect to such Loan and (ii) shall
collect, prior to the time such SPC receives payments with respect to such
funded Loan, from each such SPC the
110
appropriate forms, certificates and statements described in Section 2.22(c) as
if such SPC were a Lender under Section 2.22(c).
(i) For purposes of this Section 12.15, with respect to each Letter of
Credit, if an L/C Issuer transfers its rights with respect to the Borrower's
reimbursement obligation with respect to a Letter of Credit, (i) such L/C Issuer
shall give notice of such transfer to the Agent for notation in the Loan
Account, (ii) each such transfer shall be notated in the Loan Account, and (iii)
no such transfer will be effective for purposes of this Agreement unless it has
been recorded in the Loan Account.
Section 12.16. COUNTERPARTS; FACSIMILE SIGNATURE. (a) This Agreement
may be executed by the parties hereto individually or in any combination, in one
or more counterparts, each of which shall be an original and all of which shall
together constitute one and the same agreement.
(b) Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
Section 12.17. INVALIDITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
all applicable laws and regulations. If, however, any provision of this
Agreement shall be prohibited by or invalid under any such law or regulation, it
shall be deemed modified to conform to the minimum requirements of such law or
regulation, or, if for any reason it is not deemed so modified, it shall be
ineffective and invalid only to the extent of such prohibition or invalidity
without the remainder thereof or any of the remaining provisions of this
Agreement being prohibited or invalid.
Section 12.18. DISCLOSURE OF FINANCIAL INFORMATION. The Agent and each
Lender are each hereby authorized to deliver a copy of any financial statement
or any other information relating to the business, operations or financial
condition of the Parent and each of its Subsidiaries which may be furnished to
it hereunder or otherwise, to any Affiliate of such Lender, any other Lender,
any court, regulatory body or agency having jurisdiction over the Agent or such
Lender, to any Person which shall, or shall have any right or obligation to,
succeed to all or any part of the Agent's or such Lender's interest in any of
the Revolving Advances, this Agreement and any Collateral or to any actual or
prospective participant therein or assignee thereof. Subject to the foregoing,
the Agent and each Lender (i) agree to take all reasonable precautions and to
exercise due care to maintain the confidentiality of all information provided to
it by the Parent and its Subsidiaries in connection with this Agreement, (ii)
agree and undertake that neither it nor any of its Affiliates shall use any such
information other than for the purpose of the financing contemplated by the
Agreement or as otherwise permitted above, and (iii) shall treat all such
information confidentially and shall cause each prospective participant or
assignee of the type described in this Section 12.18 or participant or assignee
of such Lender to agree in writing to treat such information confidentially and
to abide by the provisions of this sentence. Information that is available to
the public shall not be subject to the confidentiality requirements of this
Section 12.18. In no event shall the Agent or any Lender be liable under this
Section 12.18 for any direct, indirect, consequential or punitive damages
resulting from disclosure permitted under this Section 12.18. Notwithstanding
anything to the contrary set forth herein or in any other express or implied
agreement or understanding, the obligations of confidentiality contained herein
or therein (the "Confidentiality Obligations") as they relate to the transaction
or transactions contemplated herein, shall not apply to the "structure or the
tax aspects," as that phrase is used in Section 1.6011-4T(b)(3) (or any
successor provision) of the U.S. Treasury Regulations (the "Confidentiality
Regulation") promulgated under Section 6011 of the Code, of such transaction or
transactions; provided, however, that the Confidentiality Obligations
nevertheless shall apply to any and all items of information not required to be
freely disclosable in order for the transaction or transactions not to be
treated as "offered under conditions of confidentiality" within the meaning of
the Confidentiality Regulation.
111
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
FINLAY FINE JEWELRY CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Sr. V.P., Treas., & CFO
Address:
000 Xxxxx Xxxxxx, 0xx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopier: (000) 000-0000
FINLAY ENTERPRISES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Sr. V.P., Treas., & CFO
Address:
000 Xxxxx Xxxxxx, 0xx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
with copies of all notices and other communications to be sent to:
Finlay Fine Jewelry Corporation
000 Xxxxx Xxxxxx, 0xx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
- and -
Blank Rome LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx XxXxxxxxx, Esq.
Telecopier: (000) 000-0000
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT]
GENERAL ELECTRIC CAPITAL
CORPORATION, Individually and
as Administrative Agent
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Duly Authorized Signatory
Address:
000 Xxxxxxxxxxx Xxxxxx, Xxx Xxxxx
Xxxxxxx, XX 00000
Attention: Account Manager - Finlay
Telecopier: (000) 000-0000
with copies of all notices and other communications to be sent to:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Commercial Finance Legal Counsel
Telecopier: (000) 000-0000
-and-
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
FLEET PRECIOUS METALS, INC.,
Individually and as Documentation Agent
By: /s/ Xxxxx X. XxXxxxxxx
-----------------------------------------
Name: Xxxxx X. XxXxxxxxx
Title: Vice President
Address:
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxx X. XxXxxxxxx, Vice President
Telecopier: (000) 000-0000
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT]
ABN AMRO BANK N.V.
By: /s/ Xxxxxx X. Spurga
------------------------------------
Name: Xxxxxx X. Spurga
Title: Vice President
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
Address:
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Spurga
Telecopier: (000) 000-0000
BANK LEUMI USA
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: Vice President
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Address:
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxx
Telecopier: (000) 000-0000
JPMORGAN CHASE BANK
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
Address:
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxx Xxxxxxx, Vice President
Telecopier: (000) 000-0000
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT]
FOOTHILL CAPITAL CORPORATION
By: /s/ Xxx Xxxx
---------------------------------------------
Name: Xxx Xxxx
Title: Account Executive/Assistant Vice President
Address:
0000 Xxxxxxxx Xxx., Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxx Xxxx
Telecopier: (000) 000-0000
TRANSAMERICA BUSINESS CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
Address:
000 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx X-000
Xxx, XX 00000
Attention: Xxxxx Xxxxx
Telecopier: (000) 000-0000
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT]
