EXHIBIT 10.1
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
by and among
CHARMING SHOPPES, INC.
CHARMING SHOPPES OF DELAWARE, INC.
CSI INDUSTRIES, INC.
CATHERINES STORES CORPORATION
LANE XXXXXX, INC.
FB APPAREL, INC.
and
CROSSTOWN TRADERS, INC.
as Borrowers,
and
CHARMING SHOPPES OF DELAWARE, INC.
as Administrative Borrower,
and certain other Subsidiaries of Charming Shoppes, Inc.
as Guarantors
and
THE LENDERS AND ISSUING BANKS FROM TIME TO TIME PARTY HERETO
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent
and
WACHOVIA CAPITAL MARKETS LLC,
X.X. XXXXXX SECURITIES, INC.
BANC OF AMERICA SECURITIES LLC,
as Joint Lead Arrangers and Bookrunners
and
JPMORGAN CHASE BANK, N.A.
BANK OF AMERICA, N.A.,
as Syndication Agents
and
XXXXX FARGO FOOTHILL, LLC,
as Documentation Agent
Dated: July 28, 2005
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.........................................................2
SECTION 2. CREDIT FACILITIES..................................................33
2.1 Loans.............................................................33
2.2 Letters of Credit.................................................35
2.3 Joint and Several Liability.......................................38
2.4 Increase in the Maximum Credit....................................39
SECTION 3. INTEREST AND FEES..................................................41
3.1 Interest..........................................................41
3.2 Fees..............................................................43
3.3 Changes in Laws and Increased Costs of Loans......................43
3.4 Mitigation Obligations; Replacement of Lenders....................46
SECTION 4. CONDITIONS PRECEDENT...............................................46
4.1 Conditions Precedent to Initial Loans and Letters of Credit.......46
4.2 Conditions Precedent to All Loans and Letters of Credit...........47
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST..........................48
5.1 Grant of Security Interest........................................48
5.2 Excluded Property.................................................49
5.3 Special Provisions Regarding Collateral...........................50
5.4 Perfection of Security Interests..................................50
5.5 Authorization for UCC Release Documents...........................53
SECTION 6. COLLECTION AND ADMINISTRATION......................................54
6.1 Borrowers' Loan Accounts..........................................54
6.2 Statements........................................................54
6.3 Collection of Accounts............................................55
6.4 Payments..........................................................57
6.5 Taxes.............................................................58
6.6 Authorization to Make Loans.......................................60
6.7 Use of Proceeds...................................................60
6.8 Pro Rata Treatment................................................61
6.9 Sharing of Payment, Etc...........................................61
6.10 Settlement Procedures.............................................62
6.11 Obligations Several; Independent Nature of Lenders' Rights........64
6.12 Appointment of Administrative Borrower as Agent for Requesting
Loans and Receipts of Loans and Statements........................64
(ii)
SECTION 7. COLLATERAL COVENANTS...............................................65
7.1 Intentionally Deleted.............................................65
7.2 Accounts Covenants................................................65
7.3 Inventory Covenants...............................................66
7.4 Bills of Lading and Other Documents of Title......................67
7.5 Power of Attorney.................................................68
7.6 Right to Cure.....................................................69
7.7 Access to Premises................................................69
SECTION 8. REPRESENTATIONS AND WARRANTIES.....................................69
8.1 Corporate Existence, Power and Authority; Subsidiaries............69
8.2 Financial Statements; No Material Adverse Change..................70
8.3 Collateral Locations..............................................70
8.4 Priority of Liens' Title to Properties............................70
8.5 Tax Returns.......................................................70
8.6 Litigation........................................................71
8.7 Compliance with Other Agreements and Applicable Laws..............71
8.8 Environmental Compliance..........................................72
8.9 Employee Benefits.................................................72
8.10 Bank Accounts. ..................................................73
8.11 Intellectual Property.............................................73
8.12 Capitalization....................................................74
8.13 Labor Disputes....................................................74
8.14 Corporate Names; Prior Transactions...............................74
8.15 Inactive Subsidiaries.............................................75
8.16 Restrictions on Subsidiaries......................................75
8.17 Material Contracts................................................75
8.18 Credit Card Agreements............................................75
8.19 Interrelated Businesses...........................................75
8.20 Accuracy and Completeness of Information..........................76
8.21 Survival Of Warranties; Cumulative................................76
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS.................................76
9.1 Maintenance of Existence..........................................76
9.2 New Collateral Locations..........................................77
9.3 Compliance with Laws, Regulations, Etc............................77
9.4 Payment of Taxes and Claims.......................................78
9.5 Insurance.........................................................78
9.6 Financial Statements, Collateral Reporting and Other Information.79
9.7 Consolidation and Merger; Dissolution.............................81
9.8 Sales of Assets...................................................82
9.9 Encumbrances......................................................83
9.10 Indebtedness......................................................84
9.11 Loans, Advances and Investments...................................86
9.12 Acquisitions......................................................87
(iii)
9.13 Guarantees........................................................90
9.14 New Subsidiaries..................................................91
9.15 Dividends and Redemptions.........................................92
9.16 Transactions with Affiliates......................................93
9.17 Compliance with ERISA.............................................93
9.18 End of Fiscal Years: Fiscal Quarters..............................94
9.19 Change in Business................................................94
9.20 Limitation of Restrictions Affecting Subsidiaries.................94
9.21 Fixed Charge Coverage Ratio.......................................95
9.22 Credit Card Agreements............................................95
9.23 Use of Private Label Credit Cards.................................95
9.24 Change of Control of Parent's Subsidiaries........................95
9.25 Costs and Expenses................................................96
9.26 Further Assurances................................................97
9.27 Modifications to Other Agreements.................................97
9.28 Foreign Assets Control Regulations, Etc...........................97
SECTION 10. EVENTS OF DEFAULT AND REMEDIES....................................97
10.1 Events of Default.................................................97
10.2 Remedies.........................................................100
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW.....104
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver................................................104
11.2 Waiver of Notices. .............................................105
11.3 Amendments and Waivers...........................................105
11.4 Waiver of Counterclaims..........................................107
11.5 Indemnification..................................................107
SECTION 12. THE AGENT........................................................108
12.1 Appointment, Powers and Immunities...............................108
12.2 Reliance by Agent................................................109
12.3 Events of Default................................................109
12.4 Wachovia in its Individual Capacity..............................109
12.5 Indemnification..................................................110
12.6 Non-Reliance on Agent and Other Lenders..........................110
12.7 Failure to Act...................................................110
12.8 Additional Revolving Loans.......................................111
12.9 Concerning the Collateral and the Related Financing Agreements...111
12.10 Field Audit, Examination Reports and other information;
Disclaimer by Lenders............................................111
12.11 Collateral Matters...............................................112
12.12 Agency for Perfection............................................114
12.13 Successor Agent..................................................114
12.14 Other Agent Designations.........................................114
12.15 Resignation of Issuing Bank......................................115
(iv)
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS.................................115
13.1 Term.............................................................115
13.2 Interpretative Provisions........................................116
13.3 Notices..........................................................117
13.4 Partial Invalidity...............................................118
13.5 Confidentiality..................................................119
13.6 Successors.......................................................120
13.7 Assignments; Participations......................................120
13.8 Entire Agreement.................................................122
13.9 USA Patriot Act..................................................122
13.10 Counterparts.....................................................123
SECTION 14. ACKNOWLEDGMENT AND RESTATEMENT...................................123
14.1 Acknowledgment of Existing Obligations...........................123
14.2 Acknowledgment of Security Interests.............................123
14.3 Existing Financing Agreements....................................123
14.4 Restatement......................................................124
(v)
INDEX
TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Compliance Certificate
Exhibit C Commitments
Exhibit D Form of Investment Property Control Agreement
Exhibit E Form of Guarantor Joinder Agreement
Exhibit 1.17 Borrowing Base Certificate
Exhibit 5.5 Form of UCC-3 Release for Excluded Property
Exhibit 9.6 Form of Inventory Report
Omnibus Schedule 1 Part (1) Subsidiaries; Part (3) Inactive Subsidiaries;
Part (7) Excluded Subsidiaries
Omnibus Schedule 2 Inventory Locations/Real Property Locations
Omnibus Schedule 5 Pledged Stock
Omnibus Schedule 8 Litigation/Investigations
Omnibus Schedule 11 Environmental Compliance
Omnibus Schedule 16 Tax Returns
Schedule 1.71 Existing Letters of Credit
Schedule 1.83 List of Guarantors
Schedule 6.3 Deposit Accounts and Merchant Payment Arrangements
Schedule 8.11 Intellectual Property
Schedule 8.13 Collective Bargaining Agreements
Schedule 8.14 Prior Corporate Transactions
Schedule 8.17 Material Contracts
Schedule 8.18 Credit Card Agreements
(vi)
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Second Amended and Restated Loan and Security Agreement dated July
28, 2005 is entered into by and among Charming Shoppes, Inc., a Pennsylvania
corporation ("Parent"), Charming Shoppes of Delaware, Inc., a Pennsylvania
corporation ("CS Delaware"), CSI Industries, Inc., a Delaware corporation
("CSI"), FB Apparel, Inc., an Indiana corporation ("FB Apparel"), Catherines
Stores Corporation, a Tennessee corporation ("Catherines"), Lane Xxxxxx, Inc., a
Delaware corporation ("LB"); Crosstown Traders, Inc., a Delaware corporation
("Crosstown" and, together with Parent, CS Delaware, CSI, FB Apparel,
Catherines, LB, and Crosstown hereinafter referred to individually as a
"Borrower" and collectively as "Borrowers") and CS Delaware in its capacity as
agent for itself as a Borrower and for the other Borrowers ("Administrative
Borrower"), those certain Subsidiaries of Parent parties hereto, whether by
execution of this Agreement or by a Guarantor Joinder Agreement (collectively,
the "Guarantors"), the financial institutions from time to time parties hereto
as lenders, whether by execution of this Agreement or an Assignment and
Acceptance (each individually, a "Lender" and collectively, "Lenders" as
hereinafter further defined) and Wachovia Bank, National Association, a national
banking association (as successor by merger to Congress Financial Corporation, a
Delaware corporation), in its capacity as agent for Lenders (in such capacity,
"Agent" as hereinafter further defined).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrowers (excluding Crosstown), together with certain
Subsidiaries, operate a chain of retail apparel stores and certain related
businesses and Crosstown and its Subsidiaries operate a direct marketing
business selling apparel, food and specialty gifts; and
WHEREAS, Agent, certain lenders, Borrowers (other than Crosstown) and
Administrative Borrower entered into financing arrangements pursuant to which
certain lenders made loans and advances and provided other financial
accommodations to Borrowers (other than Crosstown) as set forth in the Amended
and Restated Loan and Security Agreement, dated January 29, 2004, by and among
the lenders party thereto, Agent, and Borrowers (other than Crosstown) (the
"Existing Loan Agreement", and together with all agreements, documents and
instruments at any time executed and/or delivered in connection therewith or
related thereto, as from time to time amended, modified, supplemented, extended,
renewed, restated or replaced prior to the date hereof, including by the Joinder
Agreement (as hereinafter defined) collectively, the "Existing Financing
Agreements"); and
WHEREAS, Crosstown and its Subsidiaries were added as Borrowers under
the Existing Financing Agreement pursuant to a Joinder and Amendment Agreement
dated as of June 2, 2005 among Crosstown and its Subsidiaries and the Agent (the
"Joinder Agreement"); and
WHEREAS, Borrowers and the other Obligors (as defined below) have
requested that Agent and Lenders amend and restate the Existing Loan Agreement
and continue to provide financing arrangements pursuant to which each Lender
(severally and not jointly) shall make loans and provide other financial
accommodations to Borrowers; and
WHEREAS, Agent and Lenders have agreed to amend and restate the
Existing Loan Agreement and each Lender (severally and not jointly) has agreed
to continue to make such loans and provide such other financial accommodations
to Borrowers on a pro rata basis according to its Commitment (as defined below)
on the terms and conditions set forth herein and Agent has agreed to continue to
act as agent for Lenders on the terms and conditions set forth herein and the
other Financing Agreements.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall have the meaning given to such term in the UCC and
shall also include, without limitation, all present and future rights of each
Obligor to payment of a monetary obligation whether or not earned by
performance, which is not evidenced by chattel paper or an instrument, (a) for
property that has been or is to be sold, leased, licensed, assigned or otherwise
disposed of, (b) for services rendered or to be rendered, (c) for a secondary
obligation incurred or to be incurred, or (d) consisting of Credit Card
Receivables.
1.2 "Additional L/C Accommodations" shall mean the Letters of Credit
(including, without limitation, Existing Letters of Credit), guarantees and
other financial accommodations provided by Issuing Bank to the Additional L/C
Debtors pursuant to the Trade Financing Agreements.
1.3 "Additional L/C Collateral" shall mean the "Collateral" as defined
in the Trade Financing Agreement as in effect on the date hereof.
1.4 "Additional L/C Debt" shall mean, collectively, the reimbursement
obligations with respect to the Additional L/C Accommodations and other
indebtedness owed by the Additional L/C Debtors to Agent pursuant to the Trade
Financing Agreements.
1.5 "Additional L/C Debtors" shall mean, individually and collectively,
Sentani Trading Limited, Trimoland Limited, Huambo Limited, CS Insurance Ltd.
and any other Subsidiary of Parent designated as an Additional L/C Debtor in a
writing by Administrative Borrower delivered to Agent after the date hereof so
long as such Additional L/C Debtor executes a Trade Financing Agreement and such
other documents as Agent may reasonably request.
1.6 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan comprising part of the same
borrowing (including conversions, extensions and renewals), the rate per annum
determined by dividing (a) the London Interbank Offered Rate for such Interest
Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve
Percentage. For purposes hereof, "Reserve Percentage" shall mean for any day,
that percentage (expressed as a decimal) which is in effect from time to time
under Regulation D of the Board of Governors of the Federal Reserve System (or
any successor), as such regulation may be amended
2
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental, emergency,
special, or marginal reserves) applicable with respect to Eurocurrency
liabilities as that term is defined in Regulation D (or against any other
category of liabilities that includes deposits by reference to which the
interest rate of Eurodollar Loans is determined), whether or not any Lender has
any Eurocurrency liabilities subject to such reserve requirement at that time.
Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and as
such shall be deemed subject to reserve requirements without benefits of credits
for proration, exceptions or offsets that may be available from time to time to
a Lender. The Adjusted Eurodollar Rate shall be adjusted automatically on and as
of the effective date of any change in the Reserve Percentage and shall be
applicable to all Eurodollar Rate Loans requested on or after such date.
1.7 "Administrative Borrower" shall mean CS Delaware, in its capacity
as Administrative Borrower on behalf of itself and the other Borrowers pursuant
to Section 6.12 hereof and it successors and assigns in such capacity.
1.8 "Affiliates" shall mean, with respect to a specified Person, a
partnership, corporation or any other person which directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with such Person, and without limiting the generality of the
foregoing, includes (a) any Person which beneficially owns or holds ten (10%)
percent or more of any class of Voting Stock of such Person or other equity
interests in such Person, (b) any Person of which such Person beneficially owns
or holds ten (10%) percent or more of any class of Voting Stock and (c) any
director or executive officer of such Person. For the purposes of this
definition, the term "control" (including with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of Voting Stock or by agreement or otherwise. For purposes
of Section 9.16 only, with respect to Obligors, the term "Affiliate" shall
exclude Parent and any Subsidiary of Parent.
1.9 "Agent" shall mean Wachovia Bank, National Association (as
successor by merger to Congress Financial Corporation), in its capacity as agent
on behalf of Lenders pursuant to the terms hereof and any replacement or
successor agent hereunder.
1.10 "Agent Payment Account" shall mean account no. 5000000030279 of
Agent at Wachovia, or such other account of Agent as Agent may from time to time
designate to Administrative Borrower as the Agent Payment Account for purposes
of this Agreement and the other Financing Agreements.
1.11 "Agreement" shall mean this Second Amended and Restated Loan and
Security Agreement, as amended, modified, extended or restated from time to
time.
1.12 "Applicable L/C Fee Rate" shall mean, at any time, as to the
letter of credit fee to be charged by Agent in accordance with Section 3.2(b)
hereof in respect of Letters of Credit , the applicable percentage (on a per
annum basis) set forth below if Monthly Average Excess Availability is at or
within the amounts indicated for such percentage:
3
Monthly Average Documentary Standby
Tier Excess Availability LC's LC's
---- ------------------- ---- ----
Tier 1 Greater than $150,000,000 and LTM .50% 1.0%
EBITDA equal to or greater than
$190,000,000
Tier 2 Less than or equal to $150,000,000 but .625% 1.125%
greater than $100,000,000
Tier 3 Less than or equal to $100,000,000 .75% 1.25%
provided, that, the Applicable L/C Fee Rate shall be adjusted each fiscal month
as of the 16th day of such fiscal month (the "Adjustment Date") based upon the
Monthly Average Excess Availability and shall be effective on the Adjustment
Date as to all Letters of Credit. On the Closing Date, the Applicable L/C Fee
Rates shall be those set forth in Tier 1 above. Notwithstanding the foregoing,
the Tier 1 Applicable L/C Fee Rate shall only be in effect if both the Monthly
Excess Availability and LTM EBITDA thresholds are satisfied; in the event the
criteria in Tier 1 is satisfied with respect to the Excess Availability
threshold but not with respect to the LTM EBITDA threshold, then the Applicable
L/C Fee Rate in Tier 2 shall be in effect. For purposes of determining the
Applicable L/C Fee Rate, LTM EBITDA shall be determined for the twelve (12)
month period ended as of the last fiscal quarter for which Agent has received
financial statements in accordance with Section 9.6 hereof.
1.13 "Applicable Margin" shall mean, at any time, as to the Interest
Rate for Prime Rate Loans and the Interest Rate for Eurodollar Rate Loans, the
applicable percentage (on a per annum basis) set forth below if Monthly Average
Excess Availability is at or within the amounts indicated for such percentage:
Monthly Average LIBOR Prime Rate
Tier Excess Availability Applicable Margin Applicable Margin
---- ------------------- ----------------- -----------------
Tier 1 Greater than $150,000,000 and 1.00% 0%
LTM EBITDA equal to or greater
than $190,000,000
Tier 2 Less than or equal to $150,000,000 1.25% 0%
but greater than $100,000,000
Tier 3 Less than or equal to $100,000,000 1.50% 0%
provided, that, the Applicable Margin shall be adjusted each fiscal month as of
the 16th day of such fiscal month (the "Adjustment Date") based upon the Monthly
Average Excess Availability and shall be effective on the Adjustment Date as to
all Prime Rate Loans and for each Eurodollar Rate Loan requested on or after
such Adjustment Date; as to each Eurodollar Rate Loan outstanding on such
Adjustment Date, the new Applicable Margin shall be effective as to each
4
such Eurodollar Rate Loan on the first day of the Interest Period commencing on
or after such Adjustment Date. On the Closing Date, the Applicable Margins shall
be those set forth in Tier 1 above; in the event the criteria in Tier 1 is
satisfied with respect to the Excess Availability threshold but not with respect
to the LTM EBITDA threshold, then the Applicable Margin in Tier 2 shall be in
effect. The Applicable Margins set forth in Tier 1 shall only be in effect if
both the Monthly Excess Availability and LTM EBITDA thresholds are satisfied.
For purposes of determining the Applicable Margins, LTM EBITDA shall be
determined for the twelve (12) month period ended as of the last fiscal quarter
for which Agent has received financial statements in accordance with Section 9.6
hereof.
1.14 "Assignment and Acceptance" shall mean an Assignment and
Acceptance Agreement substantially in the form of Exhibit A attached hereto
(with blanks appropriately completed) delivered to Agent in connection with an
assignment of a Lender's interest hereunder in accordance with the provisions of
Section 13.8 hereof.
1.15 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.16 "Borrowing Base" shall mean, at any time the amount equal to:
(a) the lesser of: (i) ninety (90%) percent of the Value of the
Eligible Inventory (excluding fabric and food) or (ii) ninety (90%) percent of
the Net Recovery Cost Percentage multiplied by the Value of the Eligible
Inventory (excluding fabric and food), plus
(b) the lesser of:
(i) the lesser of (A) ninety (90%) percent of the Value of the
Eligible Inventory which is food or (B) ninety (90%) percent of the Net
Recovery Cost Percentage multiplied by the Value of the Eligible
Inventory which is food, and
(ii) $10,000,000, plus
(c) the lesser of:
(i) the lesser of (A) ninety (90%) percent of the Value of the
Eligible Inventory which is fabric or (B) ninety (90%) percent of the
Net Recovery Cost Percentage multiplied by the Value of the Eligible
Inventory which is fabric, and
(ii) $3,000,000, plus
(d) the lesser of: (i) eighty-five (85%) percent of the Net Amount of
Eligible Installment Sale Receivables or (ii) $25,000,000, plus
(e) 100% of Qualified Cash, plus
(f) the lesser of: (i) eighty-five (85%) percent of the Net Amount of
Eligible Private Label Receivables or (ii) $50,000,000, provided, that,
Administrative Borrower shall give Agent no less than five (5) Business Days
written notice that it will be including Eligible Private Label Receivables in
the Borrowing Base (which notice shall be accompanied by a completed
5
Borrowing Base Certificate setting forth all information required thereon with
respect to such Eligible Private Label Receivables as of the end of the prior
fiscal month), less
(g) any Reserves.
1.17 "Borrowing Base Certificate" shall mean a report substantially in
the form of Exhibit 1.17 hereto, as the same may from time to time be modified
by Agent in consultation with Administrative Borrower, which is duly completed
as provided in Section 9.6 hereof and executed by a financial officer of
Administrative Borrower on behalf of all Obligors and delivered to Agent.
1.18 "Business Day" shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close under
the laws of the State of New York, or the State of North Carolina, and a day on
which Agent is open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market or other applicable
Eurodollar Rate market.
1.19 "Capital Expenditure" shall mean all expenditures for any fixed or
capital assets or improvements, including, but not limited to, the purchase or
construction of equipment or other physical assets.
1.20 "Capital Leases" shall mean, as applied to any Person, any lease
of (or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.21 "Capital Stock" shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's capital stock, partnership interests or limited liability
company interests at any time outstanding, and any and all rights, warrants or
options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.22 "Cash Dominion Event" shall mean the earlier to occur of (a) the
date on which an Event of Default shall have occurred and be continuing, or (b)
the date on which Excess Availability is less than the greater of (i)
$15,000,000 or (ii) ten (10%) percent of the Borrowing Base.
1.23 "Catalog Seller" shall mean Catalog Seller LLC, a Delaware limited
liability company, and its successors and assigns.
1.24 "Catherines Card" shall mean the private label credit card or
private label credit cards issued by a Credit Card Issuer or the Financing
Subsidiaries (or any subsequent Credit Card Issuer replacing the Financing
Subsidiaries with respect to such private label credit card or private label
credit cards) to customers or prospective customers of Catherines.
6
1.25 "C.D. Credit Plan Agreement" shall mean the Consumer Credit Plan
Agreement dated as of August 12, 1994, as amended and restated as of March 26,
1996 and as of June 1, 1999, between CS Delaware and FSC, as amended, modified,
supplemented or restated from time to time.
1.26 "Change of Control" shall mean (a) the acquisition by any Person
or group (as such term is used in Section 13(d)(3) of the Exchange Act) of
beneficial ownership, directly or indirectly, of fifty (50%) percent or more of
the voting power of the total outstanding Voting Stock of Parent; or (b) during
any period of two (2) consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of Parent (together with any new
directors whose nomination for election by the stockholders of Parent or
appointment by the Board of Directors, as the case may be, was approved by a
vote of at least two thirds (2/3) of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of Parent then still in office.
1.27 "Co-Branded Card" shall mean a revolving Visa or Mastercard which
account is co-branded with "Fashion Bug" stores or the name of any Obligor.
1.28 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.29 "Collateral" shall mean the Collateral (as defined in Section 5.1
hereof).
1.30 "Collateral Access Agreement" shall mean an agreement in writing
in form and substance reasonably satisfactory to Agent from (a) any lessor of
premises on which Collateral is located, any owner or operator of any premises
on which Collateral is located, or any mortgagee of any premises owned by any
Subsidiary of Parent (excluding, in any such case, the following premises: (i)
any Retail Store location, (ii) any premises on which Inventory not in excess of
$1,000,000 at any time is located, or (iii) any chief executive office of an
Obligor if (A) the Inventory at such location does not exceed $1,000,000 at any
time and (B) either (1) no Records are stored or maintained at such location or
(2) the Records stored or maintained at such location are also stored or
maintained at a location for which Agent has received a Collateral Access
Agreement) or (b) any other person to whom any Collateral is consigned or who
has custody, control or possession of any such Collateral (excluding any common
carrier or any other Person transporting any such Collateral).
1.31 "Concentration Account" shall mean individually and collectively,
(a) the collection and cash management accounts of CS Delaware at Wachovia and
(b) such other collection and cash management accounts established by Borrowers
and Guarantors in accordance with the provisions of this Agreement.
1.32 "Commitment" shall mean, at any time, as to each Lender, the
principal amount designated as its Commitment set forth next to such Lender's
name on Exhibit C hereto, as the same may be adjusted from time to time in
accordance with Section 2.4 hereof or on Schedule 1 to the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in
7
accordance with the provisions of Section 13.8 hereof, as the same may be
adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as "Commitments".
1.33 "Consolidated Net Income" shall mean, with respect to any Person
for any period, the aggregate of the net income (loss) of such person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary and/or unusual and non-recurring gains and
non-cash losses with respect to the write down of fixed and intangible assets)
after deducting all charges which should be deducted before arriving at the net
income (loss) for such period and, without duplication, after deducting the
Provision for Taxes for such period, all as determined in accordance with GAAP
consistently applied; provided, that, (i) the net income for any Person that is
not a wholly owned Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid or payable to such Person or a wholly owned Subsidiary of
such Person; (ii) except to the extent included pursuant to the foregoing
clause, the net income of any Person accrued prior to the date it becomes a
wholly owned Subsidiary of such Person or is merged into or consolidated with
such Person or any of its wholly owned Subsidiaries or that Person's assets are
acquired by such Person or by its wholly owned Subsidiaries shall be excluded;
and (iii) the net income (if positive) of any wholly owned Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by
such wholly owned Subsidiary to such Person or to any other wholly owned
Subsidiary of such Person is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to such wholly owned Subsidiary shall
be excluded. For the purposes of this definition, net income excludes any gain
or loss (exclusive of non-cash losses with respect to the write down of fixed
assets), together with any related Provision for Taxes for such gain, realized
upon the sale or other disposition of any assets that are sold out of the
ordinary course of business (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or of any Capital Stock of such
Person or a Subsidiary of such Person and any net income realized or loss
incurred as a result of changes in accounting principles or the application
thereof to such Person.
1.34 "Cost" shall mean, as to the Inventory as of any date, the cost of
such Inventory as of such date, determined under the retail method of accounting
in accordance with GAAP. For purposes of determining "cost" of Inventory
hereunder, with respect to any Inventory sold by an Obligor to another Obligor,
such term shall mean the original cost thereof to such Obligor which originally
purchased such Inventory and shall not include any xxxx up or profit on such
intercompany sale.
1.35 "Credit Balance Cash Collateral" shall have the meaning set forth
in Section 6.4(b) hereof.
1.36 "Credit Card Acknowledgments" shall mean, individually and
collectively, the agreements in favor of Agent by Credit Card Issuers or Credit
Card Processors who are parties to Credit Card Agreements acknowledging the
security interest of Agent in the monies due and to become due to any Obligor
(including, without limitation, credits and reserves) under the Credit Card
Agreements, and agreeing to transfer all such amounts to the Blocked Accounts,
as
8
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.37 "Credit Card Agreements" shall mean the C.D. Credit Plan Agreement
and all other agreements now or hereafter entered into by any Obligor with any
Credit Card Issuer or any Credit Card Processor, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, including, but not limited to, as to Borrowers, the agreements set
forth on Schedule 8.18 hereto.
1.38 "Credit Card Issuer" shall mean any Person (including Crosstown,
each of Crosstown's Subsidiaries and each of the Financing Subsidiaries and any
other applicable Obligor) who issues or whose members issue credit cards,
including, without limitation, MasterCard or VISA bank credit or debit cards or
other bank credit or debit cards issued through MasterCard International, Inc.,
Visa, U.S.A., Inc. or Visa International and American Express, Discover, Diners
Club, any Private Label Credit Card and other non-bank credit or debit cards,
including, without limitation, credit or debit cards issued by or through
American Express Travel Related Services Company, Inc.
1.39 "Credit Card Processor" shall mean any servicing or processing
agent or any factor or financial intermediary who facilitates, services,
processes or manages the credit authorization, billing transfer and/or payment
procedures with respect to any sales transactions of Obligors involving credit
card or debit card purchases by customers using credit cards or debit cards
issued by any Credit Card Issuer. FSC shall be deemed a Credit Card Processor in
respect of the Fashion Bug Card, the Co-Branded Card and the Catherines Card.
1.40 "Credit Card Receivables" shall mean collectively, (a) all present
and future rights of any Obligor to payment from any Credit Card Issuer, Credit
Card Processor or other third party arising from sales of goods or rendition of
services to customers who have purchased such goods or services using a credit
or debit card, and (b) all present and future rights of any Obligor to payment
from any Credit Card Issuer, Credit Card Processor or other third party in
connection with the sale or transfer of Credit Card Receivables arising pursuant
to the sale of goods or rendition of services to customers who have purchased
such goods or services using a credit card or a debit card, including, but not
limited to, all amounts at any time due or to become due from any Credit Card
Issuer or Credit Card Processor under the Credit Card Agreements or otherwise.
1.41 "Credit Facility" shall mean the Loans and Letters of Credit
provided to or for the benefit of Borrowers hereunder.
1.42 "Crosstown" shall mean Crosstown Traders, Inc., a Delaware
corporation and its successors and assigns.
1.43 "Crosstown Originator Accounts" shall mean revolving charge
accounts maintained by a Crosstown Originator, including accounts that have been
written off as uncollectible.
1.44 "Crosstown Originators" shall mean, collectively, Crosstown
Traders, Inc., its Subsidiaries (other than the Figi Companies) and their
respective successors and assigns; each sometimes being referred to herein
individually as a "Crosstown Originator".
9
1.45 "Crosstown Purchase Agreements" shall mean, individually and
collectively, the Stock Purchase Agreement, dated as of May 19, 2005, by
Chestnut Acquisition Sub, Inc. and Sellers, and all agreements, documents and
instruments executed and delivered in connection therewith, as all of the
foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced but shall exclude any of the Financing
Agreements.
1.46 "Crosstown Securitization Program Assets" means (a) all Crosstown
Securitized Receivables, (b) all Crosstown Securitization Related Assets, and
(c) all collections (including recoveries) and other proceeds of the assets
described in the foregoing clauses; provided, that , Crosstown Securitization
Program Assets shall not include Crosstown Securitized Receivables that are at
any time repurchased by any Borrower or Guarantor in accordance with the terms
of a Crosstown Securitization Transaction unless such Crosstown Securitized
Receivables have become subject to another Crosstown Securitization Transaction.
1.47 "Crosstown Securitization Transaction" shall mean the transaction
or series of transactions (whether on-balance sheet or off-balance sheet, in the
form of a sale, a loan or other transaction) entered into by the Crosstown
Originators pursuant to which the Crosstown Originators may (directly or
indirectly) sell, convey or otherwise transfer to a Financing Subsidiary, or may
grant a security interest in, any Crosstown Securitization Program Assets
(whether now existing or arising in the future).
1.48 "Crosstown Securitized Receivables" means all rights to payment of
a Crosstown Originator in respect of Crosstown Originator Accounts, whether
constituting finance charges, amounts billed in respect of purchases of
merchandise or services, credit insurance premiums, rights to interchange,
returned check or other charges, fees or other amounts.
1.49 "Crosstown Securitization Related Assets" means with respect to
Crosstown Securitized Receivables: (a) any rights, remedies, powers and
privileges with respect to the Crosstown Securitized Receivables (including
rights in respect of Liens securing such Crosstown Securitized Receivables and
other credit support in respect of such Crosstown Securitized Receivables), (b)
all funds received from or on behalf of the obligors thereon, or applied to
amounts owed by such obligors (including without limitation insurance payments
and proceeds of sale or other disposition of Crosstown Securitized Receivables),
(c) all contracts, books and records that relate to the Crosstown Securitized
Receivables, (d) any proceeds of such Crosstown Securitized Receivables and any
lockboxes or accounts in which such proceeds are deposited, (e) any spread
accounts of the Financing Subsidiaries or Special Purpose Vehicles or any other
similar account (or deposits therein) established in connection with a Crosstown
Securitization Transaction, (f) any warranty, indemnity, dilution and other
intercompany claim arising out of the documents pursuant to which Crosstown
Securitized Receivables are securitized and (g) other assets of Crosstown
Originators which are transferred or in respect of which Liens are customarily
granted in connection with asset securitization transactions involving accounts
receivable; provided, that, the Crosstown Securitization Related Assets shall
not include any returned, repossessed or foreclosed goods and/or merchandise the
sale by any Obligor of which gave rise to a Crosstown Securitized Receivable
that constitutes a Crosstown Securitization Related Asset.
10
1.50 "CS Securitization Undertaking" means (i) any extension of credit
by CS Delaware, Parent or any other Obligor to a Financing Subsidiary, (ii) any
capital contribution or other investment by CS Delaware or Parent in a Financing
Subsidiary, (iii) any agreement by CS Delaware or Parent to guarantee or
otherwise become liable for the obligations of a Financing Subsidiary (which
agreement does not provide that CS Delaware or Parent shall xxxxx x Xxxx on any
Collateral in support of any guarantee or support of any Financing Subsidiary),
or (iv) any covenant, representation, warranty or indemnity given by an Obligor
pursuant to a Crosstown Securitization Transaction or another Permitted
Securitization Transaction that is customary in securitization transactions and
does not constitute recourse for credit losses.
1.51 "Default" shall mean an act, condition or event which with notice
or passage of time or both would constitute an Event of Default.
1.52 "Defaulting Lender" shall have the meaning set forth in Section
6.10 hereof.
1.53 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance reasonably satisfactory to Agent, by and among
Agent, an Obligor, with a deposit account at any bank and the bank at which such
deposit account is at any time maintained which provides that such bank will
comply with instructions originated by Agent directing disposition of the funds
in the deposit account without further consent by such Obligor and has such
other terms and conditions as Agent may reasonably require in accordance with
the terms of this Agreement.
1.54 "EBITDA" shall mean, as to any person, with respect to any period,
an amount equal to: (a) the Consolidated Net Income of such Person and its
Subsidiaries for such period, plus (b) depreciation, amortization and other
non-cash charges (including, but not limited to, imputed interest and deferred
compensation) for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), all in accordance with GAAP, plus (c)
Interest Expense for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), plus (d) charges for Federal, State,
local and foreign income taxes for such period (to the extent deducted in the
computation of Consolidated Net Income for such Person).
1.55 "Eligible Installment Sales Receivables" shall mean, as to any of
the Figi Companies, Installment Sales Receivables of such Obligor which satisfy
each of the criteria applicable thereto pursuant to this definition (provided,
that, to the extent an Account debtor may use a credit card or debit card to pay
any installment in respect of an Installment Sales Receivable, the amount of the
Installment Sales Receivable shall be deemed reduced by the amount of such
payment). Installment Sales Receivables shall be Eligible Installment Sales
Receivables if:
(a) such Installment Sales Receivables arise from the actual and bona
fide sale and delivery of goods by such Obligor to a customer in the ordinary
course of the business of such Obligor;
(b) the transaction and terms of sale giving rise to such Installment
Sales Receivables does not violate any applicable laws or regulations, the
documentation relating
11
thereto is legally sufficient under such laws and regulations and all practices
of such Obligor with respect to such Installment Sales Receivables comply in all
material respects with applicable Federal, State and local laws and regulations;
(c) such Installment Sales Receivables do not arise from sales on
consignment, guaranteed sale, sale and return, sale on approval, or other terms
under which payment by the Account debtor may be conditional or contingent
(other than pursuant to the right of return given to customers in the ordinary
course of business consistent with the practices of such Obligor as of the date
of such sale);
(d) such Installment Sales Receivables do not consist of xxxx and hold
invoices;
(e) the Account debtor with respect to such Installment Sales
Receivables has not returned the Inventory;
(f) such Installment Sales Receivables are subject to the first
priority, valid and perfected security interest of Agent;
(g) all procedures for evaluating the creditworthiness of the Account
debtor in respect thereof, established and used by such Obligor, have been
diligently and properly completed as to such Account debtor obligated in respect
of such Installment Sales Receivables, and the Account debtor with respect to
the Installment Sales Receivables is eligible for credit in the amount thereof
pursuant to the criteria established and used by such Obligor as of the date of
such sale;
(h) the terms of payment of such Installment Sales Receivables require
payments of no more than three (3) consecutive monthly installments;
(i) no payment with respect to such Installment Sales Receivable is
unpaid more than ninety (90) days past the original invoice date thereof (except
as permitted in (k) below) as reflected in the statements sent by such Obligor
to the Account debtor with respect thereto;
(j) no default or event of default under the terms of the sale giving
rise to such Installment Sales Receivables has occurred and is continuing, other
than a payment default to the extent described in clauses (i) or (k) of this
definition;
(k) such Installment Sales Receivables do not arise from sales made
pursuant to any deferred payment programs pursuant to which the initial payment
in respect thereof is not due within thirty (30) days of the shipment of the
Inventory the sale of which gave rise to such Installment Sales Receivable,
except, that, Installment Sales Receivable of such Obligor arising under the
holiday extended pay program from goods shipped in November and December which
otherwise satisfy the criteria of Eligible Installment Sales Receivables shall
be Eligible Installment Sales Receivables through April 30th of the immediately
succeeding calendar year; and
12
(l) such Installment Sales Receivables have not been and are not
required or intended to be sold or otherwise transferred pursuant to a Permitted
Securitization Transaction.
Any Installment Sales Receivables which are not Eligible Installment Sales
Receivables shall nevertheless be part of the Collateral.
1.56 "Eligible Inventory" shall mean Inventory of each Obligor
consisting of finished goods held for resale in the ordinary course of the
business of such Obligor and certain raw materials which satisfy the criteria
set forth below. In general, Eligible Inventory shall not include (a) packaging
and shipping materials and raw materials, provided, that, raw materials
consisting of fabric of Crosstown or its Subsidiaries and food of Figi Companies
shall be "Eligible Inventory"; (b) supplies used or consumed in such Obligor's
business; (c) Inventory at any distribution center leased by any Obligor unless
Agent shall have received a Collateral Access Agreement from the lessor of such
location executed and delivered by such lessor; (d) Inventory subject to a Lien
in favor of any person other than Agent except those permitted in this Agreement
that are subject to an intercreditor agreement in form and substance
satisfactory to Agent between the holder of such security interest or lien and
Agent; (e) xxxx and hold goods; (f) slow moving and obsolete Inventory;
provided, that, slow moving Inventory shall not include the immediately prior
season's Inventory to the extent it is included in the most recent appraisal of
Inventory received by Agent, in accordance with the terms of this Agreement; (g)
Inventory which is not subject to the first priority, valid and perfected
security interest of Agent; (h) damaged and/or defective Inventory; (i)
Inventory purchased or sold on consignment; (j) Inventory not located at: (i) a
premises set forth on Omnibus Schedule 2 hereto, (ii) a Retail Store location,
(iii) a premises owned by an Obligor, or (iv) a premises for which Agent shall
have received a Collateral Access Agreement from the lessor or owner of such
location executed and delivered by such lessor or owner unless Obligors are not
required in accordance with the definition of Collateral Access Agreement to
obtain a Collateral Access Agreement for such location or such requirement has
been waived by Agent in its reasonable discretion; (k) Inventory in transit to
any Obligor (except Inventory in transit (i) to a warehouse location of Obligors
listed on Omnibus Schedule 2 hereto, which Inventory is located in the United
States, has cleared United States customs and with respect to which all United
States import duties and foreign and domestic freight charges has been paid,
(ii) to the United States for which the foreign vendor thereof has been paid the
entire purchase price therefor and which is the subject of a xxxx of lading in
the possession of a customs broker from whom Agent has received a Collateral
Access Agreement, and (iii) to any Obligor from a warehouse location of another
Obligor); (l) Inventory held for return to vendors; (m) Inventory returned by
customers and not held for resale; (n) lay away Inventory; (o) Inventory
consisting of samples; (p) highly perishable Inventory; and (q) Inventory
located outside of the United States except to the extent such Inventory is
described in clause (ii) of subsection (k) and as may otherwise be agreed to by
Agent and Administrative Borrower. Any Inventory which is not Eligible Inventory
shall nevertheless be part of the Collateral.
1.57 "Eligible Private Label Receivables" shall mean, as to each
Obligor, Private Label Receivables of such Obligor which satisfy the criteria
set forth below. Private Label Receivables shall be Eligible Private Label
Receivables if:
13
(a) such Private Label Receivables arise from the actual and bona fide
sale and delivery of goods or rendition of services by an Obligor in the
ordinary course of the business of such Obligor;
(b) such Private Label Receivables do not arise from sales on
consignment, guaranteed sale, sale and return, sale on approval, or other terms
under which payment by the customer may be conditional or contingent (other than
pursuant to the right of return given to customers in the ordinary course of
business of such Obligor consistent with the practices of such Obligor as of the
date of such sale);
(c) the customer with respect to such Private Label Receivables has not
returned the Inventory purchased giving rise to such Private Label Receivables;
(d) all material procedures required by the cardholder agreement for
the Private Label Credit Card used and the credit and collection policies of
such Obligor shall have been followed by such Obligor;
(e) the customer with respect to such Private Label Receivable has not
failed to make a minimum payment on such customer's account for three (3)
consecutive months, and if such failure has occurred, it is not continuing as of
the date of determination of eligibility;
(f) all procedures for evaluating the creditworthiness of the customer
in respect thereof, established and used by such Obligor, have been diligently
and properly completed as to such customer obligated in respect of such Private
Label Receivables, and the customer with respect to the Private Label
Receivables is eligible for credit in the amount thereof pursuant to the
criteria established and used by such Obligor;
(g) no event of default has occurred under the cardholder agreement for
the credit card or debit card used in the purchase which gave rise to such
Private Label Receivable;
(h) the customer with respect to such Private Label Receivables has not
declared bankruptcy and is otherwise deemed creditworthy in accordance with the
credit and collection policies of such Obligor;
(i) such Private Label Receivables are subject to the first priority,
valid and perfected security interest of Agent as to such Private Label
Receivables of such Obligor;
(j) the terms of the sale giving rise to such Private Label Receivables
and all practices of such Obligor with respect to such Private Label Receivables
comply in all material respects with applicable Federal, State and local laws
and regulations; and
(k) such Private Label Receivables have not been and are not required
or intended to be sold or otherwise transferred pursuant to a Permitted
Securitization Transaction.
Any Private Label Receivables which are not Eligible Private Label Receivables
shall nevertheless be part of the Collateral.
14
1.58 "Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor, and in each case is approved by Agent; and (d) for the purposes of
Section 2.4 only, any Person (other than a natural Person) approved by Agent and
Administrative Borrower (which approval shall not be unreasonably withheld or
delayed); provided, that, (i) no Obligor or any Affiliate of any Obligor shall
qualify as an Eligible Transferee; and (ii) no Person to whom any Indebtedness
which is in any way subordinated by agreement in right of payment to any other
Indebtedness of any Obligor shall qualify as an Eligible Transferee, except as
Agent may otherwise agree.
1.59 "Engagement Letter" shall mean the letter agreement, dated May 6,
2005, by and among Parent, Agent and Wachovia Capital Markets, LLC, setting
forth certain fees payable by Borrowers to Agent for the benefit of itself,
Affiliates of Agent and Lenders, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, such
Engagement Letter supersedes any previously executed Fee Letter (as such term is
defined in the Existing Loan Agreement).
1.60 "Environmental Laws" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Obligor and any
Governmental Authority, (a) relating to pollution and the protection or
restoration of the environment (including air, water vapor, surface water,
ground water, drinking water, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource), or to human health
or safety, (b) relating to the exposure to, or the use, storage, recycling,
treatment, generation, manufacture, processing, distribution, transportation,
handling, labeling, production, release or disposal, or threatened release, of
Hazardous Materials, or (c) relating to all laws with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials. The term "Environmental Laws" includes (i) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Federal
Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii)
applicable state counterparts to such laws, and (iii) any common law or
equitable doctrine that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or exposure to any
Hazardous Materials.
1.61 "Equipment" shall have the meaning given to such term in the UCC
and also shall include, without limitation, all of each Obligor's now owned and
hereafter acquired equipment,
15
wherever located, including machinery, data processing and computer equipment
and computer hardware and software, whether owned or licensed, and including
embedded software, vehicles, tools, furniture, fixtures (to the extent a
security interest may be perfected in a fixture under the UCC), all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith (other than Inventory), and substitutions and replacements thereof,
wherever located.
1.62 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as amended, together with all rules, regulations and
interpretations thereunder or related thereto.
1.63 "ERISA Affiliate" shall mean any Person required to be aggregated
with any Borrower or any of its Subsidiaries under Sections 414(b), 414(c),
414(m) or 414(o) of the Code.
1.64 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a
Plan which presents a material risk of termination by the Pension Benefit
Guaranty Corporation of any such Plan that is a single employer plan where such
termination could result in any liability to the Pension Benefit Guaranty
Corporation; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" as defined in Section 4975(c) of the Code or in Section 406 of
ERISA with respect to which any Borrower or any of its Subsidiaries would be
liable; (f) a complete or partial withdrawal by any Borrower or any ERISA
Affiliate from a Multiemployer Plan or a cessation of operations which is
treated as such a withdrawal or notification that a Multiemployer Plan is in
reorganization; (g) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or
the commencement of proceedings by the Pension Benefit Guaranty Corporation to
terminate a Plan or Multiemployer Plan; (h) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan; (i) the imposition of any liability under Title IV of ERISA,
other than the Pension Benefit Guaranty Corporation premiums due but not
delinquent under Section 4007 of ERISA, upon any Borrower or any ERISA
Affiliate; and (j) any other event or condition with respect to a Plan or
Multiemployer Plan or any Plan subject to Title IV of ERISA maintained, or
contributed to, by any ERISA Affiliate that could reasonably be expected to
result in liability of any Obligor.
1.65 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.66 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
16
1.67 "Excess Availability" shall mean the amount, as determined by
Agent, calculated at any date, equal to: (a) the Borrowing Base (after giving
effect to any Reserves other than any Reserves in respect of Letter of Credit
Obligations) minus (b) the sum of (without duplication): (i) the amount of all
then outstanding and unpaid Obligations, plus (ii) the aggregate amount of all
then outstanding and unpaid trade payables and other obligations of Obligors
which are outstanding more than sixty (60) days past due as of the end of the
immediately preceding month (other than trade payables or other obligations
being contested or disputed by such Obligor in good faith), plus (iii) without
duplication, the amount of checks issued by Obligors to pay trade payables and
other obligations which are more than sixty (60) days past due as of the end of
the immediately preceding month (other than trade payables or other obligations
being contested or disputed by such Obligor in good faith), but not yet sent.
1.68 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.69 "Excluded Property" shall have the meaning set forth in Section
5.2 hereof.
1.70 "Excluded Subsidiaries" shall mean each of the Financing
Subsidiaries, the Inactive Subsidiaries, Real Property Holding Companies,
Charming J.V. Inc., CSI Charities, Inc., the Foreign Subsidiaries, White Xxxxx
Distribution, LLC, Kafco Development Co., Inc., Festus #2733 Development Co.,
Inc., Macomb #2619 Development Co., Inc., Rolla #2685 Development Co., Inc.,
Sikeston #2736 Development Co., Inc., Yucca #2524 Development Co., Inc., FB
Distro Distribution Center, LLC, Winks Lane, Inc., FB Distro, Inc., GHR
Investment Corp. and GHR Systems, Inc., as named in Omnibus Schedule 1, subpart
7 and any other Subsidiary formed or acquired pursuant to Sections 9.12 or 9.14
and designated in writing by Administrative Borrower to Agent at or prior to
formation or acquisition as an Excluded Subsidiary.
1.71 "Existing Letters of Credit" shall mean, collectively, the
Existing Letters of Credit issued for the account of Borrowers and Additional
L/C Debtors prior to the date hereof and listed on Schedule 1.71 hereof.
1.72 "Fashion Bug Card" shall mean the private label credit card or
private label credit cards issued by the Financing Subsidiaries (or any
subsequent Credit Card Issuer replacing the Financing Subsidiaries with respect
to such private label credit card or private label credit cards as to which
there has been compliance with Section 9.23 hereof) to customers or prospective
customers of the Retail Store Subsidiaries operating under the name of "Fashion
Bug".
1.73 "Figi's" shall mean Figi's Inc., a Wisconsin corporation and its
successors and assigns.
1.74 "Figi Companies" shall mean collectively, Figi's and its
Subsidiaries and their respective successors and assigns.
1.75 "Financing Agreements" shall mean, collectively, this Agreement,
the Existing Financing Agreements (other than the Existing Loan Agreement, the
Amended and Restated Guarantee, dated January 29, 2004, executed by the
Guarantors parties thereto, and the Amended and Restated General Security
Agreement, dated January 29, 2004 which have all been amended
17
and restated in their entirety in accordance with Section 14.4 hereof), and all
notes, guarantees, security agreements, deposit account control agreements,
investment property control agreements, intercreditor agreements, and all other
agreements, documents and instruments now or at any time hereafter executed
and/or delivered by any Obligor in connection with this Agreement.
1.76 "Financing Subsidiaries" shall mean, individually and
collectively, (a) FSC, Originator, Charming Shoppes Receivables Corp. (formerly
known as Fashion SPC, Inc.), Charming Shoppes Seller, Inc., Charming Shoppes
Street, Inc., Spirit of America, Inc., Fashion Service Fulfillment Corp.,
Catalog Seller LLC, Catalog Receivables LLC, Fashion Service Protection Corp.,
Spirit of America Promotions, Inc. and (b) any other direct or indirect
Subsidiary of any of them or Parent, whether now existing or organized after the
date hereof, engaged in originating, financing, funding or servicing
Securitization Program Assets, including without limitation, a Special Purpose
Vehicle, provided, that, the term "Financing Subsidiary" shall not include any
Obligor.
1.77 "Fixed Charge Coverage Ratio" shall mean, with respect to any
period, as to Parent and its Subsidiaries on a consolidated basis, the ratio, on
any date of determination, of (a) EBITDA for such period minus all cash Capital
Expenditures (offset by landlord construction allowances which are to be paid by
landlords within a reasonable time after incurrence of such Capital Expenditure
by Parent or any of its Subsidiaries, such time period not to exceed six (6)
months after the incurrence of such Capital Expenditure) to (b) Fixed Charges
for such period.
1.78 "Fixed Charges" shall mean, as to Parent and its Subsidiaries (on
a consolidated basis), with respect to any period, the sum of, without
duplication, (a) all cash Interest Expense during such period, plus (b) all
regularly scheduled principal payments in respect of Indebtedness for borrowed
money and Indebtedness with respect to Capital Leases, in any case, to the
extent paid in cash during such period (excluding any payments due upon maturity
or prepayment of any such Indebtedness in the event such Indebtedness is
refinanced), plus (c) all income taxes paid during such period in cash.
1.79 "Foreign Subsidiary" shall mean any direct or indirect subsidiary
of Parent organized in a jurisdiction other than the United States of America, a
state thereof, the District of Columbia, or Puerto Rico, whether now existing or
organized after the date hereof.
1.80 "FSC" shall mean Fashion Service Corp., a Delaware corporation and
its successors and assigns.
1.81 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied.
1.82 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or
18
administrative functions of or pertaining to government, and any corporation or
other entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
1.83 "Guarantor" shall mean any guarantor, endorser, acceptor, surety
or other person liable on or with respect to the Obligations or who is the owner
of any property which is security for the Obligations, including without
limitation, those certain Subsidiaries of Parent listed on Schedule 1.83 hereto
and any Subsidiary of Parent that executes a Guarantor Joinder Agreement after
the date hereof, provided, that, the term "Guarantor" shall not include any
Borrowers, Additional L/C Debtors or Excluded Subsidiaries.
1.84 "Guarantor Joinder Agreement" shall mean a Guarantor Joinder
Agreement substantially in the form of Exhibit E attached hereto.
1.85 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.86 "Immaterial Insolvency Event" shall mean Involuntary Proceedings
or Voluntary Proceedings with respect to any Obligors (other than Parent or
Administrative Borrower), so long as the fair market value of the assets of any
such Obligors does not exceed the Insolvency Threshold Amount.
1.87 "Inactive Subsidiaries" shall mean, individually and collectively,
the Subsidiaries that do not operate a Retail Store and which have no material
assets, as of the date hereof (all of which are more particularly described on
Omnibus Schedule 1 and those Subsidiaries which become Inactive Subsidiaries
after the date hereof.
1.88 "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) to pay the deferred purchase price of property or
services of any such Person, including, without limitation, all obligations
under earn-out or similar agreements (excluding trade payables, accrued
liabilities, tax payables, non-compete and restructuring expenses, and other
similar items, in each case arising in the ordinary course of operations); (c)
all obligations as lessee under leases which have been, or should be, in
accordance with GAAP recorded as Capital Leases; (d) any contractual obligation,
contingent or otherwise, of such Person to pay or be liable for the payment of
any indebtedness described in this definition of another Person, including,
without limitation, any such indebtedness, directly or indirectly guaranteed, or
any agreement to purchase, repurchase, or otherwise acquire such indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge thereof, or to maintain solvency, assets, level of income,
or other financial
19
condition; (e) all obligations with respect to mandatorily redeemable stock and
redemption or repurchase obligations under any Capital Stock or other equity
securities issued by such Person; (f) all reimbursement obligations and other
liabilities of such Person with respect to surety bonds (whether bid,
performance or otherwise), letters of credit, banker's acceptances or similar
documents or instruments issued for such Person's account; (g) all indebtedness
of such Person in respect of indebtedness of another Person for borrowed money
or indebtedness of another Person otherwise described in this definition which
is secured by any consensual Lien, on any asset of such Person, whether or not
such obligations, liabilities or indebtedness are assumed by or are a personal
liability of such Person, all as of such time, provided, that, for the purposes
hereof, to the extent such Indebtedness referred to in this clause (g) is
non-recourse to such Person, the amount of such Indebtedness shall not be deemed
to exceed the lesser of (i) the principal amount of such Indebtedness or (ii)
the value of the asset securing such Indebtedness; (h) all obligations,
liabilities and indebtedness of such Person (marked to market) arising under
swap agreements, cap agreements and collar agreements and other agreements or
arrangements designed to protect such person against fluctuations in interest
rates or currency or commodity values; (i) indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer to
the extent such Person is liable therefor as a result of such Person's ownership
interest in such entity, except to the extent that the terms of such
indebtedness expressly provide that such Person is not liable therefor; (j) the
principal and interest portions of all rental obligations of such Person under
any synthetic lease or similar off-balance sheet financing where such
transaction is considered to be borrowed money for tax purposes but is
classified as an operating lease in accordance with GAAP; and (k) CS
Securitization Undertakings.
1.89 "Index Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the London interbank
offered rate for one (1) month Dollar deposits as reported on Dow Xxxxx Telerate
page 3750 (or any successor page) at approximately 11:00 a.m. (London time), on
such day, or if such day is not a Business Day, then the immediately preceding
Business Day (or if not so reported, then as determined by the Agent from
another recognized source or interbank quotation).
1.90 "Insolvency Proceeding" shall mean, as to any Person, any of the
following: (i) any case or proceeding with respect to such Person under the U.S.
Bankruptcy Code or any other Federal or State bankruptcy, insolvency,
reorganization or other law affecting creditors' rights or any other or similar
proceedings seeking any stay, reorganization, arrangement, composition or
readjustment of the obligations and indebtedness of such Person or (a) any
proceeding seeking the appointment of any trustee, receiver, liquidator,
custodian or other insolvency official with similar powers with respect to such
Person or a material portion of its assets or (b) any proceedings for
liquidation, dissolution or other winding up of the business of such Person or
(c) any assignment for the benefit of creditors or any marshaling of assets of
such Person.
1.91 "Insolvency Threshold Amount" shall mean, as of the date of the
commencement of any Voluntary Proceeding(s) or Involuntary Proceeding(s), as the
case may be, in which the fair market value of the assets of the Obligor(s)
subject to such proceeding(s) is equal to or greater than $20,000,000, either
individually or in the aggregate in any fiscal year. In calculating the
Insolvency Threshold Amount, only the assets or properties of the Obligor(s)
subject to the
20
Voluntary Proceeding(s) or Involuntary Proceeding(s), as the case may be, shall
be included in the calculation.
1.92 "Installment Sales Receivables" shall mean any Accounts of the
Figi Companies arising pursuant to the sale of non- apparel Inventory by such
Obligor to an Account debtor requiring payments of the purchase price in
installments over a period of time.
1.93 "Intellectual Property" shall mean Borrower's now owned and
hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
registrations, trademarks, trade names, trade styles, trademark and service xxxx
applications, and licenses and rights to use any of the foregoing; all
extensions, renewals, reissues, divisions, continuations, and continuations in
part of any of the foregoing; all rights to xxx for past, present and future
infringement of any of the foregoing; inventions, trade secrets, formulae,
processes, compounds, drawings, designs, blueprints, surveys, reports, manuals,
and operating standards; goodwill; customer and other lists in whatever form
maintained; and domain names and domain name registrations, trade secret rights,
copyright rights, rights in works of authorship, and contract rights relating to
computer software programs, in whatever form created or maintained.
1.94 "Interest Expense" shall mean, for any period, as to any Person
and its Subsidiaries, all of the following as determined in accordance with
GAAP, total interest expense, whether paid or accrued (including the interest
component of Capital Leases for such period).
1.95 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), three (3) or six (6) months duration
as Administrative Borrower on behalf of any Borrower may elect, the exact
duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; provided, that, Administrative Borrower on
behalf of such Borrower may not elect an Interest Period which will end after
the last day of the then-current term of this Agreement.
1.96 "Interest Rate" shall mean:
(a) subject to clause (b) of this definition below:
(i) as to Prime Rate Loans, a rate equal to the Applicable
Margin on a per annum basis in excess of the Prime Rate,
(ii) as to each Eurodollar Rate Loan, a rate equal to the
Applicable Margin on a per annum basis in excess of the Adjusted
Eurodollar Rate (in each case, based on the Eurodollar Rate applicable
for the Interest Period selected by Administrative Borrower as in
effect two (2) Business Days after the date of receipt by Agent of the
request of Administrative Borrower for such Eurodollar Rate Loans in
accordance with the terms hereof;
(iii) as to Swing Line Loans, a rate equal to the Applicable
Margin for Eurodollar Rate Loans on a per annum basis in excess of the
Index Rate; and
(b) notwithstanding anything to the contrary contained in clause (a) of
this definition, the Applicable Margin otherwise used to calculate the Interest
Rate for Prime Rate
21
Loans, Eurodollar Rate Loans, and Swing Line Loans, shall be the highest
percentage set forth in the definition of the term Applicable Margin for each
category of Revolving Loans (without regard to the amount of Monthly Average
Excess Availability) plus two (2%) percent per annum, at Agent's option, or at
the direction of the Required Lenders, after notice to Administrative Borrower,
(A) for the period from and after the date of the occurrence of an Event of
Default for so long as such Event of Default is continuing, and (B) on Revolving
Loans to Borrowers at any time outstanding in excess of the Borrowing Base
(whether or not such excess(es) arise or are made with or without Agent's or any
Lender's knowledge or consent and whether made before or after an Event of
Default but only to the extent of such excess).
1.97 "Inventory" shall have the meaning given to such term in the UCC
and also include, without limitation, all of each Obligor's now owned and
hereafter existing or acquired goods, wherever located, which (a) are held by
any Obligor for sale or lease or to be furnished under a contract of service;
(b) are furnished by Obligor under a contract of service; or (c) consist of raw
materials, work in process, finished goods or materials used or consumed in the
business of any Obligor.
1.98 "Investment Property Control Agreement" shall mean an agreement in
writing, either in substantially the form attached hereto as Exhibit D or in
such other form as is reasonably acceptable to Agent, by and among Agent, any
Obligor and any securities intermediary, commodity intermediary or other person
who has custody, control or possession of any investment property of such
Obligor including such terms and conditions as Agent may reasonably require,
provided, that, no such agreement shall be required with respect to any
securities intermediary, commodity intermediary or other person who has custody,
control or possession of any investment property used for payroll, payroll taxes
and other employee wage and benefit payments to or for the benefit of any
Obligor's salaried employees or property held in trust for the benefit of an
employee or any unaffiliated third party.
1.99 "Involuntary Proceeding" shall have the meaning set forth in
Section 10.1(g) hereof.
1.100 "Issuing Bank" shall mean (a) Wachovia, (b) JPMorgan Chase Bank,
N.A. and/or Bank of America, N.A., to the extent such Lenders have agreed in a
manner satisfactory to Agent to be subject to the terms hereof as an Issuing
Bank, and (c) any successor Issuing Bank, as the same may be appointed by Agent
pursuant to Section 12.15 hereof.
1.101 "Lenders" shall mean the financial institutions and other Persons
who are signatories hereto as Lenders and other Persons made a party to this
Agreement as a Lender in accordance with Section 13.7 hereof, and their
respective successors and assigns; sometimes being referred to herein
individually as a "Lender".
1.102 "Letter of Credit Documents" shall mean, with respect to any
Letter of Credit, such Letter of Credit, any amendments thereto, any documents
delivered in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk or (b) any collateral
security for such obligations.
22
1.103 "Letter of Credit Limit" shall mean $300,000,000.
1.104 "Letter of Credit Obligations" shall mean, at any time, the sum
of (a) the aggregate undrawn amount of all Letters of Credit outstanding at such
time, plus (b) the aggregate amount of all drawings under Letters of Credit for
which an Issuing Bank has not at such time been reimbursed, plus (c) without
duplication, the aggregate amount of all payments made by each Lender to an
Issuing Bank with respect to such Lender's participation in Letters of Credit as
provided in Section 2.2 for which Borrowers have not at such time reimbursed the
Lenders, whether by way of a Revolving Loan or otherwise.
1.105 "Letters of Credit" shall mean all (a) letters of credit (whether
documentary or stand-by and whether for the purchase of Inventory, Equipment or
otherwise) issued by an Issuing Bank for the account of any Obligor or any
Additional L/C Debtor pursuant to this Agreement and the Trade Financing
Agreements and all amendments, renewals, extensions or replacements thereof and
including, but not limited to, the Existing Letters of Credit and the Additional
L/C Accommodations, and (b) any letter of credit which is issued by Parent or a
Subsidiary of Parent, which letter of credit has been confirmed by an Issuing
Bank.
1.106 "License Agreements" shall have the meaning set forth in Section
8.11 hereof.
1.107 "Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, security interest, encumbrance
(including, but not limited to, easements, rights of way and the like), lien
(statutory or other), security agreement or transfer intended as security,
including without limitation, any conditional sale or other title retention
agreement, the interest of a lessor under a Capital Lease or any financing lease
having substantially the same economic effect as any of the foregoing.
1.108 "Loans" shall mean, collectively, the Revolving Loans and the
Swing Line Loans.
1.109 "London Interbank Offered Rate" shall mean, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate of interest
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
on Telerate Page 3750 (or any successor page) as the London interbank offered
rate for deposits in U.S. Dollars at approximately 11:00 A.M. (London time) two
(2) Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, that, if more than one rate is
specified on Telerate Page 3750, the applicable rate shall be the arithmetic
mean of all such rates. If, for any reason, such rate is not available, the term
"London Interbank Offered Rate" shall mean, with respect to any Eurodollar Loan
for the Interest Period applicable thereto, the rate of interest per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two (2) Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates.
1.110 "LTM EBITDA" shall mean on any date of determination, the amount
equal to EBITDA of Parent and its Subsidiaries on a consolidated basis for the
twelve (12) consecutive months then ended immediately prior to the date of
determination.
23
1.111 "Material Adverse Effect" shall mean a material adverse effect on
(a) the financial condition, business, performance or operations of Obligors,
taken as a whole, (b) the Collateral or the value thereof, taken as a whole, or
(c) the ability of Obligors, taken as a whole, to repay the Obligations.
1.112 "Material Contract" shall mean (a) any contract or other
agreement (other than the Financing Agreements and purchase orders for
merchandise), written or oral, of any Obligor involving monetary liability of or
to any Person in an amount in excess of $25,000,000 in any fiscal year and (b)
any other contract or other agreement (other than the Financing Agreements),
whether written or oral, to which any Obligor is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto would have
a Material Adverse Effect.
1.113 "Maximum Credit" shall mean $375,000,000; provided, that, the
Maximum Credit may be increased from time to time in accordance with the
provisions of Section 2.4 hereof.
1.114 "Monthly Average Excess Availability" shall mean, at any time,
the daily average of the amount of the Excess Availability for the immediately
preceding fiscal month as set forth in the report referred to in Section
9.6(a)(i)(B).
1.115 "Multiemployer Plan" shall mean a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
plan year or the immediately preceding six (6) plan years contributed to by any
Borrower or any ERISA Affiliate.
1.116 "NBC Agreements" shall mean, collectively, the Loan Agreement,
dated February 17, 1998, as amended January 29, 1999, as further amended May 29,
1999, as further amended July 31, 2000, as further amended August 16, 2001 and
as further amended January 27, 2005 by and among Catherines, Catherines, Inc.
and National Bank of Commerce (or its successors) and all agreements, documents
and instruments at any time executed and/or delivered by Borrowers, any of
Obligors or any other person with, to or in favor of National Bank of Commerce
in connection therewith or related thereto, as all of the foregoing now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.117 "Net Amount of Eligible Installment Sales Receivables" shall
mean, the gross amount of the Eligible Installment Sales Receivables after
taking into account returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or claimed
with respect thereto, less sales, excise or similar taxes included in the amount
thereof.
1.118 "Net Amount of Eligible Private Label Receivables" shall mean,
the gross amount of the Eligible Private Label Receivables of Obligors after
taking into account returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or claimed
with respect thereto, less sales, excise or similar taxes included in the amount
thereof.
1.119 "Net Recovery Cost Percentage" shall mean the fraction, expressed
as a percentage, the numerator of which is the amount equal to the recovery on
the aggregate amount of the Inventory at such time on a "going out of business
sale" basis as set forth in the most recent acceptable appraisal of Inventory
received by Agent in accordance with Section 7.3, net of
24
operating expenses, liquidation expenses and commissions, and the denominator of
which is the original cost of the aggregate amount of the Inventory subject to
appraisal.
1.120 "Obligations" shall mean any and all Loans, Letter of Credit
Obligations and all other obligations, liabilities and Indebtedness of every
kind, nature and description owing by Obligors or Additional L/C Debtors to
Agent or any Lender or Issuing Bank, including principal, interest, charges,
fees, costs and expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, arising under this Agreement and the other
Financing Agreements or on account of any Letter of Credit and all other Letter
of Credit Obligations, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of this
Agreement or after the commencement of any case with respect to any or all of
Obligors or Additional L/C Debtors under the United States Bankruptcy Code or
any similar statute (including, without limitation, the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part
in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured.
1.121 "Obligor" shall mean any Borrower or Guarantor.
1.122 "Originator" shall mean Spirit of America National Bank and its
successors and assigns.
1.123 "Originator Accounts" shall mean revolving credit card accounts
maintained by the Originator, including accounts that have been written off as
uncollectible.
1.124 "Other Taxes" shall mean any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
of the other Financing Agreements.
1.125 "Over Advance" shall have the meaning set forth in Section 12.8
hereof.
1.126 "Participant" shall mean any financial institution that acquires
and holds a participation in the interest of any Lender in any of the Revolving
Loans and Letters of Credit in conformity with the provisions of Section 13.7 of
this Agreement governing participations.
1.127 "Permits" shall have the meaning set forth in Section 8.7(b)
hereof.
1.128 "Permitted Investments" shall mean, at any time, (a) any evidence
of Indebtedness with a maturity date of ten years or less from the date acquired
by an Obligor and which is issued or directly and fully guaranteed or insured by
the United States of America of any agency or instrumentality thereof or by the
Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, the Federal Farm Credit Bank, the Federal Home Loan Bank or the
Tennessee Valley Authority; provided, that, the full faith and credit of the
United States of America is pledged in support thereof; (b) obligations of
states and local governments or agencies thereof (including variable rate demand
notes and auction rate securities) with a maturity date or reset period of one
year or less from the date of determination; (c) certificates of
25
deposit, time deposits or bankers' acceptances with a maturity of one year or
less of any financial institution that is a member of the Federal Reserve System
having combined capital and surplus and undivided profits of not less than
$250,000,000; (d) commercial paper with a maturity of one year or less issued by
a corporation (except an Affiliate of Borrower) organized under the laws of any
State of the United States of America or the District of Columbia and rated at
least A 2 by Standard & Poor's Ratings Service, a division of The McGraw Hill
Companies, Inc. or at least P 2 by Xxxxx'x Investors Service, Inc.; (e)
corporate bonds or notes (including variable rate demand notes, auction rate
securities and Eurodollar notes) issued by a corporation (except an Affiliate of
Borrower) organized under the laws of any State of the United States of America
or the District of Columbia and rated at least A2 by Standard & Poor's Rating
Service, a division of The McGraw Hill Companies, Inc. or at least A by Xxxxx'x
Investors Service, Inc.; (f) repurchase obligations with a term of not more than
thirty (30) days for underlying securities of the types described in clause (a)
above entered into with any financial institution having combined capital and
surplus and undivided profits of not less than $250,000,000; (g) repurchase
agreements and reverse repurchase agreements relating to marketable direct
obligations issued or unconditionally guaranteed by the United States of America
or issued by any governmental agency thereof and backed by the full faith and
credit of the United States of America, in each case maturing within one year or
less from the date of determination; provided, that, the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985; (h) municipal
securities (including variable rate demand notes and auction rate securities)
issued by states and local governments or agencies thereof and rated at least A
by Standard & Poor's Rating Service, a division of The McGraw Hill Companies,
Inc. or at least VMIG-1 by Xxxxx'x Investors Service, Inc.; and (i) investments
in money market funds and mutual funds which invest substantially all of their
assets in securities of the types described in clauses (a) through (g) above.
1.129 "Permitted Liens" shall mean those Liens permitted to be incurred by
Obligors in accordance with Section 9.9 hereof.
1.130 "Permitted Securitization Transaction" means (a) a transaction in
which (i) Receivables, Accounts or other financial assets originated or acquired
by any Obligor or Originator are described as being transferred or required to
be transferred to one or more Financing Subsidiaries in a manner that is
intended to legally isolate the transferred assets from such Obligor or
Originator (such that the transferred assets would not be included in the estate
of such Obligor or Originator in any Insolvency Proceeding) and (ii) asset
backed certificates or other securities evidencing an interest in, or otherwise
backed by, the transferred assets are sold to investors, (b) a Crosstown
Securitization Transaction or (c) a transaction or series of transactions
(whether on-balance sheet or off-balance sheet, in the form of a sale, a loan or
other transaction) entered into by any Obligor pursuant to which such Obligor
may (directly or indirectly) sell, convey or otherwise transfer to a Financing
Subsidiary, or may grant a security interest in, any Securitization Program
Assets (whether now existing or arising in the future).
1.131 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint
26
stock corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.132 "Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) subject to Title IV of ERISA which any Borrower sponsors, maintains,
or to which it makes, is making, or is obligated to make contributions, other
than a Multiemployer Plan.
1.133 "Prime Rate" shall mean the rate from time to time publicly
announced by Wachovia Bank, National Association, or its successors, as its
prime rate, whether or not such announced rate is the best rate available at
such bank.
1.134 "Prime Rate Loans" shall mean, any Revolving Loans or portion
thereof on which interest is payable based on the Prime Rate in accordance with
the terms hereof.
1.135 "Private Label Credit Cards" shall mean any of the following: the
Fashion Bug Card, the Co-Branded Card, the Catherines Card and any other private
label credit card issued by Originator, any Financing Subsidiary, or any other
Obligor to customers or prospective customers of any Obligors, in respect of
which Parent or any Subsidiary of Parent is either the Credit Card Issuer or
Credit Card Processor.
1.136 "Private Label Receivables" shall mean all Receivables (including
rights to payment of any finance charges, interest or fees) due to any Obligor
directly from any customer pursuant to a Private Label Credit Card that have not
been and are not required or intended to be sold or otherwise transferred
pursuant to a Permitted Securitization Transaction.
1.137 "Proceeds" shall mean all proceeds as defined in the Uniform
Commercial Code of New York or other applicable law, and all other profits,
rentals, or receipts, in whatever form, arising from the collection, sale,
lease, or other disposition of, or realization upon, the Collateral, or a
specified portion thereof, including, without limitation, any insurance proceeds
with respect thereto.
1.138 "Pro Rata Share" shall mean as to any Lender, the fraction
(expressed as a percentage) the numerator of which is such Lender's Commitment
and the denominator of which is the aggregate amount of all of the Commitments
of Lenders, as adjusted from time to time in accordance with the provisions of
Sections 2.4 and 13.7 hereof; provided, that, if the Commitments have been
terminated, the numerator shall be the unpaid amount of such Lender's Loans and
its interest in the Letters of Credit and the denominator shall be the aggregate
amount of all unpaid Loans and Letters of Credit.
1.139 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial, county
or local, and whether foreign or domestic, that are paid or payable by any
Person in respect of any period in accordance with GAAP.
1.140 "Qualified Cash" shall mean, as of any date of determination, (a)
cash and (b)Permitted Investments (but including only those Permitted
Investments having a maturity date of one (1) year or less from the date of
determination) of Obligors which are, in each case (i)
27
subject to a perfected first priority security interest in favor of Agent and
Lenders and (ii) available to Obligors without restriction or condition.
1.141 "Real Property" shall mean all now owned and hereafter acquired
real property of Obligors, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located.
1.142 "Real Property Holding Companies" shall mean, individually and
collectively, any direct or indirect Subsidiary of Parent, whether now existing
or organized after the date hereof, which is engaged in owning and/or leasing
Real Property, provided, that, the term "Real Property Holding Company" shall
not include any Obligor.
1.143 "Receivables" shall mean all of the following now owned or
hereafter arising or acquired property of each Obligor: (a) all Accounts; (b)
all Credit Card Receivables and all Installment Sales Receivables; (c) all
amounts at any time payable to any Obligor in respect of the sale or other
disposition by any Obligor of any Account, other Receivable or other obligation
for the payment of money; (d) all interest, fees, late charges, penalties,
collection fees and other amounts due or to become due or otherwise payable in
connection with any Account, Installment Sales Receivable or any Credit Card
Receivables; (e) payment intangibles of any Obligor and other contract rights,
chattel paper, instruments, notes and other forms of obligations owing to any
Obligor, whether from the sale and lease of goods or other property, licensing
of any property (including Intellectual Property and other general intangibles),
rendition of services or from loans or advances by such Obligor to or for the
benefit of any third person (including loans or advances to any Affiliates or
Subsidiaries of such Obligor) or otherwise associated with any Accounts,
Inventory, other Receivables or general intangibles (including, without
limitation, bills of lading, warehouse receipts and other documents of title or
shipping documents); (f) all monies, securities and other investment property,
credit balances, deposits, deposit accounts and other property and the proceeds
thereof, now or hereafter held or received or held by, or in transit to, Agent,
any Lender or any of their Affiliates or participants or held or received by any
other bank, other financial institution or other person, whether for
safekeeping, pledge, custody, transmission, collection or otherwise; (g)
deposits (general or special) and balances at any bank or other financial
institution or other person; (h) all right, title and interest in, to and in
respect of the foregoing, including, without limitation, all goods described in
invoices, documents, contracts or instruments with respect to, or otherwise
representing or evidencing, any of same, including, without limitation, all
returned, reclaimed or repossessed Inventory; (i) all right, title and interest,
and all enforcement and other rights, remedies, and security and liens, in, to
and in respect of any of the foregoing, including, without limitation, rights of
stoppage in transit, replevin, repossession, sequestration and reclamation and
other rights and remedies of an unpaid vendor, lienor or secured party,
guaranties, or other contracts of suretyship with respect thereto, or deposits
or other security for the obligation of any account debtor; and (j) credit and
other insurance with respect to any Receivables or Inventory.
1.144 "Records" shall mean all of any Obligor's present and future
books of account of every kind or nature, invoices, ledger cards, bills of
lading and other shipping evidence, statements, correspondence, memoranda,
credit files and other data relating to the Collateral or any account debtor,
together with the tapes, disks, diskettes and other data and software storage
28
media (including any rights of such Obligor with respect to the foregoing
maintained with or by any other person).
1.145 "Register" shall have the meaning set forth in Section 13.8
hereof.
1.146 "Required Lenders" shall mean, at any time, those Lenders whose
Pro Rata Shares aggregate more than fifty (50%) percent of the aggregate of the
Commitments of all Lenders, or if the Commitments shall have been terminated,
Lenders to whom at least more than fifty (50%) percent of the then outstanding
Obligations are owing.
1.147 "Reserves" shall mean as of any date of determination, such
amounts as Agent may from time to time establish and revise in good faith,
exercising its commercially reasonable business judgment, reducing the amount of
Loans and Letters of Credit which would otherwise be available to any Borrower
under the lending formula(s) provided for herein: (a) to reflect events,
conditions or risks which, as reasonably determined by Agent in good faith,
adversely affect, or have a reasonable likelihood of adversely affecting, either
(i) the Collateral or its value, (ii) the assets of Obligors, taken as a whole
or (iii) the security interests and other rights of Agent in the Collateral
(including the enforceability, perfection and priority thereof) or (b) to
reflect Agent's reasonable and good faith belief that any collateral report or
financial information furnished by or on behalf of any Obligor to Agent is
incomplete, inaccurate or misleading in any material respect or (c) to reflect
outstanding Letters of Credit as provided in Section 2.2 hereof or (d) in
respect of any state of facts which Agent determines in good faith constitutes a
Default (other than a Default arising under Section 10.1(a)(ii) hereof, so long
as (i) such Default is not an intentional breach by any Obligor of any term,
covenant, condition or provision of the Financing Agreements, (ii) such Default
is capable of being cured prior to it constituting an Event of Default and (iii)
Obligors are diligently proceeding to cure such Default) or an Event of Default.
Without limiting any other rights or remedies of Agent under this Agreement or
any of the other Financing Agreements with respect to the establishment of
Reserves in respect of the events, conditions or risks set forth in clauses (a)
through (d) of the immediately preceding sentence, Agent may establish and
revise Reserves to reflect any of the following in accordance with the formula
set forth herein: (i) an increase in inventory shrinkage over historical levels
(but such Reserve shall only be established to the extent that such Inventory
shrinkage was not deducted in determining the Value of such Inventory); (ii) an
increase in reserves in respect of markdowns over historical levels to the
extent not reflected in the most recent Borrowing Base Certificate delivered to
Agent or the most recent appraisal delivered to Agent in accordance with the
terms of this Agreement; (iii) cost variances, to the extent such cost variances
result in the value of Inventory as set forth in the most recent Borrowing Base
Certificate exceeding the Value of Inventory; (iv) the aggregate amount of
deposits, if any, received by any Borrower or any Obligor from its retail
customers in respect of unfilled orders for merchandise but only to the extent
such Inventory is included in the calculation of the Borrowing Base without
deduction for deposits received; (v) in the event that Excess Availability shall
be less than $25,000,000 prior to giving effect to any Reserve to be established
by Agent pursuant to this clause (v), to reflect amounts past due in respect of
sales, use and/or withholding taxes to the extent that the dollar amount of
Eligible Inventory, Eligible Installment Sales Receivables or Eligible Private
Label Credit Card Receivables included in the Borrowing Base has not already
been reduced to reflect such amounts; (vi) in the event that Excess Availability
shall be less than $25,000,000 prior to giving effect to any Reserve to be
established by Agent pursuant to this clause (vi), to reflect any
29
past due rental payments or other amounts to become due to lessors of real
property to the extent Inventory or Records needed to monitor or otherwise deal
with the Collateral are located in or on such property other than for any
location where either: (A) Agent has received a Collateral Access Agreement or
(B) the delivery of a Collateral Access Agreement is not required or was waived
by Agent, other than for retail store locations, provided, that, the Reserves
established pursuant to this clause (vi) shall not exceed the greater of (i) the
rental payments and other amounts past due or (ii) the rental payments and other
amounts payable for the next three (3) months, to the lessors of such locations
located in those States where any right of the lessor to Collateral may have
priority over the Lien of Agent and provided, that, such formula for
establishing the amount of the Reserves pursuant to this clause (vi) shall only
apply so long as: (a) no Default or Event of Default shall have occurred and be
continuing and (b) neither any Obligor nor Agent shall have received notice of
any event of default by the lessee under the lease with respect to such
location; (ix) variances between the perpetual inventory records of Borrowers
and the results of the test counts of Inventory conducted by Agent with respect
thereto in excess of the percentage acceptable to Agent, (x) in the event that
Excess Availability shall be less than $25,000,000 prior to giving effect to any
such Reserve to be established by Agent pursuant to this clause (x), to reflect
the amount of duty, freight, and taxes arising in connection with imported goods
other than as already reserved for pursuant to clauses (c) and (v) above, and
(xi) to reflect that a judgment described in Section 9.9(a)(x) hereof has been
entered against an Obligor (for which Administrative Borrower has not either (A)
delivered a writing to Agent that the applicable insurer has assumed
responsibility for such judgment or (B) certified in writing to Agent that such
judgment is covered by insurance) which either (1) if paid, would cause Excess
Availability to be less than $25,000,000 or (2) would result in a Lien in
respect of the Collateral that would have priority over the Lien of the Agent in
such Collateral, provided, that, such Reserve shall in no event exceed the
lesser of (aa) the amount any Obligor would be required to pay to satisfy such
judgment (net of any insurance applicable thereto) or (bb) the value of any
Collateral subject to the Lien of such judgment. The amount of any Reserve
established by Agent shall have a reasonable and direct relationship to the
event, condition or other matter which is the basis for such Reserve.
Notwithstanding the foregoing, Agent shall not establish or increase Reserves
for any event or condition already factored into the calculation of the relevant
Net Recovery Cost Percentage or Net Amount of Eligible Private Label Receivables
or Net Amount of Eligible Installment Sales Receivables. Agent shall not
establish Reserves (excluding reserves for Letters of Credit as provided in
Section 2.2 hereof and Reserves in effect on the date hereof) or increase the
amount of such Reserves after the date hereof unless Agent shall have given five
(5) Business Days prior written notice to Administrative Borrower (such notice
not to be required after the occurrence of an Event of Default) and Agent shall
have prior to the establishment or increase of such Reserve explained to
Administrative Borrower the nature and amount of the Reserve. Agent may increase
a Reserve and shall reduce or eliminate a Reserve if the event or condition
giving rise to such Reserve shall warrant, as Agent may reasonably and in good
faith determine.
1.148 "Restricted Payment" shall mean (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of Parent or any other Obligor, as the case may be, now or
hereafter outstanding, except a dividend payable solely in shares of Capital
Stock of Parent or such other Obligor, as the case may be; (b) any redemption,
retirement, purchase or other acquisition, direct or indirect, of any shares of
any class of Capital Stock of Parent or any other Obligor, as the case may be,
now or hereafter outstanding, or of any
30
warrants, rights or options to acquire any such shares or interests, except to
the extent that the consideration therefor consists solely of shares of Capital
Stock of Parent or such other Obligor; or (c) any sinking fund, other prepayment
or installment payment on account of any Capital Stock of Parent or any other
Obligor.
1.149 "Retail Sales Price" shall mean the current ticketed sales price
in the Retail Stores, net of markdowns from the original retail sales price with
respect thereto, for the types, categories and styles of Inventory included in
the Eligible Inventory of Obligors.
1.150 "Retail Stores" shall mean the retail stores which are now or
hereafter operated by Obligors and which sell Inventory.
1.151 "Retail Store Subsidiary" shall mean an Obligor which now or
hereafter owns a Retail Store or which is now existing or hereafter organized to
operate a Retail Store in the future but shall not include any Inactive
Subsidiaries.
1.152 "Revolving Loans" shall mean the loans now or hereafter made by
or on behalf of any Lender or by Agent for the ratable account of any Lender on
a revolving basis pursuant to the Credit Facility (involving advances,
repayments and readvances) as set forth in Section 2.1(a)(i) hereof.
1.153 "Securitization Documents" means (a) a receivables purchase
agreement, pooling and servicing agreement, credit agreement, agreements to
acquire undivided interests or other agreement to transfer, or create a security
interest in, Securitization Program Assets, in each case as amended, modified,
supplemented or restated and in effect from time to time entered into by any
Obligor or any Financing Subsidiary, and (b) each other instrument, agreement
and other document entered into by any Obligor or any Financing Subsidiary
relating to the transactions contemplated by the agreements referred to in
clause (a) above, and (d) each CS Securitization Undertaking made by CS Delaware
or Parent, in each case as amended, modified, supplemented or restated and in
effect from time to time.
1.154 "Securitization Program Assets" means (a) all Securitized
Receivables, (b) all Securitization Related Assets, and (c) all collections
(including recoveries) and other proceeds of the assets described in the
foregoing clauses.
1.155 "Securitized Receivables" means all Receivables (including rights
to payment) described in any Securitization Documents as being transferred or
required to be transferred by any Obligor or Originator to any Financing
Subsidiary, but such Receivables shall not include Installment Sales Receivables
or Private Label Receivables.
1.156 "Securitization Related Assets" means (a) any rights, remedies,
powers and privileges with respect to the Securitized Receivables (including
rights in respect of Liens securing such Securitized Receivables and other
credit support in respect of such Securitized Receivables), (b) all funds
received from or on behalf of the obligors thereon, or applied to amounts owed
by such obligors (including without limitation insurance payments and proceeds
of sale or other disposition of Securitized Receivables), (c) all contracts,
books and records that relate to the Securitized Receivables, (d) any proceeds
of such Securitized Receivables and any lockboxes or accounts in which such
proceeds are deposited, (e) any spread accounts of the
31
Financing Subsidiaries or Special Purpose Vehicles or any other similar account
(or deposits therein) established in connection with a Permitted Securitization
Transaction, (f) any warranty, indemnity, dilution and other intercompany claim
arising out of Securitization Documents, and (g) other assets of Originators
which are transferred or in respect of which Liens are customarily granted in
connection with asset securitization transactions involving accounts receivable;
provided, that, the Securitization Related Assets shall not include any
returned, repossessed or foreclosed goods and/or merchandise the sale of which
by any Obligor gave rise to a Securitized Receivable that constitutes a
Securitization Related Asset.
1.157 "Special Agent Advances" shall have the meaning set forth in
Section 12.11 hereof.
1.158 "Special Purpose Vehicle" shall mean a trust, partnership or
other special purpose Person established by an Excluded Subsidiary or Parent in
a manner that intended to legally isolate the assets of such Person from the
Parent and its Subsidiaries as a consolidated group, to implement a Permitted
Securitization Transaction.
1.159 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the board
of directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.
1.160 "Swing Line Lender" shall mean Wachovia Bank, National
Association, in its capacity as lender of Swing Line Loans.
1.161 "Swing Line Loan Limit" shall mean $50,000,000.
1.162 "Swing Line Loans" shall have the meaning set forth in Section
2.1(a)(ii) hereof.
1.163 "Taxes" shall mean any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of any Lender, such taxes (including income
taxes, franchise taxes or capital taxes) as are imposed on or measured by such
Lender' s net or gross income or capital by any jurisdiction (or any political
subdivision thereof).
1.164 "Termination Date" shall have the meaning set forth in Section
13.1 hereof.
1.165 "Trade Financing Agreements" shall mean, individually and
collectively the following (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced), (a) the Trade
Financing Agreement [Security Agreement,] dated as of August 16, 2001, by and
among the Additional L/C Debtors (other than CS Insurance Limited) and Agent;
(b) the Letter of Credit Reimbursement Agreement, dated as
32
of August 16, 2001, by and between CS Insurance Ltd. and Agent; and (c) all
other agreements, documents and instruments executed in connection with the
foregoing.
1.166 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York, and any successor statute, together with any regulations
thereunder, in each case as in effect from time to time (except that terms used
herein which are defined in the Uniform Commercial Code as in effect in the
State of New York on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute). References to
sections of the UCC shall be construed to also refer to any successor sections.
1.167 "US Subsidiary" means a Subsidiary which is a corporation now
existing or hereafter organized under the laws of the United States of America
or of any state of the United States of America, the District of Columbia or
Puerto Rico, except that such term shall not include the Excluded Subsidiaries.
1.168 "Value" shall mean the lower of (a) cost or (b) market value,
provided, that, for purposes of the calculation of the Borrowing Base, the Value
of the Inventory shall not include: (A) the portion of the Value of Inventory
equal to the profit earned by any Affiliate on the sale thereof to an Obligor or
(B) write ups or write downs in value with respect to currency exchange rates.
Notwithstanding anything to the contrary contained herein, the cost of the
Inventory shall be determined in the same manner and consistent with the most
recent appraisal of the Inventory conducted in accordance with Section 7.2 and
received by Agent prior to the date of determination.
1.169 "Voluntary Proceeding" shall have the meaning set forth in
Section 10.1(h) hereof.
1.170 "Voting Stock" shall mean with respect to any Person, (a) one (1)
or more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
1.171 "Wachovia" shall mean Wachovia Bank, National Association, a
national banking association, in its individual capacity, and its successors and
assigns.
SECTION 2. CREDIT FACILITIES
2.1 Loans.
(a) Subject to and upon the terms and conditions contained herein,
(i) each Lender severally (and not jointly) agrees to fund its
Pro Rata Share of Revolving Loans to Borrowers from time to time in
amounts requested by Borrowers up to the amount outstanding at any time
equal to the lesser of: (i) the Borrowing Base at such time or (ii) the
Maximum Credit.
33
(ii) Swing Line Lender agrees that it will make loans ("Swing
Line Loans") to the Administrative Borrower for the account of the
applicable Borrower equal to the principal amount of the Swing Line
Loan requested by any Borrower (or Administrative Borrower on behalf of
a Borrower) to be made on such day, provided, that, the aggregate
principal amount of the Revolving Loans, Swing Line Loans and Letter of
Credit Obligations outstanding with respect to all Borrowers at any one
time shall not exceed the lesser of (A) the Borrowing Base at such time
or (B) the Maximum Credit and the aggregate principal amount of the
Swing Line Loans outstanding to all Borrowers at any one time shall not
exceed the Swing Line Loan Limit.
(b) On the terms and subject to the conditions hereof, each Borrower
may from time to time borrow, prepay and reborrow Revolving Loans and Swing Line
Loans. No Lender shall be required to make any Revolving Loan, if, after giving
effect thereto the aggregate outstanding principal amount of all Revolving Loans
of such Lender, together with such Lender's Pro Rata Share of the aggregate
amount of all Swing Line Loans and Letter of Credit Obligations, would exceed
such Lender's Commitment. Swing Line Lender shall not be required to make Swing
Line Loans, if, after giving effect thereto, either (i) the aggregate
outstanding principal amount of all Swing Line Loans would exceed the then
existing Swing Line Loan Limit or (ii) the aggregate outstanding principal
amount of all Revolving Loans, together with the aggregate amount of all Swing
Line Loans and Letter of Credit Obligations, would exceed the lesser of (A) the
Borrowing Base or (ii) the Maximum Credit. Each Swing Line Loan shall be subject
to all of the terms and conditions applicable to other Prime Rate Loans funded
by the Lenders, except that all payments thereon shall be payable to the Swing
Line Lender solely for its own account. All Revolving Loans and Swing Line Loans
shall be subject to the settlement among Lenders provided for in Section 6.10
hereof.
(c) Upon the making of a Swing Line Loan or a Special Agent Advance
(whether before or after the occurrence of a Default or Event of Default) or any
Loan by Agent as provided in Section 6.10 hereof, without further action by any
party hereto, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Swing Line Lender or Agent,
without recourse or warranty, an undivided interest and participation to the
extent of such Lender's Pro Rata Share in such Swing Line Loan, Special Agent
Advance or other Loan. To the extent that there is no settlement in accordance
with Section 6.10 below, the Swing Line Lender or Agent, as the case may be, may
at any time, require the Lenders to fund their participations. From and after
the date, if any, on which any Lender is required to fund its participation in
any Swing Line Loan, Special Agent Advance or other Loan, Agent shall promptly
distribute to such Lender, such Lender's Pro Rata Share of all payments of
principal and interest received by Agent in respect of such Swing Line Loan or
Special Agent Advance
(d) Except in Agent's discretion, with the consent of all Lenders, or
as otherwise provided herein, the aggregate amount of the Loans and the Letter
of Credit Obligations outstanding at any time shall not exceed the lesser of the
Borrowing Base or Maximum Credit.
(e) In the event that the aggregate amount of the Loans and the Letter
of Credit Obligations outstanding at any time exceed the lesser of the Borrowing
Base or the Maximum Credit, such event shall not limit, waive or otherwise
affect any rights of Agent or
34
Lenders in such circumstances or on any future occasions and Borrowers shall,
upon demand by Agent, which may be made at any time or from time to time,
immediately repay to Agent the entire amount of any such excess(es) for which
payment is demanded.
2.2 Letters of Credit.
(a) Subject to and upon the terms and conditions contained herein and
in the Letter of Credit Documents, at the request of a Borrower (or
Administrative Borrower on behalf of any Obligor or Additional L/C Debtor),
Agent agrees to cause an Issuing Bank to issue, and each such Issuing Bank
agrees to issue, for the account of such Obligor or Additional L/C Debtor one or
more Letters of Credit, for the ratable risk of each Lender according to its Pro
Rata Share, containing terms and conditions reasonably acceptable to Agent and
such Issuing Bank.
(b) The Borrower (or Administrative Borrower on behalf of such
Borrower) or Additional L/C Debtor requesting such Letter of Credit shall give
Agent and the applicable Issuing Bank two (2) Business Days' prior written
notice of such Borrower or Additional LC Debtor's request for the issuance of a
Letter of Credit. Such notice shall be irrevocable and shall specify the
original face amount of the Letter of Credit requested, the effective date
(which date shall be a Business Day and in no event shall be a date less than
ten (10) days prior to the end of the then current term of this Agreement) of
issuance of such requested Letter of Credit, whether such Letter of Credit may
be drawn in a single or in partial draws, the date on which such requested
Letter of Credit is to expire (which date shall be a Business Day and shall not
be more than one year from the date of issuance), the purpose for which such
Letter of Credit is to be issued, and the beneficiary of the requested Letter of
Credit. The Borrower or Additional L/C Debtor requesting the Letter of Credit
(or Administrative Borrower on behalf of such Borrower) shall attach to such
notice the proposed terms of the Letter of Credit. The renewal or extension of
any Letter of Credit shall, for purposes hereof be treated in all respects the
same as the issuance of a new Letter of Credit hereunder. Any Issuing Bank
(other than Wachovia) shall notify Agent in writing on each Business Day of all
Letters of Credit issued on the prior Business Day by such Issuing Bank unless
otherwise agreed to by Agent and such Issuing Bank.
(c) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit shall be available unless each
of the following conditions precedent have been satisfied in a manner reasonably
satisfactory to Agent: (i) the Borrower (or Administrative Borrower on behalf of
such Borrower) or Additional L/C Debtor requesting such Letter of Credit shall
have delivered to the applicable Issuing Bank at such times and in such manner
as such Issuing Bank may require, an application, in form and substance
reasonably satisfactory to such Issuing Bank and Agent, for the issuance of the
Letter of Credit and such other Letter of Credit Documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed Letter of
Credit shall be reasonably satisfactory to Agent and such Issuing Bank, (ii) as
of the date of issuance, no order of any court, arbitrator or other Governmental
Authority shall by its terms enjoin or restrain money center banks generally
from issuing letters of credit of the type and in the amount of the proposed
Letter of Credit, and no law, rule or regulation applicable to money center
banks generally and no request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over money center banks
generally shall prohibit the issuance of letters of credit generally or request
that such Issuing Bank refrain from
35
the issuance of letters of credit generally or the issuance of the proposed
Letter of Credit, (iii) after giving effect to the issuance of such Letter of
Credit, the Letter of Credit Obligations shall not exceed the Letter of Credit
Limit, and (iv) Excess Availability, prior to giving effect to any Reserves with
respect to such Letter of Credit, on the date of the proposed issuance of any
Letter of Credit shall be equal to or greater than: (A) if the proposed Letter
of Credit is for the purpose of purchasing Eligible Inventory, the sum of (1)
the percentage equal to one hundred (100%) percent minus the then applicable
percentage with respect to Eligible Inventory set forth in the definition of the
term Borrowing Base multiplied by the Value of such Eligible Inventory, plus (2)
freight, taxes, duty and other amounts which Agent estimates must be paid in
connection with such Inventory upon arrival and for delivery to an Obligor
locations for Eligible Inventory within the United States of America and (B) if
the proposed Letter of Credit is for any other purpose, an amount equal to one
hundred (100%) percent of the Letter of Credit Obligations with respect to such
proposed Letter of Credit. Effective on the issuance of each Letter of Credit, a
Reserve shall be established in the applicable amount set forth in Section
2.2(c)(iv)(A) or Section 2.2(c)(iv)(B).
(d) Except in Agent's discretion, with the consent of all Lenders, the
amount of all outstanding Letter of Credit Obligations shall not at any time
exceed the Letter of Credit Limit.
(e) Each Borrower shall reimburse the applicable Issuing Bank
immediately for any draw under any Letter of Credit issued by such Issuing Bank
for the account of such Borrower by such Issuing Bank and pay each Issuing Bank
the amount of all other charges and fees payable to such Issuing Bank in
connection with any Letter of Credit issued for the account of such Borrower
immediately, irrespective of any claim, setoff, defense or other right which
such Borrower may have at any time against any Issuing Bank or any other Person.
Each drawing under any Letter of Credit or other amount payable in connection
therewith when due shall constitute a request by the Borrower for whose account
such Letter of Credit was issued to Agent for a Swing Line Loan in the amount of
such drawing or other amount then due, and shall be made by Agent on behalf of
Lenders as a Swing Line Loan (or Special Agent Advance, as the case may be)
provided, however, that in the event the amount of such drawing or other amount
then due exceeds the amount available to be drawn as Swing Line Loans, such
request shall be deemed to be a request for a Revolving Loan which is a Prime
Rate Loan. The date of such Swing Line Loan or Prime Rate Loan, as the case may
be, shall be the date of the drawing or as to other amounts, the due date
therefor. Any payments made by or on behalf of Agent or any Lender to an Issuing
Bank and/or related parties in connection with any Letter of Credit shall
constitute additional Swing Line Loans or Revolving Loans to such Borrower
pursuant to this Section 2 (or Special Agent Advances as the case may be).
(f) Borrowers shall indemnify and hold Agent and Lenders harmless from
and against any and all losses, claims, damages, liabilities, costs and expenses
which Agent or any Lender may suffer or incur in connection with any Letter of
Credit and any documents, drafts or acceptances relating thereto, including any
losses, claims, damages, liabilities, costs and expenses due to any action taken
by an Issuing Bank or correspondent with respect to any Letter of Credit, except
for such losses, claims, damages, liabilities, costs or expenses that are a
direct result of the gross negligence or willful misconduct of Agent as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Borrowers assume all risks with
36
respect to the acts or omissions of the drawer under or beneficiary of any
Letter of Credit and, for such purposes only, the drawer or beneficiary shall be
deemed Borrower's agent. Borrowers assume all risks for, and agrees to pay, all
foreign, Federal, State and local taxes, duties and levies relating to any goods
subject to any Letter of Credit or any documents, drafts or acceptances
thereunder. Borrowers hereby release and hold Agent and Lenders harmless from
and against any acts, waivers, errors, delays or omissions, whether caused by
Borrowers, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit, except for the gross negligence or willful
misconduct of Agent as determined pursuant to a final, non-appealable order of a
court of competent jurisdiction. The provisions of this Section 2.2(f) shall
survive the payment of Obligations and the termination of this Agreement.
(g) In connection with Inventory purchased pursuant to any Letter of
Credit, Borrowers shall, upon the occurrence and during the continuance of an
Event of Default, at Agent's request, instruct all suppliers, carriers,
forwarders, customs brokers, warehouses or others receiving or holding cash,
checks, Inventory, documents or instruments in which Agent holds a security
interest to deliver them to Agent and/or subject to Agent's order, and if they
shall come into Borrower's possession, to deliver them, upon Agent's request, to
Agent in their original form. Borrowers shall also, upon the occurrence and
during the continuance of an Event of Default, at Agent's request, designate the
applicable Issuing Bank as the consignee on all bills of lading and other
negotiable and non-negotiable documents.
(h) Borrowers hereby irrevocably authorize and direct each Issuing Bank
to name such Borrower as the account party therein and to deliver to Agent all
instruments, documents and other writings and property received by such Issuing
Bank pursuant to the Letter of Credit and to accept and rely upon Agent's
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit or the Letter of Credit Documents with respect
thereto. Nothing contained herein shall be deemed or construed to grant any
Obligor any right or authority to pledge the credit of Agent or any Lender in
any manner. Agent and Lenders shall have no liability of any kind with respect
to any Letter of Credit provided by an issuer other than Agent or any Lender, as
specifically set forth in this Agreement unless Agent has duly executed and
delivered to such issuer the application or a guarantee or indemnification in
writing with respect to such Letter of Credit. Borrowers shall be bound by any
reasonable interpretation made in good faith by Agent, or an Issuing Bank under
or in connection with any Letter of Credit or any documents, drafts or
acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of Borrowers, any Additional L/C Debtor or
Administrative Borrower. Agent shall have the sole and exclusive right and
authority to, and Borrowers, any Additional L/C Debtor or Administrative
Borrower shall not: (i) at any time an Event of Default has occurred and is
continuing, (A) approve or resolve any questions of non-compliance of documents,
(B) give any instructions as to acceptance or rejection of any documents or
goods or (C) execute any and all applications for steamship or airway
guaranties, indemnities or delivery orders, and (ii) at all times, (A) grant any
extensions of the maturity of, time of payment for, or time of presentation of,
any drafts, acceptances, or documents, and (B) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Letters of Credit, or documents,
drafts or acceptances thereunder or any letters of credit included in the
Collateral except (unless an Event of Default or a condition or event which,
with notice or the passage of time or both, would constitute an Event of Default
has occurred and is continuing), Borrowers and Additional L/C Debtors may waive
discrepancies in
37
the presentation of documents required for payment under any Letters of Credit
other than for the required presentation or delivery of a xxxx of lading or
cargo receipt or other transport document with respect to Eligible Inventory
thereunder. Agent may take such actions either in its own name or in the name of
any Borrower, any Additional L/C Debtor or Administrative Borrower.
(i) Any rights, remedies, duties or obligations granted or undertaken
by Borrowers to any issuer or correspondent in any application for any Letter of
Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit, shall be deemed to have been
granted or undertaken by Borrowers and Additional L/C Debtors to Agent for the
ratable benefit of Lenders. Any duties or obligations undertaken by Agent to any
issuer or correspondent in any application for any Letter of Credit, or any
other agreement by Agent in favor of any issuer or correspondent relating to any
Letter of Credit, shall be deemed to have been undertaken by Borrowers to Agent
for the ratable benefit of Lenders and to apply in all respects to Borrowers.
(j) Immediately upon the issuance or amendment of any Letter of Credit,
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received, without recourse or warranty, an undivided interest and
participation to the extent of such Lender's Pro Rata Share of the liability
with respect to such Letter of Credit and the obligations of Borrowers with
respect thereto (including all Letter of Credit Obligations with respect
thereto). Each Lender shall absolutely, unconditionally and irrevocably assume,
as primary obligor and not as surety, and be obligated to pay to such Issuing
Bank therefor and discharge when due, its Pro Rata Share of all of such
obligations arising under such Letter of Credit. Without limiting the scope and
nature of each Lender's participation in any Letter of Credit, to the extent
that an Issuing Bank has not been reimbursed or otherwise paid as required
hereunder or under any such Letter of Credit, each such Lender shall pay to such
Issuing Bank its Pro Rata Share of such unreimbursed drawing or other amounts
then due to such Issuing Bank in connection therewith.
(k) The obligations of Borrowers to pay each Letter of Credit
Obligations and the obligations of Lenders to make payments to Agent for the
account of an Issuing Bank with respect to Letters of Credit shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of this Agreement under any and all circumstances, whatsoever,
notwithstanding the occurrence or continuance of any Default, Event of Default,
the failure to satisfy any other condition set forth in Section 4 or any other
event or circumstance. If such amount is not made available by a Lender when
due, Agent shall be entitled to recover such amount on demand from such Lender
with interest thereon, for each day from the date such amount was due until the
date such amount is paid to Agent at the interest rate then payable by any
Borrower in respect of Loans that are Prime Rate Loans. Any such reimbursement
shall not relieve or otherwise impair the obligation of Borrowers to reimburse
an Issuing Bank under any Letter of Credit or make any other payment in
connection therewith.
2.3 Joint and Several Liability. Borrowers shall be liable for all
amounts due to Agent, Issuing Banks and Lenders under this Agreement, regardless
of which Borrower actually receives the Loans, Letters of Credit or other
extensions of credit hereunder or the amount of such Loans received or the
manner in which Agent accounts for such Loans, Letters of Credit or other
extensions of credit on its books and records. The Obligations with respect to
Loans and Letters of Credit or other extensions of credit made to a Borrower,
and the Obligations arising as
38
a result of the joint and several liability of a Borrower hereunder, with
respect to Loans and Letters of Credit or other extensions of credit made to the
other Borrowers hereunder, shall be separate and distinct obligations, but all
such Obligations shall be primary obligations of all Borrowers. The Obligations
arising as a result of the joint and several liability of a Borrower hereunder
with respect to Loans, Letters of Credit or other extensions of credit made to
the other Borrowers hereunder shall, to the fullest extent permitted by law, be
unconditional irrespective of (a) the validity or enforceability, avoidance or
subordination of the Obligations of the other Borrowers or of any promissory
note or other document evidencing all or any part of the Obligations of the
other Borrowers, (b) the absence of any attempt to collect the Obligations from
the other Borrowers, any Guarantor or any other security therefor, or the
absence of any other action to enforce the same, (c) the waiver, consent,
extension, forbearance or granting of any indulgence by Agent with respect to
any provisions of any instrument evidencing the Obligations of the other
Borrowers, or any part thereof, or any other agreement now or hereafter executed
by the other Borrowers and Guarantors and delivered to Agent, (d) the failure by
Agent to take any steps to perfect and maintain its security interest in, or to
preserve its rights and maintain its security or collateral for the Obligations
of the other Borrowers and Guarantors, (e) the election of Agent in any
proceeding instituted under the Bankruptcy Code, of the application of Section
1111(b)(2) of the Bankruptcy Code, (f) the disallowance of all or any portion of
the claim(s) of Agent for the repayment of the Obligations of the other
Borrowers and Guarantors under Section 502 of the Bankruptcy Code, or (g) any
other circumstances which might constitute a legal or equitable discharge or
defense of any Obligor, other than the willful misconduct or gross negligence of
Agent, any Issuing Bank or Lenders as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction. With respect to the
Obligations arising as a result of the joint and several liability of a Borrower
hereunder with respect to Loans, Letters of Credit or other extensions of credit
made to the other Borrowers hereunder, each Borrower and Guarantor waives, until
the Obligations shall have been paid in full in immediately available funds and
this Agreement shall have been terminated, any right to enforce any right of
subrogation or any remedy which Agent now has or may hereafter have against
Borrowers and Guarantors, any endorser or any guarantor of all or any part of
the Obligations, and any benefit of, and any right to participate in, any
security or collateral given to Agent. Upon any Event of Default and for so long
as the same is continuing, Agent may proceed directly and at once, without
notice, against any Borrower or Guarantor to collect and recover the full
amount, or any portion of the Obligations, without first proceeding against the
other Borrowers or any other Person, or against any security or collateral for
the Obligations. Each Borrower and Guarantor consents and agrees that Agent and
Lenders shall be under no obligation to marshal any assets in favor of
Borrower(s) or Guarantors against or in payment of any or all of the
Obligations.
2.4 Increase in the Maximum Credit.
(a) Administrative Borrower may, at any time, deliver a written request
to Agent to increase the Maximum Credit. Any such written request shall specify
the amount of the increase in the Maximum Credit that Borrowers are requesting,
provided, that, (i) in no event shall the aggregate amount of any such increase
in the Maximum Credit cause the Maximum Credit to exceed $500,000,000, (ii) such
request shall be for an increase of not less than $25,000,000, (iii) any such
request shall be irrevocable, and (iv) in no event shall more than one such
written request be delivered to Agent in any calendar quarter.
39
(b) Upon the receipt by Agent of any such written request, Agent shall
notify each of the Lenders of such request and each Lender shall have the option
(but not the obligation) to increase the amount of its Commitment by an amount
up to its Pro Rata Share of the amount of the increase in the Maximum Credit
requested by Administrative Borrower as set forth in the notice from Agent to
such Lender. Each Lender shall notify Agent within fifteen (15) days after the
receipt of such notice from Agent whether it is willing to so increase its
Commitment, and if so, the amount of such increase; provided, that, (i) the
minimum increase in the Commitments of each such Lender providing the additional
Commitments shall equal or exceed $2,000,000. If the aggregate amount of the
increases in the Commitments received from the Lenders equals the amount of the
increase in the Maximum Credit requested by Administrative Borrower, such
increase shall be effective on the date five (5) Business Days after each of the
conditions set forth in Section 2.4(c) have been satisfied or such earlier date
after such conditions have been satisfied as Agent may agree. If the aggregate
amount of the increases in the Commitments received from the Lenders is less
than the amount of the increase in the Maximum Credit requested by
Administrative Borrower, Agent may seek additional increases from Lenders or
Commitments from such Eligible Transferees as it may determine, after
consultation with Administrative Borrower. In the event Lenders (or Lenders and
any such Eligible Transferees, as the case may be) have committed in writing to
provide increases in their Commitments or new Commitments in an aggregate amount
in excess of the increase in the Maximum Credit requested by Borrowers or
permitted hereunder, Agent shall then have the right to allocate such
commitments, first to Lenders and then to Eligible Transferees, in such amounts
and manner as Agent may determine, after consultation with Administrative
Borrower.
(c) The Maximum Credit shall be increased by the amount of the increase
in Commitments from Lenders or new Commitments from Eligible Transferees, in
each case selected in accordance with Section 2.4(b) above, five (5) Business
Days after each of the conditions set forth in this Section 2.4(c) have been
satisfied or waived by Agent or such earlier date as Administrative Borrower may
request (such earlier date being referred to herein as the "Early Increase
Date"):
(i) Agent shall have received from each Lender or Eligible
Transferee that is providing an additional Commitment as part of the
increase in the Maximum Credit, an Assignment and Acceptance duly
executed by such Lender or Eligible Transferee and Administrative
Borrower;
(ii) the conditions precedent to the making of Loans set forth
in Section 4.2 shall be satisfied as of the date of the increase in the
Maximum Credit, both before and after giving effect to such increase;
(iii) Agent shall have received an opinion of counsel to
Borrowers in form and substance reasonably satisfactory to Agent and
Lenders addressing such matters as Agent may reasonably request
(including an opinion as to no conflicts with other Indebtedness);
(iv) such increase in the Maximum Credit on the date of the
effectiveness thereof shall not violate in any material respect any
applicable law, regulation or order or decree of any court or other
Governmental Authority and shall not be enjoined, temporarily,
preliminarily or permanently;
40
(v) there shall have been paid to each Lender and Eligible
Transferee providing an additional Commitment in connection with such
increase in the Maximum Credit all fees and expenses, due and payable
to such Person on or before the effectiveness of such increase; and
(vi) there shall have been paid to Agent, for the account of
the Agent and Lenders (in accordance with any agreement among them) all
fees and expenses (including reasonable fees and expenses of counsel to
Agent) due and payable pursuant to any of the Financing Agreements on
or before the effectiveness of such increase.
Notwithstanding anything to the contrary contained herein, the increase in
Commitments in accordance with the foregoing shall not exceed the increase in
the Maximum Credit requested by Administrative Borrower without the consent of
Administrative Borrower.
(d) In the event that Administrative Borrower requests that the Maximum
Credit is increased on an Early Increase Date, and the aggregate amount of the
increases in the Commitments received from the Lenders and new Commitments from
Eligible Transferees, as the case may be, as of the Early Increase Date (based
upon the satisfaction of the conditions set forth above) does not equal the
amount of the increase in the Maximum Credit requested by Administrative
Borrower, the Maximum Credit may thereafter be increased again on the date that
is sixty (60) days after the date of the original request by Administrative
Borrower for such increase based on any additional increase in Commitments or
new Commitments received by Agent (i) after the Early Increase Date but (ii)
prior to the date that is sixty (60) days after the date of such original
request by Administrative Borrower for any such increase.
(e) As of the effective date of any such increase in the Maximum
Credit, each reference to the term Maximum Credit herein, and in any of the
other Financing Agreements shall be deemed amended to mean the amount of the
Maximum Credit specified in the most recent written notice from Agent to
Administrative Borrower of the increase in the Maximum Credit.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Agent, for the benefit of Lenders, interest
on the outstanding principal amount of the Loans at the Interest Rate. All
interest accruing hereunder on and after the date of any Event of Default which
is continuing shall be payable on demand.
(b) Administrative Borrower may from time to time request Revolving
Loans as Eurodollar Rate Loans or may request that Revolving Loans which are
Prime Rate Loans be converted to Eurodollar Rate Loans or that any existing
Eurodollar Rate Loans continue for an additional Interest Period. Such request
from Administrative Borrower shall specify the amount of the Eurodollar Rate
Loans or the amount of the Prime Rate Loans to be converted to Eurodollar Rate
Loans or the amount of the Eurodollar Rate Loans to be continued (subject to the
limits set forth below) and the Interest Period to be applicable to such
Eurodollar Rate Loans. Subject to the terms and conditions contained herein,
three (3) Business Days after receipt by Agent of such a request from
Administrative Borrower, such Prime Rate Loans shall be
41
converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue,
as the case may be, provided, that, (i) no Event of Default shall have occurred
and be continuing, (ii) no more than ten (10) Interest Periods may be in effect
at any one time, (iii) the Interest Period selected or Adjusted Eurodollar Rate
is generally available to Agent and Lenders and can be readily determined as of
the date of the request for such Eurodollar Rate Loan, and (iv) the aggregate
amount of the Eurodollar Rate Loans must be in an amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof. Any request
by Administrative Borrower for Eurodollar Rate Loans or to convert Prime Rate
Loans to Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans
shall be irrevocable. Notwithstanding anything to the contrary contained herein,
Agent and Lenders shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market to fund any Eurodollar Rate Loans, but the provisions hereof shall be
deemed to apply as if Agent and Lenders had purchased such deposits to fund the
Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate
Loans upon the last day of the applicable Interest Period, unless Agent has
received a request to continue such Eurodollar Rate Loan at least three (3)
Business Days prior to such last day in accordance with the terms hereof. Any
Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent to
Administrative Borrower, be subsequently converted to Prime Rate Loans in the
event that this Agreement shall terminate. Borrowers shall pay to Agent, for the
benefit of Lenders, within twenty (20) days of written demand by Agent (or Agent
may, at its option, charge any loan account of any Borrower) any amounts
required to compensate Agent, any Lender or any Participant for any loss
(including loss of anticipated profits), cost or expense incurred by such
person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate
Loans pursuant to any of the foregoing excluding any conversion or termination
on the last day of the applicable Interest Period. In the event any Person seeks
compensation hereunder prior to Borrowers being obligated to pay such amount or
Agent charges any loan account of any Borrower, a certificate of Agent or any
Lender setting forth the basis for the determination of such amount necessary to
compensate Agent or such Lender as aforesaid shall be delivered to Borrowers,
which certificate shall be conclusive, absent manifest error.
(d) Interest shall be payable by Borrowers to Agent, for the account of
Lenders, monthly in arrears not later than the first day of each calendar month
and shall be calculated on the basis of a three hundred sixty (360) day year and
actual days elapsed, other than for Prime Rate Loans and Swing Line Loans which
shall be calculated on the basis of three hundred sixty-five (365) or three
hundred sixty-six (366) day year, as applicable, and actual days elapsed. The
interest rate on non-contingent Obligations (other than Eurodollar Rate Loans)
shall increase or decrease by an amount equal to each increase or decrease in
the Prime Rate or Index Rate, as applicable, effective on the date any change in
such Prime Rate or Index Rate, as applicable, is announced. In no event shall
charges constituting interest payable by Borrowers to Agent and Lenders exceed
the maximum amount or the rate permitted under any applicable law or regulation,
and if any such part or provision of this Agreement is in contravention of any
such law or regulation, such part or provision shall be deemed amended to
conform thereto.
42
3.2 Fees.
(a) Borrowers shall pay to Agent, for the account of Lenders, monthly
an unused line fee at a rate equal to one-quarter (.25%) percent per annum
calculated upon the amount by which the Maximum Credit (then in effect) exceeds
the average daily principal balance of the outstanding Revolving Loans and
Letters of Credit during the immediately preceding month (or part thereof) while
this Agreement is in effect and for so long thereafter as any of the Obligations
are outstanding, which fee shall be payable on the first day of each month in
arrears.
(b) In the case of standby letters of credit, Borrowers shall pay to
Agent, for the account of Lenders, a fee at a rate equal to the Applicable L/C
Fee Rate per annum applicable to standby Letters of Credit and in the case of
documentary letters of credit, Borrowers shall pay to Agent, for the account of
Lenders, a fee at a rate equal to the Applicable L/C Fee Rate per annum
applicable to documentary Letters of Credit, on the average daily maximum amount
available to be drawn under all of such Letters of Credit for the immediately
preceding month (or part thereof), payable in arrears as of the first day of
each succeeding month, computed for each day from the date of issuance to the
date of expiration; except, that, Borrowers shall pay, at Agent's option,
without notice, such fee at a rate two (2%) percent greater than the otherwise
applicable rate on such average daily maximum amount for the period from and
after the date of the occurrence of an Event of Default for so long as such
Event of Default is continuing. Such letter of credit fees shall be calculated
on the basis of a three hundred sixty (360) day year and actual days elapsed and
the obligation of Borrowers to pay such fee shall survive the termination of
this Agreement. In addition to the letter of credit fees provided above,
Borrowers shall pay to each applicable Issuing Bank for its own account (without
sharing with Lenders) the letter of credit fronting and negotiation fees agreed
to by Borrowers and such Issuing Bank from time to time and the customary
charges from time to time of such Issuing Bank with respect to the issuance,
amendment, transfer, administration, cancellation and conversion of, and
drawings under, such Letters of Credit.
(c) Borrowers shall pay to Agent the other fees and amounts set forth
in the Engagement Letter in the amounts and at the times specified therein. To
the extent payment in full of the applicable fee is received by Agent from
Borrowers on or about the date hereof, Agent shall pay to each Lender its share
of such fees in accordance with the terms of the arrangements of Agent with such
Lender.
3.3 Changes in Laws and Increased Costs of Loans.
(a) If, after the date hereof, either (i) any change in, or in the
interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to any Lender or
any banking or financial institution from whom any Lender borrows funds or
obtains credit (a "Funding Bank"), or (ii) a Funding Bank or any Lender complies
with any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank, any Lender or Issuing Bank determines that
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration
43
thereof has or would have the effect described below, or a Funding Bank, any
Lender or Issuing Bank complies with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, and in the case of any event set forth in this clause
(iii), such adoption, change or compliance has or would have the direct or
indirect effect of reducing the rate of return on any Lender's or Issuing Bank's
capital as a consequence of its obligations hereunder to a level below that
which such Lender or Issuing Bank could have achieved but for such adoption,
change or compliance (taking into consideration the Funding Bank's or Lender's
or Issuing Bank's policies with respect to capital adequacy) by an amount deemed
by such Lender or Issuing Bank to be material, and the result of any of the
foregoing events described in clauses (i), (ii) or (iii) is or results in an
increase in the cost to any Lender or Issuing Bank of funding or maintaining the
Loans, the Letters of Credit or its Commitment, then Borrowers shall from time
to time within twenty (20) days of written demand by Agent pay to Agent
additional amounts sufficient to indemnify such Lender or Issuing Bank, as the
case may be, against such increased cost on an after-tax basis (after taking
into account applicable deductions and credits in respect of the amount
indemnified). A certificate as to the amount of such increased cost and the
basis for such determination shall be submitted to Administrative Borrower by
Agent or the applicable Lender and shall be conclusive, absent manifest error.
(b) If prior to the first day of any Interest Period, (i) Agent shall
have determined reasonably and in good faith (such determination to be
conclusive and binding upon Borrowers) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Adjusted Eurodollar Rate for such Interest Period, (ii) Agent
has received notice from the Required Lenders that the Adjusted Eurodollar Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to Lenders of making or maintaining Eurodollar Rate
Loans during such Interest Period, or (iii) Dollar deposits in the principal
amounts of the Eurodollar Rate Loans to which such Interest Period is to be
applicable are not generally available in the London interbank market, Agent
shall give telecopy or telephonic notice thereof to Administrative Borrower as
soon as practicable thereafter, and will also give prompt written notice to
Administrative Borrower when such conditions no longer exist. If such notice is
given (A) any Eurodollar Rate Loans requested to be made on the first day of
such Interest Period shall be made as Prime Rate Loans, (B) any Loans that were
to have been converted on the first day of such Interest Period to or continued
as Eurodollar Rate Loans shall be converted to or continued as Prime Rate Loans
and (C) each outstanding Eurodollar Rate Loan shall be converted, on the last
day of the then-current Interest Period thereof, to Prime Rate Loans. Until such
notice has been withdrawn by Agent, no further Eurodollar Rate Loans shall be
made or continued as such, nor shall any Borrower (or Administrative Borrower on
behalf of any Borrower) have the right to convert Prime Rate Loans to Eurodollar
Rate Loans.
(c) Notwithstanding any other provision herein, if the adoption of or
any change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority or in
the interpretation or application thereof occurring after the date hereof shall
make it unlawful for Agent or any Lender to make or maintain Eurodollar Rate
Loans as contemplated by this Agreement, (i) Agent or such Lender shall promptly
give written notice of such circumstances to Administrative Borrower (which
notice shall be withdrawn promptly whenever such circumstances no longer exist),
(ii) the
44
commitment of such Lender hereunder to make Eurodollar Rate Loans, continue
Eurodollar Rate Loans as such and convert Prime Rate Loans to Eurodollar Rate
Loans shall forthwith be canceled and, until such time as it shall no longer be
unlawful for such Lender to make or maintain Eurodollar Rate Loans, such Lender
shall then have a commitment only to make a Prime Rate Loan when a Eurodollar
Rate Loan is requested and (iii) such Lender's Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted automatically to Prime Rate
Loans on the respective last days of the then current Interest Periods with
respect to such Loans or within such earlier period as required by law. If any
such conversion of a Eurodollar Rate Loan occurs on a day which is not the last
day of the then current Interest Period with respect thereto, Borrowers shall
pay to such Lender such amounts, if any, as may be required pursuant to Section
3.3(d) below.
(d) Borrowers shall indemnify Agent and each Lender and to hold Agent
and each Lender harmless from any loss or expense which Agent or such Lender may
sustain or incur as a consequence of (i) default by any Borrower in making a
borrowing of, conversion into or extension of Eurodollar Rate Loans after such
Borrower (or Administrative Borrower on behalf of such Borrower) has given a
notice requesting the same in accordance with the provisions of this Agreement,
(ii) default by any Borrower in making any prepayment of a Eurodollar Rate Loan
after such Borrower has given a notice thereof in accordance with the provisions
of this Agreement, and (iii) the making of a prepayment of Eurodollar Rate Loans
on a day which is not the last day of an Interest Period with respect thereto.
With respect to Eurodollar Rate Loans, such indemnification may include an
amount equal to the excess, if any, of (A) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
extended, for the period from the date of such prepayment or of such failure to
borrow, convert or extend to the last day of the applicable Interest Period (or,
in the case of a failure to borrow, convert or extend, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Rate Loans provided for herein over (B) the
amount of interest (as determined by such Agent or such Lender) which would have
accrued to Agent or such Lender on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank Eurodollar market.
Such amounts shall be payable within twenty (20) days of written demand by
Agent. This covenant shall survive the termination of this Agreement and the
payment of the Obligations.
(e) Failure or delay on the part of any Lender or Issuing Bank to
demand compensation pursuant to the foregoing provisions of this Section shall
not constitute a waiver of such Lender's or Issuing Bank's right to demand such
compensation, provided that no Borrower shall be required to compensate a Lender
or Issuing Bank pursuant to the foregoing provisions of this Section for any
increased costs incurred or reductions suffered more than six months prior to
the date that such Lender or Issuing Bank, as the case may be, notifies the
Administrative Borrower of the change giving rise to such increased costs or
reductions and of such Lender's or Issuing Bank's intention to claim
compensation therefor (except that, if the change giving rise to such increased
costs or reductions is retroactive, then the six month period referred to above
shall be extended to include the period of retroactive effect thereof).
45
3.4 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 3.3, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 3.3 in the future and (ii) would not subject
such Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrowers hereby agree to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) If any Lender requests compensation under Section 3.3 or 6.5, or if
any Lender defaults in its obligation to fund Loans hereunder, or if a Lender
(other than Agent) fails to consent to an amendment requiring its consent under
Section 11.3(a) after such amendment has been approved by the Required Lenders,
then the Administrative Borrower may, at its sole expense and effort, upon
notice to such Lender and the Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in, and consents required by, Section 13.7), all of its interests, rights and
obligations under this Agreement and the related Financing Agreements to an
assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment), provided that
(i) the Borrowers shall have paid to the Agent the assignment
fee specified in Section 13.7,
(ii) such Lender shall have received payment of an amount
equal to the outstanding principal of its Loans and participations in
Letters of Credit, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 3.3(d) or 6.5) from the assignee
(to the extent of such outstanding principal and accrued interest and
fees) or the Borrowers (in the case of all other amounts), and
(iii) in the case of any such assignment resulting from a
claim for compensation under Section 3.3 or 6.5, such assignment will
result in a reduction in such compensation or payments thereafter.
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrowers to require such assignment and delegation
cease to apply.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letters of Credit. Each
of the following is a condition precedent to Agent and Lenders making the
initial Loans and each Issuing Bank providing the initial Letters of Credit
hereunder:
(a) all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be satisfactory in form
and substance to
46
Agent, and Lenders shall have received all information and copies of all
documents, including records of requisite corporate, and other action and
proceedings which Agent may have reasonably requested in connection therewith,
such documents where requested by Agent or its counsel to be certified by
appropriate corporate officers or Governmental Authority (and including a copy
of the certificate of incorporation, formation or other organization document of
any of Borrowers certified by the Secretary of State (or equivalent Governmental
Authority);
(b) no material adverse change shall have occurred in the assets,
businesses or prospects of Obligors, taken as a whole, since the date of the
commencement of Agent's latest field examination and no change or event shall
have occurred which would impair the ability of Obligors, taken as a whole, to
perform their obligations hereunder or under any of the other Financing
Agreements to which any of them is party or of Agent to enforce the Obligations
or realize upon the Collateral. Without limiting the generality of the foregoing
(i) no investigation, litigation or other proceedings shall be pending or
threatened against any Obligor as of the closing which could have a Material
Adverse Effect in the good faith determination of Agent and Lenders;
(c) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has a valid perfected first priority security
interest in all of the Collateral subject to Permitted Liens;
(d) Agent shall have received, in form and substance satisfactory to
Agent, (i) a guarantee of payment by each Borrower of the Obligations owed by
each of the Obligors and the Additional L/C Debtors, and (ii) a guarantee of
payment by all Guarantors of all Obligations;
(e) Intentionally Deleted;
(f) Agent and Lenders shall be satisfied that (A) as of the date
hereof, Obligors taken as a whole, are not insolvent or will not become
insolvent as a result of the transactions contemplated hereby, (i) Obligors,
taken as a whole, do not have unreasonably small capital after the consummation
of the transactions contemplated hereby to continue to engage in its business,
and (ii) Obligors, taken as a whole, have not incurred liabilities as a result
of the transactions contemplated hereby that are beyond their ability to pay as
such liabilities mature;
(g) the Excess Availability as determined by Agent, as of the date
hereof, shall be not less than $100,000,000 after giving effect to the initial
Loans made or to be made and Letters of Credit issued or to be issued in
connection with the transactions hereunder;
(h) Agent shall have received, in form and substance reasonably
satisfactory to Agent, such opinion letters of counsel to Borrowers and Obligors
with respect to the Financing Agreements and such other matters as Agent may
reasonably request; and
(i) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Agent,
in form and substance reasonably satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letters of Credit. The
obligation of Lenders to make the Loans, including the initial Loans, or of each
Issuing Bank to issue any
47
Letter of Credit, including the initial Letters of Credit, is subject to the
further satisfaction of, or waiver of, immediately prior to or concurrently with
the making of each such Loan or the issuance of such Letter of Credit of each of
the following conditions precedent:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct with the same effect as
though such representations and warranties had been made on and as of the date
of the making of each such Loan or providing each such Letter of Credit and
after giving effect thereto, except (i) to the extent that such representations
and warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date) and (ii) with respect to any changes in the representations
and warranties resulting from any actions, sales, mergers, acquisitions,
dispositions or other transactions permitted by this Agreement or consented to
by the Required Lenders or all Lenders, as applicable;
(b) no Default (other than a Default arising under Section 10.1(a)(ii),
provided, that, (i) such Default is not an intentional breach by any Obligor of
any term, covenant, condition or provision of the Financing Agreements, (ii)
such Default is capable of being cured prior to it constituting an Event of
Default and (iii) Obligors are diligently proceeding to cure such Default) or
Event of Default shall have occurred and be continuing on and as of the date of
the making of such Loan or providing each such Letter of Credit and immediately
after giving effect thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 Grant of Security Interest. To secure payment and performance of
all Obligations, each Obligor hereby grants to Agent, for itself and the benefit
of each Issuing Bank and Lenders, a continuing security interest in, a lien
upon, and a right of set off against, and hereby assigns to Agent, for itself
and the benefit of Issuing Bank and Lenders, and hereby confirms, reaffirms and
restates the prior grant thereof to Agent, for itself, each Issuing Bank and
Lenders, pursuant to the Existing Financing Agreements (as amended and restated
hereby), as security, all of the following personal property and interests in
personal property, of each Obligor, whether now owned or hereafter acquired or
existing, and wherever located (collectively, the "Collateral") including:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all
Intellectual Property;
(c) all goods including Inventory but excluding Equipment;
(d) all chattel paper (including all tangible and electronic chattel
paper);
(e) all instruments (including all promissory notes);
(f) all documents;
(g) all deposit accounts;
48
(h) all letters of credit, banker's acceptances and similar instruments
and including all letter of credit rights;
(i) all supporting obligations and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods (excluding Equipment)
described in invoices, documents, contracts or instruments with respect to, or
otherwise representing or evidencing, Receivables or other Collateral, including
returned, repossessed and reclaimed goods consisting of Inventory, and (iv)
deposits by and property of account debtors or other persons securing the
obligations of account debtors;
(j) all (i) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (ii) monies, credit balances,
deposits and other property of any Obligor now or hereafter held or received by
or in transit to any Obligor or at any other depository or other institution
from or for the account of any Obligor, whether for safekeeping, pledge,
custody, transmission, collection or otherwise;
(k) all commercial tort claims;
(l) to the extent not otherwise described above, all Receivables
excluding any Securitized Receivables or Crosstown Securitized Receivables;
(m) all Records; and
(n) all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
Notwithstanding the foregoing, Obligors do not hereby grant Agent any Lien or
security interest in and to any of the Excluded Property.
5.2 Excluded Property. The Collateral shall not and does not include
(collectively, "Excluded Property"): (a) the Capital Stock of Excluded
Subsidiaries (other than one hundred (100%) percent of the issued and
outstanding Capital Stock of FSC) and Capital Stock of Persons acquired by
Obligors pursuant to Section 9.12 hereof but only if such Capital Stock is being
pledged to the seller of such Capital Stock as collateral for the payment of the
purchase price thereof and otherwise satisfies the conditions set forth in
Section 9.9(a)(iv) hereof, (b) any assets of the Excluded Subsidiaries, (c) Real
Property or rentals from the use or occupancy of Real Property, (d) any life
insurance policies owned by Obligors on the lives of employees and former
employees of Obligors, and life insurance policies subject to split dollar
arrangements, (e) any Securitized Receivables, other Securitization Program
Assets and all Crosstown Securitization Program Assets, (f) any Collateral
transferred to an Excluded Subsidiary pursuant to this Agreement, and (g)
Equipment including, without limitation, trade fixtures, motor vehicles and
aircraft and any interest therein. To the extent any Excluded Property was, is
or
49
becomes Collateral at any time hereunder or under any other Financing
Agreements, the Agent hereby releases and confirms its release of its Lien on
any such Excluded Property.
5.3 Special Provisions Regarding Collateral. Notwithstanding anything
to the contrary contained in Section 5.1 above, the types or items of Collateral
described in such Section shall not include any rights or interest in any
contract, lease, permit, license, charter or license agreement covering property
of such Obligor, as such, if under the terms of such contract, lease, permit,
license, charter or license agreement, or applicable law with respect thereto,
the valid grant of a security interest or lien therein to Agent is prohibited as
a matter of law or under the terms of such contract, lease, permit, license,
charter or license agreement and such prohibition has not been or is not waived
or the consent of the other party to such contract, lease, permit, license,
charter or license agreement has not been or is not otherwise obtained;
provided, that, the foregoing exclusion shall in no way be construed (a) to
apply if any such prohibition is unenforceable under Sections 9-406, 9-407, and
9-408 of the UCC or other applicable law or (b) so as to limit, impair or
otherwise affect Agent's unconditional continuing security interests in and
liens upon any rights or interests of such Obligor in or to monies due or to
become due under any such contract, lease, permit, license, charter or license
agreement (including any Accounts).
5.4 Perfection of Security Interests.
(a) Each Obligor irrevocably and unconditionally authorizes Agent (or
its agent) to file at any time and from time to time such financing statements
with respect to the Collateral naming Agent or its designee as the secured party
and any Obligor as debtor, as Agent may require, and including any other
information with respect to any Obligor or otherwise required by part 5 of
Article 9 of the Uniform Commercial Code of such jurisdiction as Agent may
determine, together with any amendment and continuations with respect thereto,
which authorization shall apply to all financing statements filed on, prior to
or after the date hereof. Each Obligor hereby ratifies and approves all
financing statements naming Agent or its designee as secured party and any
Obligor as debtor with respect to the Collateral (and any amendments with
respect to such financing statements) filed by or on behalf of Agent prior to
the date hereof and ratifies and confirms the authorization of Agent to file
such financing statements (and amendments, if any). Each Obligor hereby
authorizes Agent to adopt on behalf of Obligors any symbol required for
authenticating any electronic filing. In no event shall Obligors at any time
file, or permit or cause to be filed, any correction statement or termination
statement with respect to any financing statement (or amendment or continuation
with respect thereto) naming Agent or its designee as secured party and any
Obligor as debtor except with respect to termination statements, as permitted by
Section 9-509(d)(2) of the UCC or releases of Excluded Property pursuant to
Section 5.5(a) hereof.
(b) No Obligor has any chattel paper (whether tangible or electronic)
or instruments as of the date hereof, except that which has been delivered to
Agent on or prior to the date hereof. In the event that any Obligor shall be
entitled to or shall receive any chattel paper or instrument in excess of
$5,000,000 after the date hereof or any chattel paper or instrument after the
occurrence and during the continuance of an Event of Default, such Obligor shall
promptly notify Agent thereof in writing and, if requested by Agent, such
Obligor shall deliver, or cause to be delivered to Agent, all such tangible
chattel paper and instruments that such Obligor, accompanied by such instruments
of transfer or assignment duly executed in blank
50
as Agent may from time to time specify, in each case except as Agent may
otherwise agree, or at Agent's option, each Obligor shall cause the original of
any such instrument or chattel paper to be conspicuously marked in a form and
manner acceptable to Agent with the following legend referring to chattel paper
or instruments as applicable: "This [chattel paper][instrument] is subject to
the security interest of Wachovia Bank, National Association, as Agent and any
sale, transfer, assignment or encumbrance of this [chattel paper][instrument]
violates the rights of such secured party."
(c) In the event that any Obligor shall at any time hold or acquire an
interest in any electronic chattel paper or any "transferable record" (as such
term is defined in Section 201 of the Federal Electronic Signatures in Global
and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction), such Obligor shall
promptly notify Agent thereof in writing. Promptly upon Agent's request, each
Obligor shall take, or cause to be taken, such actions as Agent may reasonably
request to give Agent control of such electronic chattel paper under the UCC and
control of such transferable record under Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or, as the case may be, Section
16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.
(d) No Obligor has any deposit accounts as of the date hereof, except
as set forth in Schedule 6.3 hereof and the Concentration Accounts. No Obligor
shall, directly or indirectly, after the date hereof open, establish or maintain
any deposit account other than Retail Store bank accounts and zero balance
disbursement accounts unless on or before the opening of such deposit account,
such Obligor shall deliver to Agent a Deposit Account Control Agreement with
respect to such deposit account duly executed and delivered by such Obligor and
the bank at which such deposit account is opened and maintained. The terms of
this subsection (d) shall not apply to deposit accounts designated by Obligors
for payroll, payroll taxes and other employee wage and benefit payments to or
for the benefit of any Obligor's salaried employees, escrows of security
deposits with respect to leases of Real Property or Concentration Accounts until
the occurrence of an Event of Default as set forth in Section 6.3 hereof.
(e) No Obligor owns or holds, directly or indirectly, beneficially or
as record owner or both, any investment property, as of the date hereof, or has
any investment account, securities account, commodity account or other similar
account with any bank or other financial institution or other securities
intermediary or commodity intermediary as of the date hereof, in each case
except as set forth in Schedule 5.4(e) hereof except for investment property
designated by Obligors for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of any Obligor's salaried employees or
property held in trust for the benefit of an employee or any third party which
is not an Affiliate.
(i) In the event that any Obligor shall be entitled to or
shall at any time after the date hereof hold or acquire any
certificated securities (other than Permitted Investments except as
required in clause (ii) below), which are not Excluded Property, such
Obligor shall promptly endorse, assign and deliver the same to Agent,
for the benefit of Lenders, accompanied by such instruments of transfer
or assignment duly executed in blank as Agent may from time to time
specify. If any securities, which are not Excluded Property, now or
hereafter acquired by any Obligor are uncertificated and are issued to
any Obligor or its nominee directly
51
by the issuer thereof, such Obligor shall promptly notify Agent thereof
and shall, as Agent may specify, cause the issuer to agree to comply
with instructions from Agent as to such securities, without further
consent of any Obligor or such nominees.
(ii) No Obligor shall, directly or indirectly, after the date
hereof open, establish or maintain any investment account, securities
account, commodity account or any other similar account (other than a
deposit account) with any securities intermediary with Qualified Cash
unless the securities intermediary or commodity intermediary (as the
case may be) where such account is opened or maintained shall be
reasonably acceptable to Agent and such Obligor shall execute and
deliver, and cause to be executed and delivered to Agent, an Investment
Property Control Agreement with respect thereto duly executed and
delivered by any Obligor and such securities intermediary or commodity
intermediary, provided, that, Agent hereby agrees and Agent shall
instruct the securities intermediary, commodity intermediary or other
person who has custody, control or possession of any investment
property (collectively, "Intermediary") of any Obligor subject to an
Investment Property Control Agreement to comply with entitlement orders
issued or originated by such Obligor (to the extent such entitlement
orders do not conflict with instructions issued by Agent to such
Intermediary) concerning the investment property account until such
time as Agent delivers a written notice to such Intermediary which
states such Obligor is no longer entitled to give any such orders in
respect of such investment property account. Agent will only send such
notices to the Intermediaries at any time after the occurrence and
during the continuance of a Cash Dominion Event. Notwithstanding
anything to the contrary set forth herein, Obligors shall not be
required to obtain Investment Property Control Agreements with respect
to any investment accounts in which Permitted Investments are held
unless Obligors desire to include such Permitted Investments in the
calculation of Qualified Cash.
(f) No Obligor is the beneficiary or otherwise entitled to any right to
payment under any letter of credit or banker's acceptance as of the date hereof.
In the event that any Obligor shall be entitled to or shall receive any right,
whether as beneficiary thereof or otherwise after the date hereof, to payment
under any letter of credit or banker's acceptance in excess of $5,000,000 prior
to the occurrence of an Event of Default and any right to payment under any
letter of credit or banker's acceptance after the occurrence and during the
continuance of an Event of Default, such Obligor shall promptly notify Agent
thereof in writing, and, at the request of Agent, such Obligor shall promptly,
as Agent may specify, deliver, or cause to be delivered to Agent, with respect
to such letter of credit or banker's acceptance, the written agreement of the
issuer and any other nominated person obligated to make any payment in respect
thereof (including any confirming or negotiating bank), in form and substance
reasonably satisfactory to Agent, consenting to the assignment of the proceeds
of the letter of credit to Agent by Obligors and agreeing to make all payments
thereon directly to Agent or as Agent may otherwise direct.
(g) No Obligor has any commercial tort claims, as of the date hereof,
in excess of $5,000,000. In the event that any Obligor shall, at any time after
the date hereof, have any commercial tort claims in excess of $5,000,000 prior
to the occurrence of an Event of Default, and any commercial tort claim after
the occurrence and during the continuance of an Event of Default, such Obligor
shall promptly notify Agent thereof in writing, which notice shall (i) set forth
in reasonable detail the basis for and nature of such commercial tort claim and
(ii) include the express grant by such Obligor to Agent of a security interest
in such commercial tort
52
claim (and the proceeds thereof). In the event that such notice does not include
such grant of a security interest, the sending thereof by such Obligor to Agent
shall be deemed to constitute such grant to Agent. Upon the sending of such
notice, any commercial tort claim described therein shall constitute part of the
Collateral and shall be deemed included therein. Without limiting the
authorization of Agent provided in Section 5.4(a) hereof or otherwise arising by
the execution by Obligors of this Agreement or any of the other Financing
Agreements, Agent is hereby irrevocably authorized from time to time and at any
time to file such financing statements naming Agent or its designee as secured
party and each Obligor as debtor, or any amendments to any financing statements,
covering any such commercial tort claim as Collateral. In addition, each Obligor
shall promptly upon Agent's request, execute and deliver, or cause to be
executed and delivered, to Agent such other agreements, documents and
instruments as Agent may reasonably require in connection with such commercial
tort claim.
(h) No Obligor has any goods constituting Collateral, documents of
title or other Collateral in the custody, control or possession of a third party
in the United States as of the date hereof, except as set forth on Omnibus
Schedule 2 hereof and except for goods located in the United States in transit
to a location of any Obligor permitted herein in the ordinary course of business
of Obligors in the possession of the carrier transporting such goods. In the
event that any goods constituting Collateral, documents of title or other
Collateral in the United States with a value in excess of $1,000,000 are at any
time after the date hereof in the custody, control or possession of any Person
(not an Obligor) who: (i) is not referred to in the Omnibus Schedules, (ii) has
not executed a Collateral Access Agreement if and only if such third party is
required to execute a Collateral Access Agreement pursuant to the Loan Agreement
or (iii) is not a carrier, Obligors shall promptly notify Agent thereof in
writing. Promptly upon Agent's request, each Obligor shall use commercially
reasonable efforts to deliver to Agent a Collateral Access Agreement duly
executed and delivered by such third party and such Obligor. In the event
Obligor cannot obtain a Collateral Access Agreement as required under this
Section from a third party, such Obligor shall remove any Collateral in such
third party's custody, control or possession within 30 days of request from
Agent to do so.
(i) Obligors shall take any other actions reasonably requested by Agent
from time to time to cause the attachment, perfection and first priority of, and
the ability of Agent to enforce, the security interest of Agent in any and all
of the Collateral, including, without limitation, (i) executing, delivering and,
where appropriate, filing financing statements and amendments relating thereto
under the UCC or other applicable law, to the extent, if any, that Obligor's
signature thereon is required therefor, (ii) complying with any provision of any
statute, regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of Agent to enforce, the security interest of each
Lender in such Collateral, or (iii) obtaining the consent and approval of any
Governmental Authority or third party, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral, and
taking all actions required by any other law, as applicable in any relevant
jurisdiction.
5.5 Authorization for UCC Release Documents.
(a) Agent hereby authorizes any Obligor to execute, if applicable, and
file any release to or amendment of any UCC financing statement (in the form
annexed hereto as
53
Exhibit 5.5) necessary to reflect the exclusion of the Excluded Property from
the Lien of the Agent at any time and from time to time. Such Obligor shall
promptly provide copies to Agent of any such releases or amendments filed in
accordance herewith.
(b) Agent shall (and is hereby irrevocably authorized by Lenders to)
upon the request of Administrative Borrower and at Borrowers' expense, (i) upon
(A) a liquidation of an Obligor permitted under Section 9.7 or the sale of an
Obligor permitted under Section 9.8 hereof, release such Obligor from the
Obligations, release the Capital Stock of such Obligor from the Lien of Agent
hereunder and release any Collateral owned by such Obligor subject to the Lien
of Agent hereunder, and (B) the sale or other disposition of any Collateral
permitted under Section 9.8 hereof, release such Collateral from the Lien of
Agent hereunder, and (ii) in connection with the transactions described in
clause (i), deliver to Administrative Borrower a UCC-3 partial release (or other
appropriate instrument, as the case may be) in form and substance reasonably
satisfactory to Agent, as may be necessary to evidence the release of any
Obligor (as the result of a transfer of the Capital Stock of such Obligor in
accordance with and as permitted in accordance with Sections 9.7 and 9.8 hereof)
or of the Lien in favor of Agent upon any Collateral to the extent such
Collateral is sold, transferred or otherwise disposed of in accordance with
Section 9.7(b) or 9.8 hereof; provided, that, (A) Administrative Borrower
certifies to Agent, Issuing Bank and Lenders in writing that such sale,
disposition or other transaction is being consummated in accordance with the
terms of this Agreement (and Agent, Issuing Bank and Lenders may rely
conclusively upon such certificate without any further inquiry) and such release
shall only be effective upon the consummation of such transaction, sale or other
disposition, (B) Agent shall not be required to execute any such document on
terms which, in Agent's opinion, would expose Agent to liability to any third
Person or create any obligations or entail any consequence to Agent, Issuing
Bank or Lenders other than the release of such Obligor or such Lien without
recourse or warranty, and (C) such release shall not in any manner discharge,
affect or impair the Obligations of any Person not released or any Lien upon (or
obligations of Obligors in respect of) the Collateral retained by Obligors.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letters of
Credit and other Obligations, (b) all payments made by or on behalf of Borrowers
and (c) all other appropriate debits and credits as provided in this Agreement,
including, without limitation, fees, charges, costs, expenses and interest. All
entries in the loan account(s) shall be made in accordance with Agent's
customary practices as in effect from time to time.
6.2 Statements. Agent shall render to Administrative Borrower each
month a statement setting forth the balance in the Borrowers' loan account(s)
maintained by Agent for Borrowers pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses. Each such statement
shall be subject to subsequent adjustment by Agent but shall, absent errors or
omissions, be considered correct and deemed accepted by Borrowers, Parent and
Administrative Borrower and conclusively binding upon Borrowers, Parent and
Administrative Borrower as an account stated except to the extent that Agent
receives a written notice from Administrative Borrower of any specific
exceptions of Borrowers thereto within thirty (30) days after the date such
statement has been mailed by Agent. Until such time as Agent shall have
54
rendered to Administrative Borrower a written statement as provided above, the
balance in Borrowers' loan account(s) shall be presumptive evidence of the
amounts due and owing to Agent and Lenders by Borrower.
6.3 Collection of Accounts.
(a) Each Obligor shall establish and maintain, at its expense, deposit
account arrangements and merchant payment arrangements with the banks set forth
on Schedule 6.3 hereto and after prior written notice to Agent, subject to
Section 5.4(d), such other banks as such Obligor may hereafter select. As of the
date hereof, the banks set forth on Schedule 6.3 constitute all of the banks
with whom Obligors have deposit account arrangements and merchant payment
arrangements and identifies each of the deposit accounts at such banks to a
Retail Store location of an Obligor or otherwise describes the nature of the use
of such deposit account by such Obligor.
(b) Each Obligor shall establish and maintain, at its expense, deposit
accounts with such banks (the "Blocked Accounts") into which each Obligor shall
promptly deposit, and direct, their respective account debtors, Credit Card
Issuers (other than Originator) and Credit Card Processors to directly remit to
such Blocked Accounts payments on its Accounts, Credit Card Receivables and all
other payments constituting proceeds of Inventory, other Collateral or other
property which is security for the Obligations in the identical form in which
such payments are made, whether by cash, check or other manner. The banks at
which the Blocked Accounts are established shall enter into a Deposit Account
Control Agreement reasonably satisfactory to Agent prior to any funds being
transferred into such Blocked Account. Subject to the terms and conditions
contained herein, Agent shall instruct the depository banks at which the Blocked
Accounts are maintained to transfer the funds on deposit in the Blocked Accounts
to such operating bank account of each Obligor as such Obligor (or
Administrative Borrower on behalf of such Obligor) may specify in writing to
Agent until such time as Agent shall notify the depository bank otherwise. Agent
will only instruct the depository banks at which the Blocked Accounts are
maintained to transfer all funds received or deposited into the Blocked Accounts
to the Agent Payment Account at any time upon and after the occurrence of a Cash
Dominion Event. Each Obligor agrees that at all times that Agent shall have
notified any depository bank to transfer funds from the Blocked Accounts, all
payments made to such Blocked Accounts or other funds received and collected by
Agent, shall be treated as payments to Agent in respect of the Obligations and
therefore shall constitute the property of Agent to the extent of the then
outstanding Obligations.
(c) Notwithstanding anything to the contrary set forth in Section
6.3(b), Obligors may direct each of the Retail Store Subsidiaries to first
deposit all collections from customers of their Retail Stores, all proceeds from
sales of Inventory in every form, including, without limitation, cash, checks,
credit card sales drafts, credit card sales or charge slips or receipts and
other forms of daily store receipts, into a depository account maintained by
them with a local bank, used solely for such purpose and identified to each
Retail Store as set forth on Schedule 6.3 (together with any other deposit
accounts at any time established or used by any Obligor for receiving such store
receipts from any Retail Store, collectively, the "Store Bank Accounts" and each
individually, a "Store Bank Account"); provided, that, (i) all such funds
deposited into the Store Bank Accounts shall be sent by wire transfer or by
transfer using the
55
automated clearinghouse network no less frequently than twice a week (or more
frequently after the occurrence and during the continuance of an Event of
Default upon Agent's request), except nominal amounts which are required to be
maintained (A) in such Store Bank Accounts under the terms of such Obligor's
arrangements with the bank at which such Store Bank Accounts are maintained or
(B) for such Obligor's operations, including, without limitation, amounts to
cover returned or dishonored checks or returned goods, and which nominal amounts
shall not exceed $10,000 as to any individual Retail Store at any time, to one
of the Concentration Accounts and (ii) on each Business Day CS Delaware shall
remit or cause the applicable depository bank to remit all collected funds in
such Concentration Accounts to the Blocked Accounts, except for Excluded
Property. No Obligors shall open or use any concentration or cash management
accounts at any bank or other financial institution, other than the
Concentration Accounts and Store Bank Accounts, except in compliance with this
Section 6.3. No later than five (5) days after the occurrence of an Event of
Default, each Obligor which maintains a Concentration Account shall, upon
Agent's request, obtain a Deposit Control Agreement, in form and substance
reasonably satisfactory to Agent, from each depository bank with respect to such
Concentration Account.
(d) For purposes of calculating the amount of the Loans available to
Borrowers, such payments will be applied (conditional upon final collection) to
the Obligations on the Business Day of receipt by Agent of immediately available
funds in the Agent Payment Account provided such payments and notice thereof are
received in accordance with Agent's usual and customary practices as in effect
from time to time and within sufficient time to credit such Borrower's loan
account on such day, and if not, then on the next Business Day; provided, that,
upon the occurrence of a Cash Dominion Event (other than a Cash Dominion Event
arising from the occurrence of an Event of Default), for purposes of calculating
the amount of the Loans available to Borrowers such payments will be applied
(conditional upon final collection) to the Obligations on the Business Day of
receipt by Agent in the Agent Payment Account, if such payments are received in
the Agent Payment Account by 3:00 p.m. New York City time and Agent has received
notice thereof from the Administrative Borrower and the bank at which such Agent
Payment Account is maintained to credit Borrowers' loan account on such day, and
if not, then on the next Business Day. For purposes of calculating interest on
the Obligations, such payments or other funds received and collected by Agent on
account of the Obligations will be applied (conditional upon final collection)
to the Obligations on the Business Day of receipt of immediately available funds
by Agent in the Agent Payment Account if received prior to 2:00 p.m. and one (1)
Business Day following the date of receipt of immediately available funds by
Agent in the Agent Payment Account if received after such time.
(e) Each Obligor and all of their directors, employees, agents,
Subsidiaries (other than Financing Subsidiaries) and other Affiliates shall,
acting as trustee for Agent, receive, as the property of Agent, any monies,
checks, notes, drafts or any other payment relating to and/or proceeds of
Receivables constituting Collateral or other Collateral which come into their
possession or under their control and immediately upon receipt thereof, shall
deposit or cause the same to be deposited in the accounts of Obligors in
accordance with the provisions of this Section 6.3, or remit the same or cause
the same to be remitted, in kind, to Agent; provided, that, if at any time the
Excess Availability shall be less than $10,000,000, Obligors shall promptly upon
Agent's request cause the portion thereof representing sales and/or use taxes
payable in connection with such sales or otherwise to be deposited into a
separate bank account or accounts
56
established for such purpose until Excess Availability exceeds $10,000,000. In
no event during such period in which Excess Availability is less than
$10,000,000 shall the same be commingled with Obligor's own funds. Each Obligor
agrees to reimburse Agent within ten (10) days of written demand by Agent for
any amounts owed or paid to any bank at which a Blocked Account is established
or any other bank or person involved in the transfer of funds to or from the
Blocked Accounts arising out of the payments by Agent to or indemnification of
such bank or person in connection with such Blocked Account or any amounts
received therein or transferred therefrom. The obligation of Obligors to
reimburse Agent for such amounts pursuant to this Section 6.3 shall survive the
termination of this Agreement.
6.4 Payments.
(a) All Obligations shall be payable to the Agent Payment Account as
provided in Section 6.3 or such other place as Agent may designate from time to
time. Subject to the other terms and conditions contained herein, Agent shall
apply payments received or collected from any Obligor or for the account of any
Obligor (including the monetary proceeds of collections or of realization upon
any Collateral) as follows: first, to pay any fees, indemnities or expense
reimbursements then due to Agent, each Issuing Bank and Lenders from any
Obligor; second, to pay interest then due in respect of any Swing Line Loans,
third, to pay interest then due in respect of any Revolving Loans, Special Agent
Advances, or Letter of Credit Obligations; fourth, to pay or prepay principal in
respect of Special Agent Advances; fifth, to pay or prepay principal in respect
of Swing Line Loans; sixth, to pay or prepay principal in respect of the
Revolving Loans; and seventh, at any time (i) prior to the occurrence of an
Event of Default, to pay any other Obligations (not otherwise specified above)
then due, in such order and manner as Agent determines, and (ii) an Event of
Default has occurred and is continuing, to pay or prepay any Obligations (not
otherwise specified above) whether or not then due, in such order and manner as
Agent determines and to provide cash collateral for any Letter of Credit
Obligations.
(b) Notwithstanding anything to the contrary contained in this
Agreement, unless so directed by Administrative Borrower, or unless an Event of
Default shall have occurred and be continuing, Agent shall not apply any
payments which it receives to any Eurodollar Rate Loans, except (i) on the
expiration date of the Interest Period applicable to any such Eurodollar Rate
Loans or (ii) in the event that there are no outstanding Prime Rate Loans,
provided, that, in the event that there are no outstanding Prime Rate Loans, no
Event of Default has occurred and is continuing and no Cash Dominion Event has
occurred and is continuing, payments will not be applied to the Eurodollar Rate
Loans and such payments shall be promptly remitted to Borrowers. If a Cash
Dominion Event has occurred, such amounts that are not applied to the
Obligations pursuant to Section 6.4(a) hereof shall be held as cash collateral
for the Obligations (the "Credit Balance Cash Collateral"). Such Credit Balance
Cash Collateral shall constitute part of the Collateral. Such Credit Balance
Cash Collateral shall be held by Agent in an account designated by Agent for
such purposes in its books and records and may be commingled with Agent's own
funds. Borrowers shall receive a credit on a monthly basis to its loan account
maintained by Agent on the funds so held by Agent at a rate equal to three and
one half (3 1/2%) percent per annum less than the Prime Rate (adjusted effective
on the first day of the month after any change in such Prime Rate is announced
based on the Prime Rate in effect on the last day of the month in which any such
change occurs) as calculated by Agent.
57
(c) At Agent's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of any Borrower
maintained by Agent. Obligors shall make all payments to Agent and Lenders on
the Obligations free and clear of, and without deduction or withholding for or
on account of, any setoff, counterclaim, defense, duties, taxes, levies,
imposts, fees, deductions, withholding, restrictions or conditions of any kind.
If after receipt of any payment of, or proceeds of Collateral applied to the
payment of, any of the Obligations, Agent, Issuing Bank or any Lender is
required to surrender or return such payment or proceeds to any Person for any
reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
Agent or such Lender. Obligors shall be liable to pay to Agent, and do hereby
indemnify and hold Agent and Lenders harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4(c) shall remain effective
notwithstanding any contrary action which may be taken by Agent or any Lender in
reliance upon such payment or proceeds. This Section 6.4 shall survive the
payment of the Obligations and the termination of this Agreement.
6.5 Taxes.
(a) Any and all payments by or on account of any of the Obligations
shall be made free and clear of and without deduction or withholding for or on
account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,
fees, deductions, charges, withholdings, liabilities, restrictions or conditions
of any kind, excluding (i) in the case of each Lender, Issuing Bank and Agent
(A) taxes measured by its net income, and franchise taxes imposed on it, by the
jurisdiction (or any political subdivision thereof) under the laws of which such
Lender, Issuing Bank or Agent (as the case may be) is organized and (B) any
United States withholding taxes payable with respect to payments under the
Financing Agreements under laws (including any statute, treaty or regulation) in
effect on the date hereof (or, in the case of an Eligible Transferee, the date
of the Assignment and Acceptance) applicable to such Lender, Issuing Bank or
Agent, as the case may be, but not excluding any United States withholding taxes
payable as a result of any change in such laws occurring after the date hereof
(or the date of such Assignment and Acceptance) and (ii) in the case of each
Lender, Issuing Bank or Agent, taxes measured by its net income, and franchise
taxes imposed on it as a result of a present or former connection between such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any taxing authority thereof or therein (all such non-excluded taxes, levies,
imposts, fees, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes").
(b) If any Taxes shall be required by law to be deducted from or in
respect of any sum payable in respect of the Obligations to any Lender, Issuing
Bank or Agent (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 6.5), such Lender, Issuing Bank or
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the relevant Obligor shall make
such deductions, (iii) the relevant Obligor shall pay the full amount deducted
to the relevant taxing authority or other authority in accordance with
applicable law and (iv) the relevant Obligor shall deliver to Agent evidence of
such payment.
58
(c) In addition, each Obligor agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction, and all liabilities with respect thereto, in
each case arising from any payment made hereunder or under any of the other
Financing Agreements or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any of the other Financing
Agreements (collectively, "Other Taxes").
(d) Each Obligor shall indemnify each Lender, Issuing Bank and Agent
for the full amount of Taxes and Other Taxes (including any Taxes and Other
Taxes imposed by any jurisdiction on amounts payable under this Section 6.5)
paid by such Lender, Issuing Bank or Agent (as the case may be) and any
liability (including for penalties, interest and expenses) arising therefrom or
with respect thereto. This indemnification shall be made within thirty (30) days
from the date such Lender, Issuing Bank or Agent (as the case may be) makes
written demand therefor. A certificate as to the amount of such payment or
liability delivered to Administrative Borrower by a Lender, Issuing Bank (with a
copy to Agent) or by Agent on its own behalf or on behalf of a Lender or Issuing
Bank, shall be conclusive absent manifest error.
(e) As soon as practicable after any payment of Taxes or Other Taxes by
any Obligor, such Obligor shall furnish to Agent, at its address referred to
herein, the original or a certified copy of a receipt evidencing payment
thereof.
(f) Without prejudice to the survival of any other agreements of any
Obligor hereunder or under any of the other Financing Agreements, the agreements
and obligations of such Obligor contained in this Section 6.5 shall survive the
termination of this Agreement and the payment in full of the Obligations.
(g) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
applicable Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any of the
other Financing Agreements shall deliver to Administrative Borrower (with a copy
to Agent), at the time or times prescribed by applicable law or reasonably
requested by Administrative Borrower or Agent (in such number of copies as is
reasonably requested by the recipient), whichever of the following is applicable
(but only if such Foreign Lender is legally entitled to do so): (i) duly
completed copies of Internal Revenue Service Form W-8BEN claiming exemption
from, or a reduction to, withholding tax under an income tax treaty, or any
successor form, (ii) duly completed copies of Internal Revenue Service Form
8-8ECI claiming exemption from withholding because the income is effectively
connection with a U.S. trade or business or any successor form, (iii) in the
case of a Foreign Lender claiming the benefits of the exemption for portfolio
interest under Sections 871(h) or 881(c) of the Code, (A) a certificate of the
Lender to the effect that such Lender is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code, a "10 percent shareholder" of a Borrower
within the meaning of Section 881(c)(3)(B) of the Code or a "controlled foreign
corporation" described and Section 881(c)(3)(C) of the Code and (B) duly
completed copies of Internal Revenue Service Form W-8BEN claiming exemption from
withholding under the portfolio interest exemption or any successor form or (iv)
any other applicable form, certificate or document prescribed by applicable law
as a basis for claiming exemption from or a reduction in United States
59
withholding tax duly completed together with such supplementary documentation as
may be prescribed by applicable law to permit a Borrower to determine the
withholding or deduction required to be made. Unless Administrative Borrower and
Agent have received forms or other documents satisfactory to them indicating
that payments hereunder or under any of the other Financing Agreements to or for
a Foreign Lender are not subject to United States withholding tax or are subject
to such tax at a rate reduced by an applicable tax treaty, Borrowers or Agent
shall withhold amounts required to be withheld by applicable requirements of law
from such payments at the applicable statutory rate.
(h) Any Lender claiming any additional amounts payable pursuant to this
Section 6.5 shall use its reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
applicable lending office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that would be payable
or may thereafter accrue and would not, in the sole determination of such
Lender, be otherwise disadvantageous to such Lender
(i) Each Lender and Agent agrees that in the event that Obligors are
required to pay additional amounts or to make indemnity payments pursuant to
this Section 6.5 to such Lender or Agent, such Lender or Agent, as the case may
be, will use reasonable efforts to designate another lending office for any
Loans, Letters of Credit or other Obligations.
6.6 Authorization to Make Loans. Agent and Lenders are authorized to
make the Loans and provide the Letters of Credit based upon telephonic or other
instructions received from anyone purporting to be an officer of any Borrower or
Administrative Borrower or, at the discretion of Agent, if such Loans are
necessary to satisfy any Obligations then due and payable. All requests for
Loans or Letters of Credit hereunder shall specify the date on which the
requested advance is to be made or Letters of Credit established (which day
shall be a Business Day) and the amount of the requested Loan. Requests received
after 11:00 a.m. New York City time on any day shall be deemed to have been made
as of the opening of business on the immediately following Business Day. All
Loans and Letters of Credit under this Agreement shall be conclusively presumed
to have been made to, and at the request of and for the benefit of, Borrowers
when deposited to the credit of such Borrower or otherwise disbursed or
established in accordance with the instructions of such Borrower or
Administrative Borrower or in accordance with the terms and conditions of this
Agreement.
6.7 Use of Proceeds. All Loans made or Letters of Credit provided to or
for the benefit of Borrowers pursuant to the provisions hereof shall be used by
Borrowers only for costs, expenses and fees in connection with the preparation,
negotiation, execution and delivery of this Agreement and the other Financing
Agreements and for general operating, working capital and other proper corporate
purposes of Borrowers (including, without limitation, to finance acquisitions
permitted to be made in accordance with Section 9.12 hereof and to make
Restricted Payments) not otherwise prohibited by the terms hereof. None of the
proceeds will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security or for the purposes of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the Loans to be
considered a "purpose credit" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, as amended, except, that, Borrowers may
use proceeds of Loans to
60
make acquisitions and to purchase shares of the Capital Stock of Parent so long
as any such purchase (x) does not constitute or otherwise cause a violation of
Regulation U and (y) is otherwise is in compliance with the terms and provisions
hereof.
6.8 Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement: (a) the making and conversion of Revolving Loans shall be made among
the Lenders based on their respective Pro Rata Shares as to the Revolving Loans
and (b) each payment on account of any Obligations to or for the account of one
or more of Lenders in respect of any Obligations due on a particular day shall
be allocated among the Lenders entitled to such payments based on their
respective Pro Rata Shares and shall be distributed accordingly.
6.9 Sharing of Payment, Etc.
(a) Borrowers agree that, in addition to (and without limitation of)
any right of setoff, banker's lien or counterclaim Agent or any Lender may
otherwise have, each Lender shall be entitled, at its option (but subject, as
among Agent and Lenders, to the provisions of Section 12.3(b) hereof), to offset
balances held by it for the account of Borrowers at any of its offices, in
dollars or in any other currency, against any principal of or interest on any
Loans owed to such Lender or any other amount payable to such Lender hereunder,
that is not paid when due (regardless of whether such balances are then due to
Borrower), in which case it shall promptly notify the Administrative Borrower
and Agent thereof; provided, that, such Lender's failure to give such notice
shall not affect the validity thereof.
(b) If any Lender (including Agent) shall obtain from any Obligor
payment of any principal of or interest on any Loan owing to it or payment of
any other amount under this Agreement or any of the other Financing Agreements
through the exercise of any right of setoff, banker' s lien or counterclaim or
similar right or otherwise (other than from Agent as provided herein), and, as a
result of such payment, such Lender shall have received more than its Pro Rata
Share of the principal of the Loans or more than its share of such other amounts
then due hereunder or thereunder by Borrowers to such Lender than the percentage
thereof received by any other Lender, it shall promptly pay to Agent, for the
benefit of Lenders, the amount of such excess and simultaneously purchase from
such other Lenders a participation in the Loans or such other amounts,
respectively, owing to such other Lenders (or such interest due thereon, as the
case may be) in such amounts, and make such other adjustments from time to time
as shall be equitable, to the end that all Lenders shall share the benefit of
such excess payment (net of any expenses that may be incurred by such Lender in
obtaining or preserving such excess payment) in accordance with their respective
Pro Rata Shares or as otherwise agreed by Lenders. To such end all Lenders shall
make appropriate adjustments among themselves (by the resale of participation
sold or otherwise) if such payment is rescinded or must otherwise be restored.
(c) Borrowers agree that any Lender so purchasing such a participation
(or direct interest) may exercise, in a manner consistent with this Section, all
rights of setoff, banker's lien, counterclaim or similar rights with respect to
such participation as fully as if such Lender were a direct holder of Loans or
other amounts (as the case may be) owing to such Lender in the amount of such
participation.
61
(d) Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other Indebtedness or
obligation of Borrower. If, under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
6.10 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient manner
and to minimize the transfer of funds between Agent and Lenders, Agent may, at
its option, subject to the terms of this Section, make available, on behalf of
Lenders, the full amount of the Revolving Loans requested or charged to any
Borrower's loan account(s) or otherwise to be advanced by Lenders pursuant to
the terms hereof, without requirement of prior notice to Lenders of the proposed
Revolving Loans.
(b) With respect to all Revolving Loans made by Agent on behalf of
Lenders, or any Swing Line Loans made by Swing Line Lender or Agent on behalf of
Swing Line Lender, the amount of each Lender's Pro Rata Share of the outstanding
Loans shall be computed weekly, and shall be adjusted upward or downward on the
basis of the amount of the outstanding Loans as of 5:00 p.m. New York City time
on the Business Day immediately preceding the date of each settlement
computation; provided, that, Agent retains the absolute right at any time or
from time to time to make the above described adjustments at intervals more
frequent than weekly, but in no event more than twice in any week. Agent shall
deliver to each of the Lenders after the end of each week, or at such lesser
period or periods as Agent shall determine, a summary statement of the amount of
outstanding Loans for such period (such week or lesser period or periods being
hereinafter referred to as a "Settlement Period"). If the summary statement is
sent by Agent and received by a Lender prior to 12:00 p.m. New York City time,
then such Lender shall make the settlement transfer described in this Section by
no later than 3:00 p.m. New York City time on the same Business Day and if
received by a Lender after 12:00 p.m. New York City time, then such Lender shall
make the settlement transfer by not later than 3:00 p.m. New York City time on
the next Business Day following the date of receipt. If, as of the end of any
Settlement Period, the amount of a Lender's Pro Rata Share of the outstanding
Loans is more than such Lender's Pro Rata Share of the outstanding Loans as of
the end of the previous Settlement Period, then such Lender shall forthwith (but
in no event later than the time set forth in the preceding sentence) transfer to
Agent by wire transfer in immediately available funds the amount of the
increase. Alternatively, if the amount of a Lender's Pro Rata Share of the
outstanding Loans in any Settlement Period is less than the amount of such
Lender's Pro Rata Share of the outstanding Loans for the previous Settlement
Period, Agent shall forthwith transfer to such Lender by wire transfer in
immediately available funds the amount of the decrease. The obligation of each
of the Lenders to transfer such funds and effect such settlement shall be
irrevocable and unconditional and without recourse to or warranty by Agent.
Agent and each Lender agrees to xxxx its books and records at the end of each
Settlement Period to show at all times the dollar amount of its Pro Rata Share
of the outstanding Loans and Letters of Credit. Each Lender shall only be
entitled to receive interest on its Pro Rata Share of the Loans to the
62
extent such Loans have been funded by such Lender. Because the Agent on behalf
of Lenders may be advancing and/or may be repaid Loans prior to the time when
Lenders will actually advance and/or be repaid such Loans, interest with respect
to Loans shall be allocated by Agent in accordance with the amount of Loans
actually advanced by and repaid to each Lender and the Agent and shall accrue
from and including the date such Loans are so advanced to but excluding the date
such Loans are either repaid by Borrowers or actually settled with the
applicable Lender as described in this Section.
(c) To the extent that Agent has made any such amounts available and
the settlement described above shall not yet have occurred, upon repayment of
any Loans by a Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section. In lieu of weekly or
more frequent settlements, Agent may, at its option, at any time require each
Lender to provide Agent with immediately available funds representing its Pro
Rata Share of each Loan, prior to Agent's disbursement of such Loan to Borrower.
In such event, all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares. No Lender shall be
responsible for any default by any other Lender in the other Lender's obligation
to make a Loan requested hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of the default by any other Lender in the
other Lender's obligation to make a Loan hereunder.
(d) If Agent is not funding a particular Loan to a Borrower (or
Administrative Borrower for the benefit of such Borrower) pursuant to Sections
6.10(a) and 6.10(b) above on any day, but is requiring each Lender to provide
Agent with immediately available funds on the date of such Loan as provided in
Section 6.10(c) above, Agent may assume that each Lender will make available to
Agent such Lender's Pro Rata Share of the Loan requested or otherwise made on
such day and Agent may, in its discretion, but shall not be obligated to, cause
a corresponding amount to be made available to or for the benefit of such
Borrower on such day. If Agent makes such corresponding amount available to a
Borrower and such corresponding amount is not in fact made available to Agent by
such Lender, Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon for each day from the
date such payment was due until the date such amount is paid to Agent at the
Federal Funds Rate for each day during such period (as published by the Federal
Reserve Bank of New York or at Agent's option based on the arithmetic mean
determined by Agent of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that day by each of
the three leading brokers of Federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days of
Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to Prime Rate Loans. During the period in which such Lender has not
paid such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Agent to or for the benefit of any Borrower shall, for
all purposes hereof, be a Loan made by Agent for its own account. Upon any such
failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Administrative Borrower of such failure and Borrowers shall pay such
corresponding amount to Agent for its own account within five (5) Business Days
of Administrative Borrower's receipt of such notice. A Lender who fails to pay
Agent its Pro Rata Share of any Loans made available by the Agent on such
Lender's behalf, or any Lender who fails to pay any other amount owing by it to
Agent, is a "Defaulting Lender". Agent shall not be obligated to transfer to a
Defaulting Lender any
63
payments received by Agent for the Defaulting Lender's benefit, nor shall a
Defaulting Lender be entitled to the sharing of any payments hereunder
(including any principal, interest or fees). Amounts payable to a Defaulting
Lender shall instead be paid to or retained by Agent. Agent may hold and, in its
discretion, relend to a Borrower the amount of all such payments received or
retained by it for the account of such Defaulting Lender. For purposes of voting
or consenting to matters with respect to this Agreement and the other Financing
Agreements and determining Pro Rata Shares, such Defaulting Lender shall be
deemed not to be a "Lender" and such Lender's Commitment shall be deemed to be
zero (0). This Section shall remain effective with respect to a Defaulting
Lender until such default is cured. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by any Obligor of its duties and obligations
hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or the other
Financing Agreements shall be deemed to require Agent to advance funds on behalf
of any Lender or to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that any Borrower may have
against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.
6.11 Obligations Several; Independent Nature of Lenders' Rights. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
6.12 Appointment of Administrative Borrower as Agent for Requesting
Loans and Receipts of Loans and Statements.
(a) Each Borrower hereby irrevocably appoints and constitutes
Administrative Borrower as its agent and attorney-in-fact to request and receive
Loans and Letters of Credit pursuant to this Agreement and the other Financing
Agreements from Agent or any Lender in the name or on behalf of such Borrower.
Agent and Lenders may disburse the Loans to such bank account of Administrative
Borrower or a Borrower or otherwise make such Loans to a Borrower and provide
such Letters of Credit to an Obligor or Additional L/C Debtor as Administrative
Borrower may designate or direct, without notice to any other Obligor.
Notwithstanding anything to the contrary contained herein, Agent may at any time
and from time to time require that Loans to or for the account of any Borrower
be disbursed directly to an operating account of such Borrower.
(b) Administrative Borrower hereby accepts the appointment by Borrowers
to act as the agent and attorney-in-fact of Borrowers pursuant to this Section
6.12. Administrative Borrower shall ensure that the disbursement of any Loans to
each Borrower requested by or paid to or for the account of Administrative
Borrower, or the issuance of any Letter of Credit for a Borrower hereunder,
shall be paid to or for the account of such Borrower.
64
(c) Each Obligor hereby irrevocably appoints and constitutes
Administrative Borrower as its agent to receive statements on account and all
other notices from Agent and Lenders with respect to the Obligations or
otherwise under or in connection with this Agreement and the other Financing
Agreements.
(d) Any notice, election, representation, warranty, agreement or
undertaking by or on behalf of any other Obligor by Administrative Borrower
shall be deemed for all purposes to have been made by such Obligor, and shall be
binding upon and enforceable against such Obligor to the same extent as if made
directly by such Obligor.
(e) No purported termination of the appointment of Administrative
Borrower as agent as aforesaid shall be effective, except after ten (10) days'
prior written notice to Agent.
SECTION 7. COLLATERAL COVENANTS
7.1 Intentionally Deleted.
7.2 Accounts Covenants.
(a) Obligors shall notify Agent promptly of: (i) any notice of a
material default by any Obligor under any of the Credit Card Agreements or of
any default which has a reasonable likelihood of resulting in the Credit Card
Issuer or Credit Card Processor ceasing to make payments or suspending payments
to any Obligor, (ii) any notice from any Credit Card Issuer or Credit Card
Processor that such person is ceasing or suspending, or will cease or suspend,
any present or future payments due or to become due to any Obligor from such
person, or that such person is terminating or will terminate any of the Credit
Card Agreements, and (iii) the failure of any Obligor to comply with any
material terms of the Credit Card Agreements or any terms thereof which has a
reasonable likelihood of resulting in the Credit Card Issuer or Credit Card
Processor ceasing or suspending payments to any Obligor.
(b) Each Obligor shall notify Agent promptly of the assertion of (i)
any claims, offsets, defenses or counterclaims by any account debtor, with
respect to Accounts constituting Collateral, Credit Card Issuer or Credit Card
Processor or any disputes with any of such persons or any settlement, adjustment
or compromise thereof, to the extent any of the foregoing exceeds $10,000,000 in
any one case or $20,000,000 in the aggregate and (ii) all material adverse
information of which it has knowledge relating to the financial condition of any
material trade account debtor, Credit Card Issuer or Credit Card Processor. No
material credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor, Credit Card Issuer or Credit
Card Processor except in the ordinary course of an Obligor's business. So long
as no Event of Default has occurred and is continuing, each Obligor may settle,
adjust or compromise any claim, offset, counterclaim or dispute with any account
debtor, Credit Card Issuer, or Credit Card Processor. At any time that an Event
of Default has occurred and is continuing, Agent shall, at its option, have the
right to settle, adjust or compromise any claim, offset, counterclaim or dispute
with account debtors with respect to Accounts constituting Collateral, Credit
Card Issuers or Credit Card Processors or grant any credits, discounts or
allowances with respect to Accounts constituting Collateral.
65
(c) With respect to each Account constituting Collateral: (i) no
payments shall be made thereon except payments delivered to Agent when and as
required pursuant to the terms of this Agreement, and (ii) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Agent in accordance with the
terms of this Agreement or as has been or will be reflected in a Borrowing Base
Certificate to be delivered to Agent, and, additionally with respect to Credit
Card Receivables, in accordance with the practices of the related Credit Card
Issuer, Credit Card Processor or other Obligor thereon.
(d) Agent shall have the right at any time or times, in Agent's name or
in the name of a nominee of Agent, to verify the validity, amount or any other
matter relating to any Receivables constituting Collateral or other Collateral,
by mail, telephone, facsimile transmission or otherwise.
(e) Agent may, at any time or times that an Event of Default has
occurred and is continuing, (i) notify any or all account debtors with respect
to Accounts constituting Collateral, Credit Card Issuers, Credit Card Processors
or any other obligor in respect of any Receivables with respect to Accounts
constituting Collateral that such Receivables have been assigned to Agent and
that Agent has a security interest therein and Agent may direct any or all
account debtors, Credit Card Issuers, Credit Card Processors or other obligors
in respect of any such Receivables to make payment of such Receivables directly
to Agent, (ii) extend the time of payment of, compromise, settle or adjust for
cash, credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Receivables constituting Collateral or other obligations
included in the Collateral and thereby discharge or release the account debtor
or any other party or parties in any way liable for payment thereof without
affecting any of the Obligations, (iii) demand, collect or enforce payment of
any Receivables constituting Collateral, but without any duty to do so, and
Agent and Lenders shall not be liable for Agent's failure to collect or enforce
the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Agent may reasonably and in
good xxxxx xxxx necessary for the protection of its interests. At any time that
an Event of Default has occurred and is continuing, at Agent's request, all
invoices and statements sent to any account debtor shall state that the Accounts
constituting Collateral have been assigned to Agent and are payable directly and
only to Agent and each Obligor shall deliver to Agent such originals of
documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts constituting Collateral as Agent may
require.
7.3 Inventory Covenants. With respect to the Inventory: (a) each
Obligor shall and Parent shall cause each Additional L/C Debtor to at all times
maintain inventory records reasonably satisfactory to Agent, keeping correct and
accurate records itemizing and describing the kind, type, quality and quantity
of Inventory, Obligors' cost therefor and withdrawals therefrom and additions
thereto; (b) Obligors shall conduct a physical count of the Inventory at least
once each year (at which representatives of Agent may be present) and at such
time or times as is consistent with current practices, but at any time or times
as Agent may request after an Event of Default has occurred and is continuing in
accordance with clause (e) below, and promptly following such physical inventory
shall supply Agent with a report in the form and with such specificity as may be
reasonably satisfactory to Agent concerning such physical count; (c) Obligors
shall not remove any Inventory from the locations set forth or permitted herein,
66
without the prior written consent of Agent, except: (1) for sales of Inventory
in the ordinary course of any Obligor's business, (2) to move Inventory directly
from one location set forth or permitted herein to another such location, (3)
for Inventory shipped from the manufacturer thereof to Obligors which is in
transit to the locations set forth or permitted herein and (4) in connection
with any other transactions or dispositions permitted by this Agreement; (d)
upon Agent's request, Borrowers shall, at their expense, so long as Excess
Availability shall be greater than or equal to $50,000,000 at the end of each
fiscal month during any consecutive twelve (12) month period, no more than one
(1) time in any twelve (12) consecutive month period and if Excess Availability
shall be less than $50,000,000 at the end of any fiscal month in any twelve (12)
consecutive month period, no more than two (2) times in such twelve (12)
consecutive month period, but at any additional time or times as Agent may
request at Lenders' expense, or at any time or times as Agent may request at
Borrowers' expense on or after an Event of Default and during the continuance
thereof, deliver or cause to be delivered to Agent written reports or appraisals
as to the Inventory in form, scope and methodology reasonably acceptable to
Agent and by an appraiser reasonably acceptable to Agent, addressed to Agent and
upon which Agent and Lenders are expressly permitted to rely; (e) after the
occurrence and during the continuance of an Event of Default, Borrowers shall,
at their expense, conduct through RGIS Inventory Specialists, Inc. or another
inventory counting service reasonably acceptable to Agent, a physical count of
the Inventory in form, scope and methodology acceptable to Agent, the results of
which shall be reported directly by such inventory counting service to Agent and
Borrowers shall promptly deliver confirmation in a form reasonably satisfactory
to Agent that appropriate adjustments have been made to the inventory records of
Obligors to reconcile the inventory count to Obligors' inventory records; (f)
Obligors assume all responsibility and liability arising from or relating to the
production, use, sale or other disposition of the Inventory; (g) each Obligor
shall not sell Inventory to any customer on approval, or any other basis which
entitles the customer to return or may obligate Obligors to repurchase such
Inventory except for the right of return given to retail customers of Obligors
in the ordinary course of the business of Obligors in accordance with the then
current return policy of Obligor; (h) Obligors shall keep the Inventory in good
condition (taken as a whole); and (i) Obligors shall not acquire or accept any
Inventory on consignment or approval, except for the sale of lines other than
apparel to the extent such Inventory is reported to Agent in accordance with the
terms hereof.
7.4 Bills of Lading and Other Documents of Title. With respect to
Inventory in transit to premises of a customs broker in the United States or
premises of Obligors in the United States of America, after the occurrence and
during the continuance of an Event of Default, (a) Obligors shall cause all
bills of lading and other documents of title relating to goods being purchased
by it which are outside the United States and in transit to such premises to
name Obligors as consignee, unless and until Agent directs otherwise; (b) at
such time and from time to time as Agent may direct, Obligors shall cause Agent
or such other financial institution or other person as Agent may specify to be
named as consignee; (c) without limiting any other rights of Agent or any Lender
hereunder, Agent shall have the right to endorse and negotiate on behalf of ,
and as attorney in fact for, Obligors any xxxx of lading or other document of
title with respect to such goods naming Obligors as consignee to Agent; (d)
there shall be three (3) originals of each of such xxxx of lading or other
document of title which unless and upon Agent's direction, shall be delivered as
follows: (i) one (1) original to such customs broker as the applicable Obligor
may specify (so long as Agent has received a Collateral Access Agreement duly
executed and delivered by such customs broker), and (ii) two (2) originals to
Agent or to
67
such other person as Agent may designate for such purpose; (e) Obligors shall
obtain a copy (but not the originals) of such xxxx of lading or other documents
of title from the customs broker and (f) Obligors shall cause all bills of
lading or other documents of title relating to goods purchased by Obligors which
are outside the United States and in transit to the premises of Obligors or the
premises of a customs broker in the United States to be issued in a form so as
to constitute negotiable documents as such term is defined in the Uniform
Commercial Code.
7.5 Power of Attorney. Each Obligor hereby irrevocably designates and
appoints Agent (and all persons designated by Agent) as such Obligor's true and
lawful attorney in fact, and authorizes Agent, in such Obligor's or Agent's
name, to: (a) at any time an Event of Default has occurred and is continuing (i)
demand payment on Receivables constituting Collateral or other Collateral, (ii)
enforce payment of Receivables constituting Collateral by legal proceedings or
otherwise, (iii) exercise all of such Obligor's rights and remedies to collect
any Receivable constituting Collateral or other Collateral, (iv) sell or assign
any Receivable constituting Collateral upon such terms, for such amount and at
such time or times as the Agent deems advisable, (v) settle, adjust, compromise,
extend or renew an Account constituting Collateral, (vi) discharge and release
any Receivable constituting Collateral, (vii) prepare, file and sign such
Obligor's name on any proof of claim in bankruptcy or other similar document
against an account debtor or other obligor in respect of any Receivable
constituting Collateral or other Collateral, (viii) notify the post office
authorities to change the address for delivery of remittances from account
debtors or other obligors in respect of Receivables constituting Collateral or
other proceeds of Collateral to an address designated by Agent, and open and
dispose of all mail addressed to such Obligor and handle and store all mail
relating to the Collateral; (ix) clear Inventory the purchase of which was
financed with Letters of Credit through U.S. Customs or foreign export control
authorities in such Obligor's name, Agent's name or the name of Agent's
designee, and to sign and deliver to customs officials powers of attorney in
Obligor's name for such purpose, and to complete in such Obligor's or Agent's
name, any order, sale or transaction, obtain the necessary documents in
connection therewith and collect the proceeds thereof, and (x) do all acts and
things which are necessary, in Agent's determination, to fulfill such Obligor's
obligations under this Agreement and the other Financing Agreements and (b) at
any time to (i) take control in any manner of any item of payment in respect of
Receivables constituting Collateral or otherwise received in or for deposit in
the Blocked Accounts or otherwise received by Agent or any Lender, (ii) have
access to any lockbox or postal box into which remittances from account debtors
or other obligors in respect of Receivables constituting Collateral or other
proceeds of Collateral are sent or received, (iii) endorse Obligor's name upon
any items of payment in respect of Receivables or constituting Collateral or
otherwise received by Agent and any Lender and deposit the same in Agent's
account for application to the Obligations, (iv) endorse Obligor's name upon any
chattel paper, document, instrument, invoice, or similar document or agreement
relating to any Receivable constituting Collateral or any goods pertaining
thereto or any other Collateral, including any warehouse or other receipts, or
bills of lading and other negotiable or non-negotiable documents, and (v) sign
such Obligor's name on any verification of Receivables constituting Collateral
and notices thereof to account debtors or any secondary obligors or other
obligors in respect thereof. Each Obligor hereby releases Agent and Lenders and
their respective officers, employees and designees from any liabilities arising
from any act or acts under this power of attorney and in furtherance thereof,
whether of omission or commission, except as a result of Agent's own gross
68
negligence or willful misconduct as determined pursuant to a final non-
appealable order of a court of competent jurisdiction.
7.6 Right to Cure. Agent may, at its option, upon notice to
Administrative Borrower, following the occurrence and during the continuance of
an Event of Default, (a) cure any material default by any Obligor under any
agreement with a third party if and to the extent the termination of such
agreement would materially and adversely affect the Collateral (taken as a
whole) or the value thereof or the ability of Agent to collect, sell or
otherwise dispose of the Collateral or the rights and remedies of Agent or any
Lender therein or the ability of Obligor to perform its obligations hereunder or
under any of the other Financing Agreements; (b) pay or bond on appeal any
judgment entered against any Obligor; or (c) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral excluding Permitted Liens and pay any amount, incur any
expense or perform any act which, in Agent's reasonable judgment, is necessary
to preserve, protect, insure or maintain the Collateral and the rights of Agent
and Lenders with respect thereto. Agent may add any amounts so expended to the
Obligations and charge Borrowers' account therefor, such amounts to be repayable
by Borrowers within ten (10) days of written demand by Agent. Agent and Lenders
shall be under no obligation to effect such cure, payment or bonding and shall
not, by doing so, be deemed to have assumed any obligation or liability of any
Obligor. Any payment made or other action taken by Agent under this Section
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed accordingly.
7.7 Access to Premises. From time to time as requested by Agent, at the
cost and expense of Borrowers, (a) Agent or its designee shall have complete
access to all of Obligors' premises during normal business hours and after
notice to Administrative Borrower, or at any time and without notice to Obligors
or Administrative Borrower if an Event of Default has occurred and is
continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of Borrowers' books and records, including the Records, and
(b) Obligors shall promptly furnish or cause to be furnished to Agent such
copies of such books and records or extracts therefrom as Agent may reasonably
request, and (c) Agent or any Lender or Agent's designee may use during normal
business hours such of any Obligor's personnel, equipment, supplies and premises
as may be reasonably necessary for the foregoing (provided, that, Agent shall
use such personnel, equipment, supplies and premises in such manner so as to
minimize any interference with the operations of Obligors) and if an Event of
Default exists or has occurred and is continuing for the collection of Accounts
constituting Collateral and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Obligors hereby, jointly and severally, represent and warrant to Agent,
each Issuing Bank and Lenders the following (which shall survive the execution
and delivery of this Agreement), the truth and accuracy of which are a
continuing condition of the making of Loans and providing Letters of Credit by
Agent and Lenders to Borrowers.
8.1 Corporate Existence, Power and Authority; Subsidiaries. Except as
set forth on Omnibus Schedule 7, each Obligor and each Additional L/C Debtor is
a corporation, limited liability company or partnership duly organized and in
good standing under the laws of its state
69
or jurisdiction of formation and is duly qualified as a foreign entity and in
good standing in all states or other jurisdictions where the nature and extent
of the business transacted by it or the ownership of assets makes such
qualification necessary and where the failure to so qualify or be in good
standing has or has a reasonably likelihood of having a Material Adverse Effect.
The execution, delivery and performance of this Agreement, the other Financing
Agreements, and the transactions contemplated hereunder and thereunder are all
within each Obligor's powers, have been duly authorized and are not in
contravention of law or the terms of each Obligor's certificate of
incorporation, formation, operating or partnership agreement, by-laws, or other
organizational documentation. The execution, delivery and performance of this
Agreement, the other Financing Agreements and the transactions contemplated
thereby (a) are not in contravention of the terms of any indenture, or mortgage,
agreement or other undertaking to which any Obligor or Additional L/C Debtor is
a party or by which any Obligor or Additional L/C Debtor or its respective
properties are bound where the Indebtedness, obligations or other liability of
such Obligor or Additional L/C Debtor or the value of the respective properties
bound thereby equals or exceeds $25,000,000 or (b) result in, require or give
rise to the creation or imposition of any Lien upon any property of Obligors or
Additional L/C Debtor under any agreement or otherwise (other than in favor of
Agent pursuant to the terms of the Financing Agreements or a Permitted Lien).
This Agreement and the other Financing Agreements constitute legal, valid and
binding obligations of Borrowers enforceable in accordance with their respective
terms. Obligors do not have any Subsidiaries except as set forth on Omnibus
Schedule 1.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrowers or any other Subsidiary of Parent which have
been or may hereafter be delivered by Borrowers to Agent and Lenders have been
prepared in accordance with GAAP and fairly present in all material respects the
financial condition and the results of operation of Obligors as at the dates and
for the periods set forth therein. There has been no act, condition or event
which has had or is reasonably likely to have a Material Adverse Effect since
the date of the most recent audited financial statements furnished by Borrowers
to Agent prior to the date of this Agreement.
8.3 Collateral Locations. Each Obligor and each Obligor's Records
concerning Accounts are located only at the addresses set forth for such Obligor
on Omnibus Schedule 2 hereto, subject to the right of any Obligor to establish
new locations in accordance with Section 9.2 below. Omnibus Schedule 2 hereto
correctly identifies as of the date hereof any of such locations which are not
owned by Obligors and sets forth the owners and/or operators thereof.
8.4 Priority of Liens' Title to Properties. The Liens granted to Agent
under this Agreement and the other Financing Agreements constitute valid and,
except as otherwise specifically consented to in writing by Agent or
contemplated in this Agreement, perfected first priority Liens in and upon the
Collateral subject only to Liens permitted under Section 9.9(a). Each Obligor
has good and marketable title to all of its respective properties and assets
subject to no Liens of any kind, except Permitted Liens.
8.5 Tax Returns. Each Obligor and the other Subsidiaries of Parent has
filed, or caused to be filed, in a timely manner prior to the expiration of all
properly filed extensions all tax returns, reports and declarations which are
required to be filed by it, except as set forth in
70
Omnibus Schedule 16 hereto or unless any such failure to timely file any such
tax returns, reports or declarations would not have a Material Adverse Effect.
All information in such tax returns, reports and declarations is complete and
accurate in all material respects. Each of Obligors has paid or caused to be
paid all taxes due and payable or claimed due and payable, as to which
non-payment thereof would result in a Material Adverse Effect, except taxes the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and with respect to which adequate reserves have been set
aside on its books. Adequate provision has been made for the payment of all
accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed. Each Obligor has
collected and remitted to the appropriate tax authority when due all sales
and/or use taxes applicable to its business required to be collected under the
laws of the United States and each possession or territory thereof, and each
State or political subdivision thereof or any other jurisdiction, as to which
non-payment thereof would result in a Material Adverse Effect.
8.6 Litigation. Except as set forth on Omnibus Schedule 8 hereto, there
is no present investigation by any Governmental Authority pending, or to the
best of any Borrower's knowledge threatened, against or affecting any Obligor,
its assets or business and there is no action, suit, proceeding or claim by any
Person pending, or to the best of each Borrower's knowledge threatened, against
any Obligor or its assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, which, in any case, has had or has a reasonable
likelihood of having a Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) None of Obligors or other Subsidiaries of Parent is in default in
any respect under, or in violation in any respect of the terms of, any material
agreement, contract, instrument, lease or other commitment to which it is a
party or by which it or any of its assets are bound where such default has had
or has a reasonable likelihood of having a Material Adverse Effect. Each Obligor
and the other Subsidiaries of Parent is in compliance with the requirements of
all applicable laws, rules, regulations and orders of any Governmental Authority
relating to its business, including, without limitation, those set forth in or
promulgated pursuant to the Occupational Safety and Health Act of 1970, as
amended, the Fair Labor Standards Act of 1938, as amended, ERISA, the Code, and
all Environmental Laws where the failure to comply has had or has a reasonable
likelihood of having a Material Adverse Effect.
(b) Each Obligor and other Subsidiary of Parent has obtained all
permits, licenses, approvals, consents, certificates, orders or authorizations
of any Governmental Authority (the "Permits") required for the lawful conduct of
its business where the failure to obtain such Permit has had or is reasonably
likely to have a Material Adverse Effect. There are no actions, claims or
proceedings pending or to the best of Borrower's knowledge, threatened that seek
the revocation, cancellation, suspension or modification of any of the Permits
which revocation, cancellation, suspension or modification has had or is
reasonably likely to have Material Adverse Effect.
71
8.8 Environmental Compliance.
(a) Except as set forth on Omnibus Schedule 11 hereto, Obligors have
not generated, used, stored, treated, transported, manufactured, handled,
produced or disposed of any Hazardous Materials, on or off its premises (whether
or not owned by it) in any manner which at any time violates any applicable
Environmental Law or any license, certificate, approval or similar authorization
or other Permit thereunder where such violation would have a Material Adverse
Effect and the operations of Obligors comply in all respects with all
Environmental Laws and all licenses, certificates, approvals and other Permits
where the failure to so comply would have a Material Adverse Effect.
(b) Except as set forth on Omnibus Schedule 11 hereto, there has been
no investigation, proceeding, complaint, order, directive, claim, citation or
notice by any Governmental Authority or any other person nor is any pending or
to the best of each Obligor's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
such Obligor or the release, spill or discharge, threatened or actual, of any
Hazardous Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental matter, which affects or has a reasonable likelihood of
affecting Obligor or its business, operations or assets or any properties at
which such Obligor has transported, stored or disposed of any Hazardous
Materials which, in any case, has had or has a reasonable likelihood of having a
Material Adverse Effect.
(c) Obligors have no material liability (contingent or otherwise) in
connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials which
has had or has a reasonable likelihood of having a Material Adverse Effect.
(d) Obligors have all licenses, certificates, approvals or similar
authorizations and other Permits required to be obtained or filed in connection
with the operations of Obligors under any Environmental Law where the failure to
obtain such licenses, certificates or similar authorizations and other Permits
has had or has a reasonably likelihood of having a Material Adverse Effect and
all of such licenses, certificates, approvals or similar authorizations and
other Permits are valid and in full force and effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or State law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service and to the
best of each Borrower's knowledge, nothing has occurred which would cause the
loss of such qualification. Since October 30, 2002, no Borrower nor any of its
ERISA Affiliates has maintained or been required to contribute to any Plan
subject to Section 412 of the Code, and no application for a funding waiver or
an extension of any amortization period pursuant to Section 412 of the Code.
72
(b) There are no pending, or to the best of any Borrower's knowledge,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan which would
result in a liability to Borrowers in excess of $25,000,000.
(c) No ERISA Event has occurred or is reasonably expected to occur
which would result in a liability in excess of $25,000,000.
8.10 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by Borrowers maintained at any bank or
other financial institution are set forth on Schedule 6.3 hereto, subject to the
right of Borrowers to establish new accounts in accordance with Section 5.4
hereof.
8.11 Intellectual Property. Each Obligor owns or licenses or otherwise
has the right to use all Intellectual Property necessary for the operation of
its business as presently conducted or proposed to be conducted where the
failure to have the right to use such Intellectual Property has had or is
reasonably likely to have a Material Adverse Effect. As of the date hereof, each
Obligor does not have any Intellectual Property registered, or subject to
pending applications, in the United States Patent and Trademark Office or any
similar office or agency in the United States, any State thereof, any political
subdivision thereof or in any other country, other than those described in
Schedule 8.11 hereto and has not granted any licenses with respect thereto other
than as set forth in Schedule 8.11 hereto. No event has occurred which permits
or would permit after notice or passage of time or both, the revocation,
suspension or termination of such rights where the failure to have such rights
has had or is reasonably likely to have a Material Adverse Effect. To the best
of each Borrower's knowledge, no slogan or other advertising device, product,
process, method, substance or other Intellectual Property or goods bearing or
using any Intellectual Property presently contemplated to be sold by or employed
by each Obligor infringes any patent, trademark, servicemark, tradename,
copyright, license or other Intellectual Property owned by any other Person
presently and no claim or litigation is pending or threatened against or
affecting each Obligor contesting its right to sell or use any such Intellectual
Property which if adversely determined would have or would be reasonably likely
to have a Material Adverse Effect. Schedule 8.11 sets forth all of the
agreements or other arrangements of Obligors pursuant to which such Person(s)
has a license or other right to use any trademarks, logos, designs,
representations or other Intellectual Property owned by another person as in
effect on the date hereof (excluding rights arising by virtue of a purchase
order between an Obligor and a third party) and the dates of the expiration of
such agreements or other arrangements of such Obligor as in effect on the date
hereof (collectively, together with such agreements or other arrangements as may
be entered into by such Obligor after the date hereof, collectively, the
"License Agreements" and individually, a "License Agreement"). No trademark,
servicemark or other Intellectual Property at any time used by such Obligor
which is owned by another Person is affixed to any Eligible Inventory, except to
the extent permitted under the terms of a License Agreement or Obligor's
purchase order for such goods.
73
8.12 Capitalization.
(a) As of the date hereof, the issued and outstanding shares of Capital
Stock of each Borrower (other than Parent, Crosstown and FB Apparel) are
directly and beneficially owned and held by Parent, and, in each case, all of
such shares have been duly authorized and are fully paid and non-assessable,
free and clear of all Liens of any kind, except as disclosed in writing to
Agent. As of the date hereof, FB Clothing, Inc., which is a US Subsidiary, is
the beneficial owner and holder of all of the issued and outstanding shares of
Capital Stock of FB Apparel. As of the date hereof, Chestnut Acquisition Sub,
Inc. owns all of the issued and outstanding shares of Capital Stock of
Crosstown. Each of the Additional L/C Debtors is a direct or indirect Subsidiary
of Parent.
(b) Obligors, taken as a whole, are solvent and will continue to be
solvent after the creation of the Obligations, the security interests of Agent
and the other transactions contemplated hereunder, are able to pay their debts
as they mature and have (and have reason to believe they will continue to have)
sufficient capital (and not unreasonably small capital) to carry on their
business as and all businesses in which they are about to engage. The assets and
properties of Obligors taken as a whole, at a fair valuation and at their
present salable value are, and will be, greater than the Indebtedness of
Obligors, and including subordinated and contingent liabilities computed at the
amount which, to the best of Borrowers' knowledge, represents an amount which
can reasonably be expected to become an actual or mature liability.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 hereto is a list (including dates of
termination) of all collective bargaining or similar agreements between or
applicable to Obligors and any union, labor organization or other bargaining
agent in respect of the employees of Obligors on the date hereof.
(b) There is (i) no significant unfair labor practice complaint pending
against any Obligor or, to the best of each Borrower's knowledge, threatened
against it or any Obligor, before the National Labor Relations Board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
any Obligor or, to best of each Borrower' s knowledge, threatened against it,
and (ii) no significant strike, labor dispute, slowdown or stoppage is pending
against any Obligor or, to the best of each Borrower's knowledge, threatened
against any Obligor, which, in any case, has had or has a reasonable likelihood
of resulting in a Material Adverse Effect.
8.14 Corporate Names; Prior Transactions. As of the date hereof, no
Obligor (other than a Retail Store Subsidiary) has, during the past five years,
been known by or used any other corporate or fictitious name (other than as set
forth in Schedule 8.11 hereto) or been a party to any merger or consolidation,
or acquired all or substantially all of the assets of any Person, or acquired
any of its property or assets out of the ordinary course of business, except for
the acquisition of Catherines and its Subsidiaries, Modern Woman Holdings, Inc.
and its Subsidiaries, LBH, Inc. and its Subsidiaries, Crosstown and its
Subsidiaries and as otherwise set forth in Schedule 8.14 hereof.
74
8.15 Inactive Subsidiaries. Each of the Inactive Subsidiaries (a) has
no material business operations and assets or (b) has been or is in the process
of being or will be dissolved.
8.16 Restrictions on Subsidiaries. Except for restrictions contained in
this Agreement, the Crosstown Purchase Agreement or any other agreement with
respect to Indebtedness of Obligors permitted hereunder and the other Financing
Agreements and the Securitization Documents, there are no contractual or
consensual restrictions on any Obligor which prohibit or otherwise restrict (a)
the transfer of cash or other assets (i) between such Obligor and any of its
Subsidiaries except for restrictions on the transfers of funds from Financing
Subsidiaries (other than FSC) to Obligors or (ii) between any Subsidiaries of
such Obligor or (b) the ability of any Obligor or any of its Subsidiaries to
incur Indebtedness hereunder or grant security interests to Agent or any Lender
in the Collateral.
8.17 Material Contracts. Schedule 8.17 hereto sets forth all Material
Contracts to which any Obligor is a party or is bound as of the date hereof.
Borrower has delivered true, correct and complete copies of such Material
Contracts to Agent on or before the date hereof. No Obligor is in breach of or
in default under any Material Contract and has not received any notice of the
intention of any other party thereto to terminate any Material Contract where
such default or termination would have or is reasonably likely to have a
Material Adverse Effect.
8.18 Credit Card Agreements. Set forth in Schedule 8.18 hereto is a
correct and complete list, as of the date hereof, of (a) all of the Credit Card
Agreements, (b) the percentage of each sale payable to the Credit Card Issuer or
Credit Card Processor under the terms of the Credit Card Agreements, (c) all
other fees and charges payable by any Obligor under or in connection with the
Credit Card Agreements and (d) the term of such Credit Card Agreements. The
Credit Card Agreements constitute all of such agreements necessary for each
Borrower to operate its business as presently conducted with respect to credit
cards and debit cards and no Receivables of any Obligor arise from purchases by
customers of Inventory with credit cards or debit cards, other than those which
are issued by Credit Card Issuers with whom such Obligor has entered into one of
the Credit Card Agreements set forth on Schedule 8.18 hereto. Each of the Credit
Card Agreements constitutes the legal, valid and binding obligations of the
Obligor that is party thereto and to the best of each Borrower's knowledge, the
other parties thereto, enforceable in accordance with their respective terms and
is in full force and effect. No default or event of default, or act, condition
or event which after notice or passage of time or both, would constitute a
default or an event of default under any of the Credit Card Agreements exists or
has occurred and is continuing which would have the reasonable likelihood of
having a Material Adverse Effect. Each Obligor has complied with all of the
material terms and conditions of the Credit Card Agreements to the extent
necessary for such Obligor to be entitled to receive payments thereunder.
8.19 Interrelated Businesses. Obligors make up a related organization
of various entities which share an identity of interests such that any benefit
received by any of them benefits the others. Each Obligor (a) renders services
to or for the benefit of the other Obligors, (b) make loans and advances and
provides other financial accommodations to or for the benefit of the other
Obligors (including, inter alia, the payment and/or guaranties by Obligors of
Indebtedness of the other Obligors), and (c) provides administrative, marketing,
payroll and management services to or for the benefit of the other Obligors.
Obligors have centralized accounting and
75
legal services. The Additional L/C Accommodations are opened solely for the
purpose of (i) with respect to the Additional L/C Debtors other than CS
Insurance Ltd., acquiring Inventory by Borrowers for ultimate resale in the
Retail Stores and (ii) with respect to CS Insurance Ltd., providing insurance
services for Obligors. Nothing contained in this Section 8.19 should be
construed to imply that Obligors are not separate legal entities.
8.20 Accuracy and Completeness of Information. All information
furnished by or on behalf of each Obligor in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including all information on the
Omnibus Schedules is true and correct in all material respects on the date as of
which such information is dated or certified and does not knowingly omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a Material Adverse Affect, which has not been fully and accurately
disclosed to Agent in writing.
8.21 Survival Of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be
conclusively presumed to have been relied on by Agent regardless of any
investigation made or information possessed by Agent or any Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which Borrowers shall now or
hereafter give, or cause to be given, to Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Each Obligor shall, at all times,
preserve, renew and keep in full force and effect (a) its rights and franchises
as a corporation, limited liability company or partnership where the failure to
do so would have a reasonable likelihood of having a Material Adverse Effect and
(b) its existence subject to Sections 9.7 and 9.8 hereof. Each Obligor and
Additional L/C Debtor shall at all times maintain in full force and effect all
Permits, licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted where the failure to so maintain the same would have a reasonable
likelihood of having a Material Adverse Effect. Each Obligor shall, and Parent
shall cause each Additional L/C Debtor to give Agent twenty (20) days prior
written notice of any proposed change in its corporate name, which notice shall
accordingly set forth the new name and each Obligor and Additional L/C Debtor,
as the case may be, and Agent shall have received a copy of the amendment to the
formation of such Person, as the case may be, providing for the name change
certified by the Secretary of State or other appropriate government officer of
the jurisdiction of formation of such Person, as the case may be, as soon as it
is available. Additionally, no Obligor shall change its chief executive office
or its mailing address or organizational identification number (or if it does
not have one, shall not acquire one), unless Agent shall have received not less
than twenty (20) days' prior written notice from such Obligor of such proposed
change, which notice shall set forth such information with respect thereto as
Agent may require. No Obligor shall change its type of organization,
jurisdiction of organization or other legal structure without twenty (20) days
prior written notice to Agent of any such proposed change.
76
9.2 New Collateral Locations. No Obligor may open any new location at
which Collateral will be located other than in the United States, Canada and the
United Kingdom, provided, that no Obligor will open any new locations within the
continental United States, Canada or the United Kingdom except: (a) Retail Store
locations, (b) locations in which Inventory stored will not exceed $1,000,000 at
any time, or (c) any other location so long as Agent receives a Collateral
Access Agreement with respect to such location within thirty (30) days after
Collateral is placed at such location unless delivery of such Collateral Access
Agreement is not required in accordance with the definition of Collateral Access
Agreement or is waived by Agent in its discretion.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Obligor shall, and Parent shall cause each other Subsidiary of
Parent to, at all times, comply in all material respects with all laws, rules,
regulations, licenses, approvals, orders and other Permits applicable to it and
duly observe all requirements of any foreign, Federal, State or local
Governmental Authority, including ERISA, the Code, the Occupational Safety and
Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and all statutes, rules, regulations, orders, permits and stipulations
relating to environmental pollution and employee health and safety, including
all of the Environmental Laws where the failure to do so, individually or in the
aggregate, has had or has a reasonable likelihood of having a Material Adverse
Effect.
(b) Each Obligor shall maintain, at its expense, a system to monitor
its continued compliance in all material respects with all applicable
Environmental Laws. Each Obligor and other Subsidiary of Parent shall take
prompt and appropriate action as required by Environmental Laws to respond to
any non-compliance with any Environmental Laws which would have a Material
Adverse Effect.
(c) Each Obligor shall give both oral and written notice to Agent
immediately upon such Obligor's receipt of any notice of, or such Obligor's
otherwise obtaining knowledge of, (i) the occurrence of any event involving the
release, spill or discharge, threatened or actual, of any Hazardous Material or
(ii) any investigation, proceeding, complaint, order, directive, claims,
citation or notice with respect to: (A) any non-compliance with or violation of
any Environmental Law by such Person or (B) the release, spill or discharge,
threatened or actual, of any Hazardous Material or (C) the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials or (D) any other environmental, health or
safety matter, which affects such Person or its business, operations or assets
or any properties at which such Obligor transported, stored or disposed of any
Hazardous Materials, in any of the foregoing instances, where such matter has
had or has a reasonable likelihood of having a Material Adverse Effect.
(d) Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is material non-compliance or any condition
which requires any action by or on behalf of any Obligor or Foreign Subsidiary
in order to avoid any material non-compliance with any Environmental Law which
material non-compliance or condition has had or is reasonably likely to have a
Material Adverse Effect, such Obligor shall, at Agent's request and Borrowers'
expense: (i) cause an independent environmental engineer reasonably acceptable
77
to Agent to conduct such tests of the site where such Person's non-compliance
with such Environmental Laws has occurred as to such non-compliance and prepare
and deliver to Agent a report as to such material non-compliance setting forth
the results of such tests, a proposed plan for responding to any environmental
problems described therein, and an estimate of the costs thereof and (ii)
provide to Agent a supplemental report of such engineer whenever the scope of
such material non-compliance, or Person's response thereto or the estimated
costs thereof, shall change in any material respect.
(e) Borrowers shall indemnify and hold harmless Agent and Lenders and
their respective, directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including attorneys' fees and
legal expenses) directly or indirectly arising out of or attributable to the
use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal or presence of a Hazardous Material,
including the costs of any required or necessary repair, cleanup or other
remedial work with respect to any property of such Borrower and the preparation
and implementation of any closure, remedial or other required plans, other than
such loss, claim, liability, damage, cost or expense as a result of the gross
negligence or willful misconduct of Agent or any Lender as determined pursuant
to a final, non-appealable order of a court of competent jurisdiction. All
representations, warranties, covenants and indemnifications in this Section 9.3
shall survive the payment of the Obligations and the termination of this
Agreement.
9.4 Payment of Taxes and Claims. Each Obligor shall, and Parent shall
cause each of its other Subsidiaries to, duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or its
properties or assets, except for taxes the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and available to any
Obligor, as the case may be, and with respect to which adequate reserves have
been set aside on its books and except where the failure to pay such taxes would
not result in a liability which would exceed $25,000,000.
9.5 Insurance. Each Obligor shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be reasonably satisfactory to Agent
as to form, amount and insurer. Borrowers shall furnish certificates, policies
or endorsements to Agent as Agent shall reasonably require as proof of such
insurance, and, if Borrowers fail to do so within five (5) Business Days
following notice of such failure, Agent is authorized, but not required, to
obtain such insurance at the expense of Borrowers. All policies shall provide
for at least thirty (30) days prior written notice to Agent of any cancellation
or reduction of coverage and that, at any time an Event of Default has occurred
and is continuing, Agent may act as attorney for Obligors in obtaining,
adjusting and settling such insurance. Obligors shall cause Agent to be named as
a loss payee (with respect to policies insuring the Collateral only) and an
additional insured (but without any liability for any premiums) under such
insurance policies and Obligors shall obtain non-contributory lender's loss
payable endorsements to all insurance policies covering the Collateral in form
and substance reasonably satisfactory to Agent. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Agent as its
78
interests may appear and further specify that Agent and Lenders shall be paid
regardless of any act or omission by any Borrower or any of its Affiliates.
After an Event of Default has occurred and is continuing, at its option, Agent
may apply any insurance proceeds relating to the Collateral received by Agent at
any time to the payment of the Obligations, whether or not then due, in any
order and in such manner as Agent may determine, which amounts may be
reborrowed.
9.6 Financial Statements, Collateral Reporting and Other Information.
(a) Each Obligor shall keep proper books and records in which true and
complete entries shall be made of all dealings or transactions of or in relation
to the Collateral and the business of such Person (if any) in accordance with
GAAP and Administrative Borrower shall furnish or cause to be furnished to
Agent:
(i) (A) if Excess Availability shall be equal to or less than
$50,000,000 at the end of any fiscal month, then within forty-five (45)
days after the end of such fiscal month, monthly unaudited consolidated
financial statements for Parent and its consolidated Subsidiaries
(including in each case balance sheets, statements of income and loss
and statements of cash flow), all in reasonable detail, fairly
presenting the consolidated financial position and the results of the
consolidated operations of Parent and its consolidated Subsidiaries as
of the end of and through such fiscal month and accompanied by a
compliance certificate substantially in the form of Exhibit B hereto,
and, in the event Section 9.21 is then applicable, the calculations
used in determining, as of the end of the most recent fiscal quarter,
whether Parent and such Subsidiaries were in compliance with the
covenant set forth in Section 9.21 hereof for such quarter; provided,
that, no financial statements shall be required to be furnished for the
first fiscal month of each fiscal year, so long as the financial
statements due in respect of the second fiscal month of each fiscal
year are prepared for the first two fiscal months of such fiscal year,
(B) within fifteen (15) days after the end of each fiscal
month, a report of Monthly Average Excess Availability for the
immediately preceding fiscal month and Excess Availability at the end
of such fiscal month,
(C) within fifteen (15) days after the end of each fiscal
month, a Borrowing Base Certificate duly completed and executed by a
financial officer of Administrative Borrower, on behalf of Borrowers;
provided, that, in the event that either (1) Excess Availability shall
be equal to or less than the greater of: (A) $25,000,000 or (B) ten
(10%) percent of the Borrowing Base, for five (5) consecutive Business
Days, or (2) an Event of Default shall have occurred and be continuing,
then a Borrowing Base Certificate shall be delivered weekly or more
frequently as Agent may request,
(D) within fifteen (15) days after the end of each fiscal
month, perpetual inventory reports in substantially the form set forth
as Exhibit 9.6 hereto; provided, that, in the event that either (1)
Excess Availability shall be equal to or less than the greater of: (A)
$25,000,000 or (B) ten (10%) percent of the Borrowing Base, for five
(5) consecutive Business Days, or (2) an Event of Default shall have
occurred and be continuing, then, the following reports shall be
delivered to Agent on Tuesday of each week for the immediately
preceding week ending on the close of business on Saturday of that
week, (or more frequently as
79
Agent may request): (aa) perpetual inventory reports in substantially
the form set forth as Exhibit 9.6 hereto, with such modifications as
Agent shall reasonably request from time to time after consultation
with Administrative Borrower, (bb) reports of sales of Inventory,
returns, and aggregate Inventory purchases (including all costs related
thereto, such as freight, duty and taxes), (cc) markdown reports by
categories of Inventory, setting forth the original Cost, original
retail sales price prior to any markdowns and the Retail Sales Price,
(dd) inventory aging reports by categories of Inventory (including
identifying Inventory at locations owned and operated by third parties
or on consignment), and (ee) such other reports as to the Collateral as
Agent may reasonably request, and in the event that weekly reporting is
in effect, in the event that Excess Availability shall be greater than
the greater of: (1) $25,000,000 or (2) ten (10%) percent of the
Borrowing Base, for five (5) consecutive Business Days monthly
reporting shall be reinstituted,
(E) within fifteen (15) days after the end of each fiscal
month, agings of accounts payable,
(F) within fifteen (15) days after the end of each fiscal
month, a list of all new locations of Collateral established during the
preceding fiscal month,
(ii) if Borrowers are not delivering financial statements to
Agent pursuant to clause (i) above, then within forty-five (45) days
after the end of each fiscal quarter (excluding the fourth fiscal
quarter of each fiscal year), quarterly unaudited consolidated
financial statements for Parent and its consolidated Subsidiaries
(including in each case, balance sheets, statements of income and loss,
statements of cash flow and statements of shareholders' equity), all in
reasonable detail, fairly presenting the consolidated financial
position and the results of the consolidated operations of Parent and
its consolidated Subsidiaries as of the end of and through such fiscal
quarter and accompanied by a compliance certificate substantially in
the form of Exhibit B hereto, and, in the event Section 9.21 is then
applicable, the calculations used in determining, as of the end of such
quarter, whether Parent and such Subsidiaries were in compliance with
the covenant set forth in Section 9.21 hereof for such quarter, and
(iii) within ninety (90) days after the end of each fiscal
year, audited consolidated financial statements of Parent (including in
each case balance sheets, statements of income and loss, statements of
cash flow and statements of shareholders' equity), and the accompanying
notes thereto, all in reasonable detail, fairly presenting the
consolidated financial position and the results of the consolidated
operations of Parent and its consolidated Subsidiaries, as of the end
of and for such fiscal year, together with the opinion (which does not
contain a "going concern" or other similar exception) of independent
certified public accountants, which accountants shall be an independent
accounting firm selected by Parent and reasonably acceptable to Agent,
that such financial statements have been prepared in accordance with
GAAP, and present fairly the results of operations and financial
condition of Parent and its consolidated Subsidiaries, as of the end of
and for the fiscal year then ended.
(b) Administrative Borrower shall promptly notify Agent in writing of
the details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Inventory having a cost of $10,000,000 or more or which would
result in any Material Adverse Effect and (ii) the occurrence of any Event of
Default or Default.
80
(c) Administrative Borrower shall promptly after the sending or filing
thereof furnish or cause to be furnished to Agent copies of all reports which
Parent or any other Borrower sends to its stockholders generally and copies of
all reports and registration statements which Parent or any other Borrower files
with the Securities and Exchange Commission, any national securities exchange or
the National Association of Securities Dealers, Inc.
(d) Administrative Borrower shall furnish or cause to be furnished to
Agent such budgets, forecasts, projections and other information respecting the
Collateral and the consolidated business of the Obligors, as Agent may, from
time to time, reasonably request. Agent is hereby authorized to deliver a copy
of any financial statement or any other information relating to the business of
any Obligor to any court or other government agency or to any participant or
assignee or prospective participant or assignee, subject to the confidentiality
provisions of Section 13.5 hereof. Any documents, schedules, invoices or other
papers delivered to Agent may be destroyed or otherwise disposed of by Agent one
(1) year after the same are delivered to Agent, except for any longer period as
otherwise designated by Administrative Borrower to Agent in writing.
(e) Upon Agent's reasonable request after a Cash Dominion Event,
Administrative Borrower will furnish (A) copies of deposit slips and bank
statements, (B) copies of purchase orders, invoices and delivery documents for
Inventory acquired by Obligors, (C) the monthly statements received by any
Obligor from any Credit Card Issuers or Credit Card Processors, together with
such additional information with respect thereto as shall be sufficient to
enable Lender to monitor the transactions pursuant to the Credit Card
Agreements, (D) a report of credit card sales on a periodic basis, including the
amount of the chargebacks, fees and credits issued during such period; (E)
agings of accounts receivable (together with a reconciliation to the previous
month's aging and general ledger), and (F) a certificate from a financial
officer of Administrative Borrower on behalf of the Borrowers (1) representing
that Obligors have made payment of sales and use taxes during such month or, at
Agent's request, other evidence of such payment and (2) reporting each claim
filed by lessor or a third party operator of locations where Collateral is
located against an Obligor in an amount equal to or in excess of $500,000 (the
report should indicate the amount of the dispute and whether reserves (and the
amount thereof) are set aside therefor).
(f) Administrative Borrower shall promptly notify Agent in writing in
the event that FSC or any other Financing Subsidiary shall fail to (i) make
settlements on each Business Day (except for delays arising from force majeure,
in which case such failure to make settlements on each Business Day shall not
continue for more than one (1) Business Day) with respect to amounts owed to CS
Delaware or any other Obligor under any Credit Card Agreement, and (ii) remit to
CS Delaware all funds its receives in respect of amounts owed to CS Delaware
pursuant to the C.D. Credit Plan Agreement no later than the same Business Day
it receives such funds.
9.7 Consolidation and Merger; Dissolution. No Obligor shall:
(a) merge into or with or consolidate with any other Person except that
an Obligor may merge into or consolidate with any other Obligor and any Obligor
may merge into or consolidate with any other Person as permitted in Sections 9.8
and 9.12 hereof, and
81
(b) wind up, liquidate or dissolve, except, that, any Obligor (other
than Parent and Administrative Borrower) may wind up, liquidate or dissolve,
provided, that, each of the following conditions is satisfied: (i) no Obligor
shall assume any Indebtedness, obligations or liabilities as a result of such
winding up, liquidation or dissolution, other than liabilities assumed by law
not to exceed the value of the assets received in such liquidation or
dissolution or as would be otherwise permitted under the terms of this Agreement
and the other Financing Agreements, (ii) all assets of the Obligor which is
winding up, liquidating or dissolving (after payment or provision for payment of
any and all obligations of such Obligor) shall be promptly distributed to its
shareholders, members or partners, as the case may be, and (iii) on the date of
and immediately after giving effect to any such winding-up, dissolution or
liquidation, no Event of Default shall have occurred and be continuing.
9.8 Sales of Assets.
(a) Except as permitted in Section 9.7 or subsection (b) hereof, no
Obligor shall sell, assign, lease, transfer, abandon or otherwise dispose of any
of its assets to any other Person.
(b) Notwithstanding anything to the contrary set forth in Section
9.8(a) hereof, any Obligor may do any of the following at any time and from time
to time:
(i) sell Inventory in the ordinary course of business;
(ii) sell or otherwise transfer any Collateral (including,
without limitation, the Capital Stock of an Obligor) to any other
Obligor;
(iii) sell, transfer or otherwise dispose of Permitted
Investments and other investments that are permitted under Section 9.11
hereof;
(iv) sell, assign or otherwise transfer Receivables, Crosstown
Securitization Program Assets and Securitization Program Assets
pursuant to Permitted Securitization Transactions;
(v) sell (including by way of merger or consolidation),
assign, lease or otherwise transfer any Collateral (including, without
limitation, the Capital Stock of an Obligor) to any other Person (which
is not an Obligor or Excluded Subsidiary) outside of the ordinary
course of its business so long as the amount of net after-tax proceeds
received by such Obligor is applied to the outstanding principal amount
of the Loans, which amount may be reborrowed;
(vi) sell (including by way of merger or consolidation),
assign or lease or otherwise transfer Collateral (including, without
limitation, the Capital Stock of an Obligor) to Excluded Subsidiaries
so long as (A) on the date of such sale, assignment, lease or transfer,
and immediately after giving effect thereto, Excess Availability shall
be not less than $50,000,000 and (B) the amount of net after-tax
proceeds received by such Obligor in respect of such sale is applied to
the outstanding principal amount of the Loans, which amount may be
reborrowed; and
82
(vii) sell (including by way of merger or consolidation),
assign, lease, transfer, abandon or otherwise dispose of all or any
portion of its assets that do not constitute Collateral;
provided, that, on the date of such sale, assignment, lease, transfer,
abandonment or other disposition permitted pursuant to subsections (b)(v), (vi)
or (vii) and immediately after giving effect thereto, no Event of Default shall
have occurred and be continuing.
9.9 Encumbrances.
(a) No Obligor shall create, incur, assume or suffer to exist any Lien
on any Collateral, except, that, the following Liens shall be permitted to exist
in respect of Collateral:
(i) the security interests and liens of Agent for itself and
the benefit of Lenders;
(ii) Liens securing the payment of taxes which are either (A)
not yet due and payable or (B) the validity of which are being
contested in good faith by appropriate proceedings diligently pursued
by such Obligor and with respect to which adequate reserves have been
set aside on its books;
(iii) non-consensual statutory Liens (other than Liens
securing the payment of taxes) arising in the ordinary course of any
Obligor's business to the extent: (A) such Liens secure Indebtedness or
other obligations which are not overdue, (B) such Liens secure
Indebtedness or other obligations relating to claims or liabilities
which are fully insured and being defended principally at the cost and
expense and at the risk of the insurer or are being contested in good
faith by appropriate proceedings diligently pursued by such Obligor, in
each case prior to the commencement of foreclosure or other similar
proceedings and with respect to which adequate reserves have been set
aside on its books, or (C) non-payment of the obligations secured by
such Liens would not result in a Material Adverse Effect;
(iv) pledges of Capital Stock acquired by any Obligor as part
of an acquisition of Capital Stock permitted in accordance with Section
9.12 hereof, so long as each of following conditions is satisfied: (A)
such pledges do not apply to any property which is Collateral other
than the Capital Stock of a Person permitted to be acquired pursuant to
Section 9.12 hereof, (B) such Lien is granted to the seller of such
Capital Stock and (C) the Indebtedness secured thereby does not exceed
the cost of the Capital Stock so acquired;
(v) deposits of cash to secure the performance of bids, trade
contracts (other than for borrowed money), freight and customs duties,
leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business; provided, that, such deposit of cash is the only
security for such Obligor's performance thereunder;
(vi) pledges and deposits of cash by any Obligor after the
date hereof in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security benefits;
83
(vii) Liens or rights of setoff against credit balances of
Obligors maintained with Credit Card Issuers or Credit Card Processors
or amounts owing by such Credit Card Issuers or Credit Card Processors
to any Obligor in accordance with the then current practices of the
related Credit Card Issuer or Credit Card Processor or other obligor
thereon, but not liens on or rights of setoff against any other
property or assets of Obligors, pursuant to the Credit Card Agreements
to secure the obligations of Obligors to the Credit Card Issuers or
Credit Card Processors as a result of fees and chargebacks;
(viii) bankers' Liens, rights of setoff and other similar
Liens existing solely with respect to cash, cash equivalents, financial
assets or investment property on deposit in one or more accounts
maintained by any Obligor, in each case, granted in the ordinary course
of business in favor of the bank or banks with which such accounts are
maintained, securing amounts owing to such bank or banks with respect
to cash management, operating account and investment account
arrangements, provided, that, Deposit Account Control Agreements are
obtained if required in accordance with the terms of this Agreement;
(ix) Liens in favor of an Obligor, which Liens are
subordinated in favor of and assigned to Agent pursuant to the
Financing Agreements;
(x) judgments and other similar liens arising in connection
with court proceedings that do not constitute an Event of Default,
provided, that, (i) such liens are being contested in good faith and by
appropriate proceedings diligently pursued, (ii) adequate reserves or
other appropriate provision, if any, as are required by GAAP have been
made therefor, (iii) a stay of enforcement of any such liens is in
effect, and (iv) Agent, at its option, may establish a Reserve with
respect thereto in accordance with Section 1.147 (xi) hereof; and
(xi) bankers' Liens, rights of setoff and other similar Liens
existing solely with respect to cash on deposit in one or more Store
Bank Accounts maintained by Catherines, Inc. and Catherines Stores
Corporation with National Bank of Commerce (or its successors) to
secure Indebtedness arising under the NBC Agreements (as in effect on
the date hereof).
(b) Obligors may create, incur or assume or suffer to exist any Lien on
any assets or property that are not Collateral, provided, that, (i) on the date
of such creation, incurrence or assumption of such Lien and immediately after
giving effect thereto, no Event of Default has occurred and is continuing, (ii)
such Lien does not extend to any Collateral, and (iii) if the Excluded Property
which is the subject of any such Lien is Real Property upon which Collateral is
or may be located (excluding any location for which no Collateral Access
Agreement is required to be delivered pursuant to the terms of this Agreement),
Obligors shall, if requested by Agent, obtain a Collateral Access Agreement from
the Person in whose favor such Lien is granted.
9.10 Indebtedness. No Obligor shall incur, create, assume, become or be
liable in any manner with respect to, or permit to exist, any Indebtedness
except:
(a) the Obligations;
84
(b) purchase money Indebtedness (including Capital Leases) existing or
arising after the date hereof to the extent secured by security interests in
Excluded Property and purchase money mortgages on Excluded Property, so long as
such security interests and mortgages do not apply to any Collateral;
(c) unsecured Indebtedness of Obligors existing on or arising after the
date hereof to any Person (not a Subsidiary of Parent), provided, that, on the
date such Indebtedness is incurred, created or assumed and immediately after
giving effect thereto, no Event of Default shall have occurred and be
continuing;
(d) Indebtedness of Obligors in respect of surety bonds (whether bid,
performance or otherwise) and other obligations of a like nature incurred in the
ordinary course of business;
(e) Indebtedness of an Obligor to a Subsidiary of Parent (other than an
Obligor) which is unsecured or secured by a Lien permitted under Section 9.9(b)
hereof, provided, that, (i) such Indebtedness shall be subject to, and
subordinate in right of payment to the right of Agent to receive payment and
satisfaction in full of all of the Obligations on terms and conditions
acceptable to Agent , except, that, payments in respect of such Indebtedness may
be made so long as before and immediately after making such payment, (A) no
Event of Default has occurred and is continuing and (B) Excess Availability
shall not be less than $50,000,000, (ii) as of the date such Indebtedness is
incurred or created and immediately after giving effect thereto, no Event of
Default shall have occurred and be continuing, and (ii) as of the date such
Indebtedness is incurred or created and immediately after giving effect thereto,
the Excess Availability shall not be less than $50,000,000;
(f) Indebtedness of an Obligor to another Obligor which may be
unsecured or secured by Liens permitted under Section 9.9(a)(ix) or 9.9(b)
hereof, provided, that, such Indebtedness shall be subject to, and subordinate
in right of payment to the right of Agent to receive payment and satisfaction in
full of all of the Obligations on terms and conditions acceptable to Agent,
except, that, payments in respect of such Indebtedness may be made so long as
before and immediately after making such payment no Event of Default has
occurred and is continuing;
(g) guarantees permitted under Section 9.13 hereof;
(h) Indebtedness of the Obligors under the NBC Agreements (as in effect
on the date hereof) secured by Excluded Property and rights of set-off and Liens
on the Store Bank Accounts of certain of the Obligors as set forth in Section
9.9(b)(xi) hereof; and
(i) secured Indebtedness of Obligors not otherwise permitted by this
Section 9.10, existing on or arising after the date hereof to any Person (not an
Excluded Subsidiary), provided, that, (i) on the date of incurrence of such
Indebtedness and immediately after giving effect thereto, no Event of Default
shall have occurred and be continuing, and (ii) the assets of Obligors securing
such Indebtedness shall be Excluded Property (except, that, in the case of an
acquisition permitted under Section 9.12 hereof, such assets may include the
Capital Stock of the Person which is being acquired by such Obligor as set forth
in Section 9.12 hereof).
85
9.11 Loans, Advances and Investments. No Obligor shall, directly or
indirectly, make any loan or advance of money or property to any person, or
invest in (by capital contribution, dividend or otherwise) or purchase or
repurchase the Capital Stock or Indebtedness of any person, except:
(a) loans and advances to or investments in any other Obligor;
(b) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(c) investments in cash or Permitted Investments;
(d) loans or advances of money by any Obligor to any Person (other than
another Obligor or an Excluded Subsidiary) after the date hereof or investments
by Obligors by capital contribution in any Person (other than in another Obligor
or an Excluded Subsidiary) after the date hereof (unless such investments are
otherwise permitted in this Section 9.11 or are acquisitions permitted under
Section 9.12); provided, that, as to any such loans, advances or investments
(constituting one loan, advance or investment or a series of the foregoing) in
excess of $50,000,000 (whether individually, or in the aggregate), each of the
following conditions is satisfied: (i) the Person receiving such loan, advance
or investment is engaged in a business related, ancillary or complementary to
the business of any Obligor permitted in this Agreement, (ii) as of the date of
any such loan, advance or investment and immediately after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing,
(iii) as of the date of any such loan, advance or investment and immediately
after giving effect thereto, the Excess Availability shall not be less than
$50,000,000, and (iv) Agent shall have received (A) not less than five (5)
Business Days' prior written notice thereof setting forth in reasonable detail
the nature and terms thereof, (B) true, correct and complete copies of all
agreements, documents and instruments relating thereto and (C) such other
information with respect thereto as Agent may reasonably request, and (iv) (A)
in the case of a loan or advance of money or property, at Agent's option, the
original of any promissory note or other instrument evidencing the Indebtedness
arising pursuant to such loan or advance shall be delivered, or caused to be
delivered, to Agent, together with an appropriate endorsement from the payee
thereof or (B) in the case of an investment by capital contribution, at Agent's
option, the original of any Capital Stock or other instrument, if any,
evidencing such capital contribution shall be promptly delivered to Agent,
together with such stock power, assignment or endorsement as Agent may request,
and promptly upon Agent's request, such Borrower or Obligor shall execute and
deliver to Agent in form and substance satisfactory to Agent, a pledge and
security agreement granting to Agent a first pledge of and lien on all of the
issued and outstanding shares of such Capital Stock unless such Capital Stock is
subject to a Lien permitted under Section 9.9 hereof;
(e) (i) acquisitions permitted to be made under Section 9.12 hereof or
(ii) sales, transfers or other dispositions permitted to be made under Section
9.8 hereof;
(f) Capital Stock or obligations issued to any Obligor by any Person
(or the representative of such Person) in respect of Indebtedness of such Person
owing to such Obligor in connection with the insolvency, bankruptcy,
receivership or reorganization of such Person or a composition or readjustment
of the debts of such Person; provided, that, the original, if any, of
86
any such Capital Stock or instrument evidencing such obligations shall be
promptly delivered to Agent, upon Agent's request, together with such stock
power, assignment or endorsement by such Obligor as Agent may request; and
(g) loans and advances to or investments in any Excluded Subsidiary,
provided, that, as of the date of such loan, advance or investment and
immediately after giving effect thereto: (i) no Event of Default shall have
occurred and be continuing, and (ii) Excess Availability shall be not less than
$50,000,000.
9.12 Acquisitions. No Obligor shall, directly or indirectly, except
through an Excluded Subsidiary, acquire (which term shall include acquisition by
way of merger or consolidation), all or substantially all of the Capital Stock
or assets or property of any Person except,
(a) any Obligor may acquire all or a substantial part of the assets or
property or all or a majority of the Capital Stock of any Person located in the
United States, Canada and the United Kingdom (such acquired assets (including
the assets acquired in a Capital Stock acquisition) being referred to herein as
the "Acquired Business"), provided, that:
(i) if the total consideration payable in respect of such
Acquired Business is not greater than $50,000,000 (so long as the
aggregate amount of all consideration paid for all acquisitions
pursuant to Section 9.12(a)(i) hereof at the time of, or immediately
after giving effect to such proposed acquisition pursuant to Section
9.12(a)(i) hereof, shall be less than $100,000,000 in a fiscal year),
each of the following conditions is satisfied:
(A) the Acquired Business shall be related, ancillary or
complementary to the business of Parent and its Subsidiaries,
(B) as of the closing date of any such acquisition and
immediately after giving pro forma effect thereto, no Event of Default
shall have occurred and be continuing,
(C) (1) as of the closing date of any such acquisition but
prior to giving effect thereto, Excess Availability shall be not less
than $50,000,000 and (2) immediately after giving effect thereto and
any payments in respect of such acquisition, the Excess Availability on
a pro forma basis shall be not less than $50,000,000,
(D) the assets acquired which constitute Collateral or, if the
Acquired Business will not be, or be owned by, an Excluded Subsidiary,
the assets which constitute Collateral of the Acquired Business and the
Capital Stock so acquired by such Obligor shall be free and clear of
any security interest, mortgage, pledge, Lien, charge, or other
encumbrance (other than Permitted Liens) and Agent shall have received
evidence reasonably satisfactory to it of the same,
(E) Agent shall have received: (1) not less than five (5)
Business Days' prior written notice thereof setting forth in reasonable
detail the nature and terms thereof, including, whether the newly
acquired entity will be an Excluded Subsidiary, and (2) such other
information with respect thereto as Agent may reasonably request,
87
(F) promptly upon consummation of such purchase, (1) Agent
shall have received true, correct and complete copies of all
agreements, documents and instruments relating thereto and (2) Agent
shall have received all items required by Sections 5.4, 9.14(a)(ii) and
(iii) and 9.26 in connection with the Acquired Business (except with
respect to an entity which shall be an Excluded Subsidiary) to the
extent required under such Sections and except in compliance with the
requirements of Section 9.14 hereof regarding a pledge of the Capital
Stock of such Acquired Business to the extent the acquisition is being
financed either in whole or in part by the seller of the Capital Stock
and the acquired Capital Stock is being pledged as collateral for such
Indebtedness, and
(G) such purchase either (A) shall be a bona fide arms' length
transaction with a Person other than an Affiliate or (B) if such
transaction is with an Affiliate other than an Obligor or Excluded
Subsidiary, shall satisfy Section 9.16(b);
(ii) if the total consideration payable in respect of such
Acquired Business is greater than $50,000,000 (or the aggregate amount
of all consideration paid for all acquisitions pursuant to Section
9.12(a)(i) hereof at the time of, or immediately after giving effect to
such proposed acquisition pursuant to Section 9.12(a)(i) hereof, shall
be greater than $100,000,000 in a fiscal year), each of the following
conditions is satisfied:
(A) Agent shall have received not less than fourteen (14)
days' prior written notice of the proposed acquisition (unless Agent
otherwise agrees) and such information with respect thereto as Agent
may reasonably request, including:
(1) the proposed closing date of the acquisition,
(2) (aa) if an asset acquisition: a description of
the assets to be acquired (including the addresses of the
locations thereof and whether such locations are owned, leased
or operated by a thirty party, and if leased or operated by a
third party, the name and address of the lessor or third
party), or
(ab) if a Capital Stock acquisition (including by
merger or consolidation): (1) the name, address, jurisdiction
of incorporation and federal employer identification number of
the person whose Capital Stock is being purchased, (2) a
description of the assets of the Person whose Capital Stock is
being purchased (including the addresses of the locations
thereof and whether such locations are owned, leased or
operated by a thirty party, and if leased or operated by a
third party, the name and address of the lessor or third
party), and (3) whether the newly acquired entity will be an
Excluded Subsidiary, and
(3) the total consideration payable in respect of
such Acquired Business (and the terms of payment),
(B) Agent shall have received current, updated projections of
the amount of the Borrowing Base and Excess Availability for the twelve
(12) month period after the date of such acquisition, in a form
reasonably satisfactory to Agent, representing Borrowers' reasonable
estimate of the future Borrowing Base and Excess Availability for the
period set forth therein, which projections shall have been prepared on
the basis of the assumptions set forth
88
therein which Borrowers believe are fair and reasonable as of the date
of preparation in light of current and reasonably foreseeable business
conditions,
(C) as of the closing date of such acquisition and immediately
after giving effect thereto (including the payment of all costs related
to such acquisition), the projected pro forma Excess Availability for
the twelve (12) consecutive months after giving effect thereto, shall
not be less than 20% of the average amount of the Borrowing Base for
the thirty (30) consecutive days immediately preceding such
acquisition,
(D) as of the date of such purchase and immediately after
giving effect thereto, no Default or Event of Default shall have
occurred and be continuing,
(E) such Obligor shall deliver, or cause to be delivered to
Agent, true, correct and complete copies of all agreements, documents
and instruments relating to such acquisition,
(F) Agent shall have received all items required by Sections
5.4, 9.14(a)(ii) and (iii) and 9.26 in connection with the Acquired
Business (except with respect to an entity which shall be an Excluded
Subsidiary) to the extent required under such Sections and except in
compliance with the requirements of Section 9.14 hereof regarding a
pledge of the Capital Stock of such Acquired Business to the extent the
acquisition is being financed either in whole or in part by the seller
of the Capital Stock and the acquired Capital Stock is being pledged as
collateral for such Indebtedness,
(G) the assets acquired which constitute Collateral or, if the
Acquired Business will not be, or be owned by, an Excluded Subsidiary,
the assets which constitute Collateral of the Acquired Business and the
Capital Stock so acquired by such Obligor shall be free and clear of
any security interest, mortgage, pledge, Lien, charge, or other
encumbrance (other than Permitted Liens) and Agent shall have received
evidence reasonably satisfactory to it of the same,
(H) the Acquired Business shall be substantially consistent
with, related, complementary or ancillary to, the business of such
Obligor,
(I) the assets of the Acquired Business which constitute
Collateral and the Capital Stock so acquired by such Obligor shall be
free and clear of any security interest, mortgage, pledge, Lien,
charge, or other encumbrance (other than Permitted Liens) and Agent
shall have received evidence reasonably satisfactory to it of the same,
(J) such purchase shall either (A) be a bona fide arms' length
transaction with a Person other than an Affiliate or (B) satisfy the
conditions set forth in Section 9.16(b), if such transaction is with an
Affiliate other than an Obligor or Excluded Subsidiary, ,
(K) in the case of the acquisition of the Capital Stock of
another Person in which the consideration to be paid by an Obligor is
in excess of $100,000,000, the board of directors (or other comparable
governing body) of such other Person shall have duly approved such
acquisition and such Person shall not have announced that it will
oppose such
89
acquisition or shall not have commenced any action which alleges that
such acquisition will violate applicable law, and
(L) Agent shall have received a certificate of a financial
officer or executive officer of Administrative Borrower on behalf of
Administrative Borrower certifying to Agent and Lenders as to the
matters set forth in this Section 9.12(a)(ii).
The term "total consideration" as used in clauses (a)(i) or (ii) of this Section
9.12 shall include all cash, property or assumed Indebtedness payable on or
immediately after consummation of such acquisition but shall not include Capital
Stock of any Obligor.
The Inventory, Installment Sales Receivables or Private Label Receivables of any
Acquired Business, shall not be or be deemed to be Eligible Inventory, Eligible
Installment Sales Receivables and/or Eligible Private Label Receivables until
Agent shall have conducted a field examination with respect to such assets and
the results of such field examination and other due diligence shall be
reasonably satisfactory to Agent, and then only to the extent the criteria for
Eligible Inventory, Eligible Installment Sales Receivables and Eligible Private
Label Receivables set forth herein are satisfied with respect thereto (as such
criteria may be reasonably modified by Agent to reflect the results of Agent's
field examination including any separate advance percentage with respect to such
Installment Sales Receivables, Private Label Receivables or Inventory or
Reserves as Agent may reasonably determine but otherwise in accordance with the
definitions of Eligible Inventory, Eligible Installment Sales Receivables and
Eligible Private Label Receivables. Upon the reasonable request of Agent, if
practicable, the Inventory, Installment Sales Receivables or Private Label
Receivables acquired by such Obligor shall be separately identified and reported
to Agent in a manner reasonably satisfactory to Agent for a time period
reasonably satisfactory to Agent. In addition, if the value of the Inventory of
such Acquired Business that Obligor is seeking to have included in the Borrowing
Base is greater than $20,000,000, Agent may require an appraisal of the
Inventory and other Collateral to be included in the Borrowing Base in form and
containing assumptions and appraisal methods reasonably satisfactory to Agent by
an appraiser reasonably acceptable to Agent, on which Agent and Lenders are
expressly permitted to rely (and any Inventory and other Collateral to be
included in the Borrowing Base of the Acquired Business shall only be included
in the Borrowing Base to the extent that Agent has received such appraisal with
respect thereto).
(b) Any Obligor may acquire any other Obligor or all or any part of the
assets of any other Obligor.
(c) Any Obligor may acquire any Excluded Subsidiary or the assets
thereof provided, that, (i) as of the closing date of such acquisition but prior
to giving effect thereto, Excess Availability shall be not less than
$50,000,000, (ii) immediately after giving effect thereto and any payments in
respect of such acquisition, the Excess Availability on a pro forma basis shall
be not less than $50,000,000 and (iii) as of the date of such purchase and
immediately after giving effect thereto, no Event of Default shall have occurred
and be continuing.
9.13 Guarantees. No Obligor shall, directly or indirectly, guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly)
the Indebtedness, performance, obligations or dividends of any Person, except:
90
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) guarantees by Obligors (other than Parent) of the Indebtedness,
performance, obligations or dividends of any Subsidiary of Parent (other than
Excluded Subsidiaries), which guarantees are not secured by Collateral;
(c) guarantees by Parent of the Indebtedness, performance, obligations
or dividends of any Subsidiary of Parent, which guarantees are not secured by
Collateral (but which may be secured by Letters of Credit issued for the account
of Parent);
(d) guarantees by any Obligor or any Subsidiary of an Obligor of the
Obligations in favor of Agent and Lenders;
(e) guarantees of Indebtedness which Indebtedness is permitted by
Section 9.10, which guarantees may be unsecured or secured by Excluded Property;
and
(f) CS Securitization Undertakings.
9.14 New Subsidiaries.
(a) An Obligor may form or acquire new Subsidiaries which are not
Excluded Subsidiaries (subject, with respect to acquisitions, to the conditions
set forth in Section 9.12 hereof) or convert an Excluded Subsidiary to an
Obligor so long as:
(i) such Subsidiary is organized under the laws of the United
States or any state or territory thereof,
(ii) promptly upon any such formation, acquisition or
conversion (but no later than thirty (30) days after the formation,
acquisition or conversion thereof), such Obligor shall cause any such
Subsidiary to execute and deliver to Agent: (A) a Guarantor Joinder
Agreement pursuant to which such Subsidiary (i) absolutely and
unconditionally guarantees payment of any and all present and future
Obligations of Borrowers to Agent and (ii) grants to Agent a first and
prior security interest and lien upon all of the assets of such
Subsidiary which constitute Collateral subject to Permitted Liens or
Liens otherwise consented to in writing by Agent, and (C) such other
agreements, documents and instruments as Agent may reasonably require
which shall be reasonably satisfactory in form and substance to Agent,
including, but not limited to, supplements and amendments hereto and
other loan agreements or instruments evidencing indebtedness of such
Subsidiary to Agent,
(iii) promptly upon Agent's request: (i) such Obligor shall
execute and deliver to Agent in form and substance satisfactory to
Agent, a pledge and security agreement granting to Agent a first pledge
of and lien on all of the issued and outstanding shares of Capital
Stock of such Subsidiary, and (ii) such Obligor shall deliver the
original stock certificates evidencing such shares of Capital Stock (or
such other evidence as may be issued in the case of a limited liability
company) together with stock powers with respect thereto duly executed
in blank (or the equivalent thereof in the case of a limited liability
company), provided, that, such obligor
91
shall not be required to pledge such Capital Stock in the event such
Capital Stock has been pledged in accordance with Section 9.9(a)(iv)
hereof, and
(iv) as of the date of the organization, formation or
acquisition of any Obligor (other than a Retail Store Subsidiary) and
immediately after giving effect thereto, no Event of Default shall have
occurred and be continuing.
(b) An Obligor may form or acquire Excluded Subsidiaries on and after
the date hereof so long as on the date of such formation or acquisition and
immediately after giving effect thereto, the conditions set forth in Section
9.12(c) are satisfied. Unless such Person has been designated as an Excluded
Subsidiary in accordance with Section 9.12 hereof, Administrative Borrower shall
designate such newly formed or acquired Person as an Excluded Subsidiary
promptly upon such formation or acquisition in a writing by Administrative
Borrower delivered to Agent.
(c) With respect to any formation of an Obligor or conversion of an
Excluded Subsidiary to an Obligor pursuant to this Section (other than a Retail
Store Subsidiary in the United States), in no event shall any Inventory,
Installment Sales Receivables or Private Label Receivables of any new Obligor be
deemed Eligible Inventory or Eligible Installment Sales Receivables or Eligible
Private Label Credit Card, be or be deemed to be Eligible Inventory, Eligible
Installment Sales Receivables and/or Eligible Private Label Receivables until
Agent shall have conducted a field examination with respect to such assets and
the results of such field examination and other due diligence shall be
reasonably satisfactory to Agent, and then only to the extent the criteria for
Eligible Inventory, Eligible Installment Sales Receivables and Eligible Private
Label Receivables set forth herein are satisfied with respect thereto (as such
criteria may be reasonably modified by Agent to reflect the results of Agent's
field examination including any separate advance percentage with respect to such
Installment Sales Receivables, Private Label Receivables or Inventory or
Reserves as Agent may reasonably determine but otherwise in accordance with the
definitions of Eligible Inventory, Eligible Installment Sales Receivables and
Eligible Private Label Receivables. Upon the reasonable request of Agent, if
practicable, the Inventory, Installment Sales Receivables or Private Label
Receivables of such Obligor shall be separately identified and reported to Agent
in a manner reasonably satisfactory to Agent for a time period reasonably
satisfactory to Agent. In addition, if the value of the Inventory such new
Obligor is seeking to have included in the Borrowing Base is greater than
$20,000,000, Agent may require an appraisal of the Inventory and other
Collateral to be included in the Borrowing Base in form and containing
assumptions and appraisal methods reasonably satisfactory to Agent by an
appraiser reasonably acceptable to Agent, on which Agent and Lenders are
expressly permitted to rely (and any Inventory and other Collateral to be
included in the Borrowing Base of such new Obligor shall only be included in the
Borrowing Base to the extent that Agent has received such appraisal with respect
thereto).
9.15 Dividends and Redemptions. No Obligor shall, directly or
indirectly, declare or pay or make any Restricted Payment, except, that:
(a) any Obligor (other than Parent), or any other Subsidiary of Parent
may declare and pay a dividend, directly or indirectly, to Parent or to any
other Obligor of which it is a Subsidiary; and
92
(b) Parent may repurchase its Capital Stock; provided, that, as to any
such repurchase, each of the following conditions is satisfied: (i) as of the
date of the payment for such repurchase and immediately after giving effect
thereto, no Default or Event of Default shall exist or have occurred and be
continuing, (ii) such repurchase shall be paid with funds legally available
therefor, (iii) such repurchase shall not violate any law or regulation or the
terms of any indenture, agreement or undertaking to which Parent is a party or
by which such Parent or its or their property are bound, (iv) as of the date of
the payment for such repurchase, Excess Availability for each of the immediately
preceding thirty (30) consecutive days shall not have been less than
$50,000,000, and immediately after giving effect to such repurchase, Excess
Availability shall not be less than $50,000,000; and
(c) Parent may make any other Restricted Payment provided, that, as to
any such Restricted Payment, each of the following conditions is satisfied: (i)
as of the date of such Restricted Payment and immediately after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing,
(ii) such Restricted Payment shall be paid with funds legally available
therefor, (iii) such Restricted Payment shall not violate any law or regulation
or the terms of any indenture, agreement or undertaking to which Parent is a
party or by which Parent or its property is bound, (iv) as of the date of such
Restricted Payment, Excess Availability for each of the immediately preceding
thirty (30) consecutive days shall not have been less than $50,000,000, and
immediately after giving effect to such Restricted Payment, Excess Availability
shall not be less than $50,000,000.
9.16 Transactions with Affiliates. Except for transactions between or
among any Obligor and any other Obligor permitted under this Agreement or the
other Financing Agreements, no Obligor shall enter into any transaction for the
purchase, sale or exchange of property to or by any Affiliate except (a) in the
ordinary course consistent with the business practices in effect on the date of
such transaction and pursuant to the reasonable requirements of such Obligor's
business, and provided, that, each Obligor is in compliance with and utilizes
the arms length standard for course of dealing transactions applicable to
Affiliates as contemplated in Section 482 of the Code, as amended, and the
regulations promulgated thereunder, such that no material amount of Taxes are
due and owing and unpaid as a result of any such transaction or series of
transactions or (b) upon fair and reasonable terms no less favorable to such
Obligor than such Obligor would obtain in a comparable arm's length transaction
with an unaffiliated person, except with respect to sales of Inventory to or
purchases of Inventory by an Obligor, as to which the sales or purchase price is
not less than the cost thereof to the seller thereof.
9.17 Compliance with ERISA. Borrowers shall not with respect to any
"employee pension benefit plans" maintained by any Borrower or any of its ERISA
Affiliates:
(a) to the extent any of the following would create a Lien on any of
the Collateral, (i) terminate any of such employee pension benefit plans so as
to incur any liability to the Pension Benefit Guaranty Corporation established
pursuant to ERISA, (ii) allow or suffer to exist any prohibited transaction
involving any of such employee pension benefit plans or any trust created
thereunder which would subject Borrowers or such ERISA Affiliate to a tax or
penalty or other liability on prohibited transactions imposed under Section 4975
of the Code or ERISA, (iii) fail to pay to any such employee pension benefit
plan any contribution which it is obligated to pay under Section 302 of ERISA,
Section 412 of the Code or the terms of such plan,
93
(iv) allow or suffer to exist any accumulated funding deficiency, whether or not
waived, with respect to any such employee pension benefit plan, (v) allow or
suffer to exist any occurrence of a reportable event or any other event or
condition which presents a material risk of termination by the Pension Benefit
Guaranty Corporation of any such employee pension benefit plan that is a single
employer plan, which termination could result in any liability to the Pension
Benefit Guaranty Corporation or (vi) incur any withdrawal liability with respect
to any Multiemployer Plan; and
(b) As used in this Section 9.13, the term "employee pension benefit
plans," "employee benefit plans", "accumulated funding deficiency" and
"reportable event" shall have the respective meanings assigned to them in ERISA,
and the term "prohibited transaction" shall have the meaning assigned to it in
Section 4975 of the Code and ERISA.
9.18 End of Fiscal Years: Fiscal Quarters. Parent shall, for financial
reporting purposes, and cause its and each of its Subsidiaries' (excluding
Foreign Subsidiaries) (a) fiscal years to end on the Saturday closest to the
31st day of January of each year, and (b) fiscal quarters to end on the last day
of the thirteenth (13th) week following the end of the immediately preceding
fiscal quarter, provided, that, the end of the fourth fiscal quarter shall be on
the last day of the fourteenth (14th) week following the end of the third fiscal
quarter whenever necessary to have the fourth fiscal quarter end on the Saturday
closest to January 31 of each year. Each Foreign Subsidiary's fiscal year shall
end on December 31 of each calendar year. Notwithstanding the foregoing, Parent
and its Subsidiaries may change any fiscal year or fiscal quarter end date upon
written notice to Agent not more than thirty (30) days prior to the commencement
of such fiscal year or fiscal quarter.
9.19 Change in Business. No Obligor shall engage in any business other
than the business of such Person on the date hereof or any business reasonably
related, ancillary or complementary to the business in which Obligors are
engaged on the date hereof.
9.20 Limitation of Restrictions Affecting Subsidiaries. Except for
restrictions contained in the Crosstown Purchase Agreements and the NBC
Agreements, no Obligor shall, directly, or indirectly, create or otherwise cause
or suffer to exist any encumbrance or restriction which prohibits or limits the
ability of such Person to (a) pay dividends or make other distributions or pay
any Indebtedness owed to any Obligor provided, that, this clause (a) shall not
be applicable to Parent; (b) make loans or advances to any Obligor, (c) transfer
any Collateral to any Obligor; or (d) create, incur, assume or suffer to exist
any Lien upon any Collateral, other than encumbrances and restrictions arising
under (i) applicable law, (ii) this Agreement, (iii) customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
of any Obligor, (iv) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of any Obligor, (v) any
agreement relating to permitted Indebtedness incurred prior to the date on which
such Person was acquired by any Obligor and outstanding on such acquisition
date, and (vi) the existence, extension or continuation of contractual
obligations in existence on the date hereof; provided, that, any such
encumbrances or restrictions contained in such extension or continuation are no
less favorable to Agent and Lenders than those encumbrances and restrictions
under or pursuant to the contractual obligations so extended or continued.
94
9.21 Fixed Charge Coverage Ratio. At any time that Excess Availability
is less than ten (10%) of the Borrowing Base, Parent and its Subsidiaries, on a
consolidated basis, shall, when measured as of the fiscal quarter most recently
ended for which Agent has received financial statements in accordance with
Section 9.6(a)(i), for the four (4) immediately preceding consecutive fiscal
quarters then ended, maintain, a Fixed Charge Coverage Ratio of not less than
1.00 to 1.00.
9.22 Credit Card Agreements. Each Obligor shall:
(a) observe and perform all material terms, covenants, conditions and
provisions of the Credit Card Agreements to be observed and performed by it at
the times set forth therein;
(b) not do, permit, suffer or refrain from doing anything, as a result
of which there could be a material default under or material breach of any of
the terms of any of the Credit Card Agreements;
(c) at all times, maintain in full force and effect the Credit Card
Agreements and not terminate, cancel, surrender, modify, amend, waive or release
any of the Credit Card Agreements, or consent to or permit to occur any of the
foregoing; except, that an Obligor may terminate, cancel, surrender, modify,
amend, waive or release any of the Credit Card Agreements in the ordinary course
of operations of such Obligor;
(d) not enter into any new Credit Card Agreements with any new Credit
Card Issuer unless Obligor deliver, or cause to be delivered to Agent, a Credit
Card Acknowledgment in favor of Agent; and
(e) give Agent immediate written notice of any Credit Card Agreement
entered into by such Obligor after the date hereof, together with a true,
correct and complete copy thereof and such other information with respect
thereto as Agent may reasonably request.
9.23 Use of Private Label Credit Cards.
(a) Upon the occurrence of an Event of Default described in Section
10.1(n) hereof at the request of Agent or at the direction of the Required
Lenders, Obligors shall cease accepting any Private Label Credit Card for sales
of merchandise to customers.
(b) Upon the occurrence and during the continuance of an Event of
Default , at the request of Agent, Parent shall cause each Obligor to cease
accepting in-store payments from their customers in respect of accounts
receivable owing by such customers to any of the Financing Subsidiaries or other
Persons in respect of Private Label Credit Cards, and shall continue to cause
Crosstown and its Subsidiaries to segregate any payments received in respect of
its Private Label Credit Cards from the Collateral.
9.24 Change of Control of Parent's Subsidiaries. Parent shall at all
times own directly or indirectly not less than (a) one hundred (100%)percent of
the total outstanding Voting Stock of each Borrower, each Additional L/C Debtor,
FSC and Obligor existing as of the date of this Agreement and each other
Obligor, formed or acquired after the date hereof, the assets of which
95
Administrative Borrower wishes to include in the Borrowing Base, (b) a majority
of the total outstanding Voting Stock (or such greater amount of the total
outstanding amount of the Voting Stock of such Obligor as is necessary to
appoint a majority of the Board of Directors of such Obligor) of each Obligor
formed or acquired after the date hereof whose assets are not included in the
calculation of the Borrowing Base. Parent shall not permit (a) the transfer (in
one transaction or a series of transactions) of all or substantially all of the
assets of any Obligor to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act) other than as permitted in this Agreement, (b) the
adoption of a plan by the stockholders of any Obligor relating to the
dissolution or liquidation of such Obligor other than as permitted in this
Agreement; or (c) FSC to own directly or indirectly less than one hundred (100%)
percent of the total outstanding Voting Stock of each of the other Financing
Subsidiaries.
9.25 Costs and Expenses. Borrowers shall pay to Agent, within twenty
(20) days of written demand by Agent, all costs and expenses paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
syndication, administration, collection, liquidation, enforcement and defense of
the Obligations, Agent' s rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all out-of-pocket costs and expenses of filing or
recording (including Uniform Commercial Code financing statement filing taxes
and fees, documentary taxes and intangibles taxes, if applicable); (b) all
out-of-pocket costs and expenses for insurance premiums, appraisal fees (except
as otherwise provided in Section 7.3 hereof) and search fees, and costs and
expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
Agent's customary charges and fees with respect thereto; (c) charges, fees or
expenses charged by any Issuing Bank in connection with the Letters of Credit;
(d) all out-of-pocket costs and expenses of preserving and protecting the
Collateral; (e) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the Liens of Agent, selling or otherwise
realizing upon the Collateral, and otherwise enforcing the provisions of this
Agreement and the other Financing Agreements or defending any claims made or
threatened against Agent or any Lender arising out of the transactions
contemplated hereby and thereby (including preparations for and consultations
concerning any such matters); (f) all out of pocket expenses and costs
heretofore (with respect to the Agent) and from time to time hereafter incurred
by Agent during the course of periodic field examinations of the Collateral and
any Obligor's operations, plus a per diem charge at Agent's then standard rate
for Agent's examiners in the field and office (which rate as of the date hereof
is $850 per person per day); provided, that, (i) so long as Excess Availability
shall be equal to or greater than $50,000,000 at the end of each fiscal month
during any consecutive twelve (12) month period, no more than one (1) such field
examination conducted in such twelve (12) month period shall be at the expense
of Borrowers, (2) in the event Excess Availability shall be less than
$50,000,000, at the end of any fiscal month during any consecutive twelve (12)
month period, no more than two (2) field examinations conducted in such twelve
(12) month period shall be at the expense of Borrowers, or (3) at any time or
times as Agent may request at Borrowers' expense on or after an Event of Default
and during the continuance thereof, and (g) the reasonable fees and
disbursements of counsel (including legal assistants) to Agent in connection
with any of the foregoing.
96
9.26 Further Assurances. At the request of Agent at any time and from
time to time, Obligors shall, and Parent shall cause each Additional L/C Debtor
to, at Borrowers' expense, duly execute and deliver, or cause to be duly
executed and delivered, such further agreements, documents and instruments, and
do or cause to be done such further acts as may be necessary to evidence,
perfect, maintain and enforce the security interests and the priority thereof in
the Collateral and to otherwise effectuate the provisions of this Agreement or
any of the other Financing Agreements.
9.27 Modifications to Other Agreements. No Obligor shall amend, modify
or otherwise change its certificate of incorporation, articles of association,
certificate of formation, limited liability agreement or other organizational
documents, as applicable, except for amendments, modifications or other changes
that do not adversely affect the rights and privileges of any Obligor and do not
adversely affect the ability of any Obligor to amend, modify, renew or
supplement the terms of this Agreement or any of the other Financing Agreements,
or otherwise adversely affect the interests of Agent or Lenders.
9.28 Foreign Assets Control Regulations, Etc. None of the requesting or
borrowing of the Loans or the requesting or issuance, extension or renewal of
any Letter of Credit or the use of the proceeds of any thereof will violate the
Trading With the Enemy Act (50 USC ss.1 et seq., as amended) (the "Trading With
the Enemy Act") or any of the foreign assets control regulations of the United
States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) (the
"Foreign Assets Control Regulations") or any enabling legislation or executive
order relating thereto (including, but not limited to (a) Executive order 13224
of September 21, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)) (the "Executive Order") and (b) the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Public Law 107-56). None of Borrowers or any of their Subsidiaries or
other Affiliates is or will become a "blocked person" as described in the
Executive Order, the Trading with the Enemy Act or the Foreign Assets Control
Regulations or knowingly engages or will knowingly engage in any dealings or
transactions with any such "blocked person".
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more
of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) any Obligor or Additional L/C Debtor fails (i) to pay (A) the
principal amount of the Loans within two (2) Business Days of the due date
thereof, or (B) any Obligation (other than principal amount of any Loans) within
three (3) Business Days of the due date thereof, or (ii) to observe or perform
any of the other terms, covenants, conditions or provisions contained in this
Agreement or the other Financing Agreements other than as described in Section
10.1(a)(i) above and such failure shall continue for thirty (30) consecutive
days; provided, that, such thirty (30) day period shall not apply in the case
of: (A) any failure to observe any such term, covenant or condition or provision
which is not capable of being cured or (B) an intentional breach by any Obligor
of any such term, covenant, condition or provision;
97
(b) any representation, warranty or statement of fact made by any
Obligor or Additional L/C Debtor to Agent in this Agreement, the other Financing
Agreements or any other written agreement, schedule, confirmatory assignment or
otherwise shall when made or deemed made be false or misleading in any material
respect;
(c) any Guarantor or Additional L/C Debtor revokes or terminates any
guarantee, endorsement or other agreement of such party in favor of Agent except
in connection with the sale or other disposition of any Guarantor or Additional
L/C Debtor in a transaction permitted under this Agreement;
(d) any judgment for the payment of money is rendered against any
Obligor in excess of $25,000,000 in any one case or in excess of $50,000,000 in
the aggregate (to the extent not covered by insurance) and shall remain
undischarged or unvacated for a period in excess of thirty (30) days or, at any
time thereafter, execution shall not be effectively stayed;
(e) any Obligor dissolves or suspends or discontinues doing business
other than as permitted in this Agreement;
(f) [Intentionally Omitted];
(g) a case or proceeding under the bankruptcy laws of the United States
of America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against any Obligor or all or any part of its properties and such petition
or application is not dismissed within sixty (60) days after the date of its
filing or any Obligor shall file any answer admitting or not contesting such
petition or application or indicates its consent to, acquiescence in or approval
of, any such action or proceeding or the relief requested is granted sooner
(each such case or proceeding, an "Involuntary Proceeding"); provided that if
any Involuntary Proceeding is an Immaterial Insolvency Event, then such
Immaterial Insolvency Event shall not be an Event of Default;
(h) Any Obligor shall make an assignment for the benefit of creditors,
or admit in writing its inability to pay its debts as they mature or become due
or a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or equity) is filed
by any Obligor or for all or any part of its property (each such assignment,
admission, case or proceeding, a "Voluntary Proceeding"); provided that if any
Voluntary Proceeding is an Immaterial Insolvency Event, then such Immaterial
Insolvency Event shall not be an Event of Default;
(i) (i) any default by any Obligor under any agreement, document or
instrument relating to any Indebtedness for borrowed money owing to any person
other than Agent, or any Capital Lease, obligations, contingent Indebtedness in
connection with any guarantee, letter of credit, indemnity or similar type of
instrument in favor of any person other than Agent and Lenders, in any case in
an amount in excess of $25,000,000 which default continues for more than the
applicable notice and cure period, if any, with respect thereto which
98
default is not waived in writing by the other parties thereto or cured; or (ii)
any default by any Obligor under any Material Contract which default continues
for more than the applicable notice or cure period, if any, which default is not
waived in writing by the other parties thereto or cured and which would have a
Material Adverse Effect; or (iii) any Credit Card Issuer or Credit Card
Processor withholds payment of amounts otherwise payable to any Obligor to fund
a reserve account or otherwise hold as collateral, or shall require any Obligor
to pay funds into a reserve account or for such Credit Card Issuer or Credit
Card Processor to otherwise hold as collateral, or any Obligor shall, or shall
be required to, provide a letter of credit, guarantee, indemnity or similar
instrument to or in favor of such Credit Card Issuer or Credit Card Processor
such that in the aggregate all of such funds in the reserve account, other
amounts held as collateral and the amount of such letters of credit, guarantees,
indemnities or similar instruments shall exceed $50,000,000;
(j) any Credit Card Issuer or Credit Card Processor shall send notice
to any Obligor that it is ceasing to make or suspending payments to an Obligor
of amounts due or to become due to such Obligor or shall cease or suspend such
payments, or shall send notice to any Obligor that it is terminating its
arrangements with such Obligor or such arrangements shall terminate as a result
of any event of default under such arrangements, which continues for more than
the applicable cure period, if any, with respect thereto, unless such Obligor
shall have entered into arrangements with another Credit Card Issuer or Credit
Card Processor, as the case may be, within one hundred twenty (120) days after
the date of any such notice;
(k) any bank at which any deposit account of any Obligor is maintained
shall fail to comply with any of the terms of any Deposit Account Control
Agreement (required to be delivered under Section 6.3 hereof) to which such bank
is a party or any securities intermediary, commodity intermediary or other
financial institution at any time in custody, control or possession of any
investment property of any Obligor (which investment property is required by the
terms of this Agreement to be subject to an Investment Property Control
Agreement) shall fail to comply with any of the terms of any Investment Property
Control Agreement to which such person is a party and such account is not closed
and re-established at another securities intermediary, commodity intermediary or
financial institution, as applicable, with a Deposit Account Control Agreement
or Investment Property Control Agreement in favor of Agent within thirty (30)
days of the earlier of (i) notice of such non-compliance from Agent or (ii)
Administrative Borrower or Parent obtaining knowledge of the occurrence of such
non-compliance;
(l) any material provision hereof or of any of the other Financing
Agreements shall for any reason cease to be valid, binding and enforceable with
respect to any party hereto or thereto (other than Agent or Lenders) in
accordance with its terms, or any such party shall challenge the enforceability
hereof or thereof, or shall assert in writing, or take any action or fail to
take any action based on the assertion that any provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Financing Agreements shall cease to
be a valid and perfected first priority security interest in any of the
Collateral purported to be subject thereto (except as otherwise permitted herein
or therein), in any such case, (i) which has not been cured within thirty (30)
days of Administrative Borrower or Parent obtaining knowledge thereof; provided,
that, such thirty (30) day period shall
99
not apply in the case of: (A) any such default which is not capable of being
cured within such thirty (30) day period or (B) any such default which is the
result of an intentional breach by any Obligor and (ii) which results in a
Material Adverse Effect;
(m) an ERISA Event shall occur which results in or could reasonably be
expected to result in a Material Adverse Effect;
(n) any Change of Control;
(o) [Intentionally Omitted];
(p) FSC or any other Financing Subsidiary shall fail to (i) make
settlements in an aggregate amount in excess of $5,000,000 on each Business Day
and such failure shall continue for five (5) consecutive Business Days (except
for delays arising solely from force majeure, in which case such failure to make
settlements on each Business Day shall not continue for more than eight (8)
Business Days) with respect to amounts owed to any Obligor under any Permitted
Securitization Transaction or (ii) remit to CS Delaware all funds its receives
pursuant to any Permitted Securitization Transaction in respect of amounts owed
to CS Delaware pursuant to any Credit Card Agreement no later than the Business
Day following receipt of such funds; or
(q) there shall be an Event of Default under any of the other Financing
Agreements.
10.2 Remedies.
(a) At any time an Event of Default has occurred and is continuing,
Agent shall have all rights and remedies provided in this Agreement, the other
Financing Agreements, the Uniform Commercial Code and other applicable law, all
of which rights and remedies may be exercised without notice to or consent by
each Obligor, except as such notice or consent is expressly provided for
hereunder or required by applicable law. All rights, remedies and powers granted
to Agent or Lenders hereunder, under any of the other Financing Agreements, the
Uniform Commercial Code or other applicable law, are cumulative, not exclusive
and enforceable, in Agent's discretion, alternatively, successively, or
concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by each Obligor of this Agreement or any
of the other Financing Agreements. Subject to Section 12 hereof, Agent may, and
at the direction of the Required Lenders shall, at any time or times, proceed
directly against any Obligor to collect the Obligations without prior recourse
to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent, may, in its discretion and upon
the direction of the Required Lenders shall and without limitation (except with
respect to clause (i) hereof which Agent may do in its discretion and at the
direction of Required Lenders), (i)(A) reduce the lending formulas or amounts of
Loans and Letters of Credit available to Borrowers and Additional L/C Debtors or
(B) terminate the Commitments (provided, that, upon the occurrence of any Event
of Default described in Sections 10.1(g) and 10.1(h) other than a Immaterial
Insolvency Event, the Commitments hereunder shall automatically terminate), (ii)
accelerate the payment of all Obligations and demand immediate payment thereof
to Agent, for itself and the
100
benefit of each Issuing Bank and Lenders (provided, that, upon the occurrence of
any Event of Default described in Sections 10.1(g) or 10.1(h) hereof involving
any Obligor (other than an Immaterial Insolvency Event), all Obligations shall
automatically become immediately due and payable and the obligation of each
Lender to make any Loan and Issuing Bank to issue any Letter of Credit shall
immediately terminate; provided, further, that, in the event that an Immaterial
Insolvency Event has occurred, the Obligations of such Obligor shall
automatically become immediately due and payable for the purposes of such
Voluntary or Involuntary Proceeding (but not as to any other Obligors or for any
other purpose), (iii) with or without judicial process or the aid or assistance
of others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing,
manufacturing and repair of all or any portion of the Collateral, (iv) require
each Obligor, at Borrower's expense, to assemble and make available to Agent any
part or all of the Collateral at any place and time designated by Agent, (v)
collect, foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (vi) remove any or all of the Collateral from any premises on or in
which the same may be located for the purpose of effecting the sale, foreclosure
or other disposition thereof or for any other purpose, and (vii) sell, lease,
transfer, assign, deliver or otherwise dispose of any and all Collateral
(including, without limitation, entering into contracts with respect thereto,
public or private sales at any exchange, broker's board, at any office of Agent
or elsewhere) at such prices or terms as Agent may deem reasonable, for cash,
upon credit or for future delivery, with the Agent having the right to purchase
the whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of each Obligor,
which right or equity of redemption is hereby expressly waived and released by
each Obligor. If any of the Collateral is sold or leased by Agent upon credit
terms or for future delivery, the Obligations shall not be reduced as a result
thereof until payment therefor is finally collected by Agent. If notice of
disposition of Collateral is required by law, five (5) days prior notice by
Agent to Administrative Borrower designating the time and place of any public
sale or the time after which any private sale or other intended disposition of
Collateral is to be made, shall be deemed to be reasonable notice thereof and
each Obligor waives any other notice. In the event Agent institutes an action to
recover any Collateral or seeks recovery of any Collateral by way of prejudgment
remedy, each Obligor waives the posting of any bond which might otherwise be
required. At any time an Event of Default exists or has occurred and is
continuing, upon Agent's request, Borrowers will either, as Agent shall specify,
furnish cash collateral to each Issuing Bank to be used to secure and fund the
reimbursement obligations to each Issuing Bank in connection with any Letter of
Credit Obligations or furnish cash collateral to Agent for the Letter of Credit
Obligations. Such cash collateral shall be in the amount equal to one hundred
three (103%) percent of the amount of the Letter of Credit Obligations plus the
amount of any fees and expenses payable in connection therewith through the end
of the latest expiration date of the Letters of Credit giving rise to such
Letter of Credit Obligations.
(c) Upon the occurrence and during the continuance of an Event of
Default for the purpose of enabling Agent to exercise the rights and remedies
hereunder, each Obligor hereby grants to Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to any Obligor) to use, assign, license or sublicense any of
the trademarks, service marks, trade names, business names, trade styles,
designs, logos and other source of business identifiers and other Intellectual
Property and general intangibles now owned or hereafter acquired by any Obligor,
wherever the same maybe located, including in such license reasonable access to
all media in which any of the licensed
101
items may be recorded or stored and to all computer programs used for the
compilation or printout thereof, provided, that, such license shall terminate on
the date that Agent and Lenders have received final payment and satisfaction in
full of all of the Obligations in immediately available funds and this Agreement
has been terminated or the Event of Default shall no longer be continuing.
(d) Agent may apply the cash proceeds of Collateral actually received
by Agent from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Agent may elect, subject to Section 6.4 hereof, whether or not then due.
Borrowers shall remain jointly and severally liable to Agent and Lenders for the
payment of any deficiency with interest at the highest rate provided for in the
Loan Agreement and all costs and expenses of collection or enforcement,
including reasonable attorneys' fees and legal expenses.
(e) Agent may, at any time or times that an Event of Default has
occurred and is continuing, enforce any Obligor's rights against any account
debtor, secondary obligor or other obligor in respect of any of the Accounts or
other Receivables that constitute Collateral. Without limiting the generality of
the foregoing, Agent may at such time or times (i) notify any or all account
debtors, secondary obligors or other obligors in respect thereof that the
Receivables constituting Collateral have been assigned to Agent and that Agent
has a security interest therein for the benefit of Issuing Bank and Lenders and
Agent may direct any or all account debtors, secondary obligors and other
obligors to make payment of Receivables constituting Collateral directly to
Agent, (ii) extend the time of payment of, compromise, settle or adjust for
cash, credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Receivables constituting Collateral or other obligations
included in the Collateral and thereby discharge or release the account debtor
or any secondary obligors or other obligors in respect thereof without affecting
any of the Obligations, (iii) demand, collect or enforce payment of any
Receivables constituting Collateral or such other obligations, but without any
duty to do so, and neither Agent nor any Lender shall be liable for its failure
to collect or enforce the payment thereof nor for the negligence of its agents
or attorneys with respect thereto, and (iv) take whatever other action with
respect to the Collateral that Agent may deem necessary or desirable for the
protection of its interests and the interests of Agent and Lenders. At any time
that an Event of Default has occurred and is continuing, at Agent's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Agent and are payable directly
and only to Agent and each Obligor shall deliver to Agent such originals of
documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts constituting Collateral as Agent may
require. In the event any account debtor returns Inventory when an Event of
Default has occurred and is continuing, each Obligor shall, upon Agent's
request, hold the returned Inventory in trust for Agent, segregate all returned
Inventory from all of its other property, dispose of the returned Inventory
solely according to Agent's instructions, and not issue any credits, discounts
or allowances with respect thereto without Agent's prior written consent.
(f) To the extent that applicable law imposes duties on Agent or any
Lender to exercise remedies in a commercially reasonable manner (which duties
cannot be waived under such law), each Obligor acknowledges and agrees that it
is not commercially unreasonable for Agent or any Lender (i) to fail to incur
expenses reasonably deemed significant by Agent to
102
prepare Collateral for disposition or otherwise to complete raw material or work
in process into finished goods or other finished products for disposition, (ii)
to fail to obtain third party consents for access to Collateral to be disposed
of, or to obtain or, if not required by other law, to fail to obtain consents of
any Governmental Authority or other third party for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors, secondary obligors or
other persons obligated on Collateral or to remove Liens against Collateral,
(iv) to exercise collection remedies against account debtors and other persons
obligated on Collateral directly or through the use of collection agencies and
other collection specialists, (v) to advertise dispositions of Collateral
through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other persons, whether or
not in the same business as any Obligor, for expressions of interest in
acquiring all or any portion of the Collateral, (vii) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the collateral is of a specialized nature, (viii) to dispose of Collateral
by utilizing Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets, (ix) to dispose of assets in
wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure Agent and Lenders
against risks of loss, collection or disposition of Collateral or to provide to
Agent a guaranteed return from the collection or disposition of Collateral, or
(xii) to the extent deemed appropriate by Agent, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist Agent
in the collection or disposition of any of the Collateral.
(g) Each Obligor acknowledges that the purpose of this Section is to
provide non-exhaustive indications of what actions or omissions by Agent or any
Lender would not be commercially unreasonable in Agent's exercise of remedies
against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to any Obligor
or to impose any duties on Agent or any Lender that would not have been granted
or imposed by this Agreement or by applicable law in the absence of this
Section.
(h) Without limiting the foregoing, upon the occurrence and during the
continuance of a Default (other than a Default arising under Section
10.1(a)(ii), provided, that, (i) such Default is not an intentional breach by
any Obligor of any term, covenant, condition or provision of the Financing
Agreements, (ii) such Default is capable of being cured prior to it constituting
an Event of Default and (iii) Obligors are diligently proceeding to cure such
Default) or an Event of Default, Agent and Lenders may, at Agent's option, and
upon the occurrence of an Event of Default at the direction of the Required
Lenders, Agent, each Issuing Bank and Lenders shall, with notice, (i) cease
making Loans or arranging for Letters of Credit or reduce the lending formulas
or amounts of Loans and Letters of Credit available to Borrowers and/or (ii)
terminate any provision of this Agreement providing for any future Loans to be
made by Agent and Lenders or Letters of Credit to be issued by an Issuing Bank.
103
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Agreement and
the other Financing Agreements and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of New York (without giving
effect to principles of conflicts of law that would apply any other law).
(b) Each of the Borrowers, Guarantors, Agent, Lenders and each Issuing
Bank irrevocably consents and submits to the non-exclusive jurisdiction of the
Supreme Court of the State of New York in New York County and the United States
District Court for the Southern District of New York, whichever Agent may elect,
and waives any objection based on venue or forum non-conveniens with respect to
any action instituted therein arising under this Agreement or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of the parties hereto in respect of this Agreement or any of the
other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Agent and
Lenders shall have the right to bring any action or proceeding against any
Obligor or its property in the courts of any other jurisdiction which Agent
deems necessary or appropriate in order to realize on the Collateral or to
otherwise enforce its rights against any Obligor or its property).
(c) Each Obligor and Administrative Borrower hereby waives personal
service of any and all process upon it and consents that all such service of
process may be made by certified mail (return receipt requested) directed to its
address set forth on the signature pages hereof and service so made shall be
deemed to be completed five (5) days after the same shall have been so deposited
in the U.S. mails, or, at Agent's option, by service upon any Obligor in any
other manner provided under the rules of any such courts.
(d) EACH OF THE BORROWERS, GUARANTORS, AGENT, LENDERS AND EACH ISSUING
BANK HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER
FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY
OR OTHERWISE. EACH BORROWER, GUARANTOR, AGENT, LENDER AND ISSUING BANK HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT EACH BORROWER, GUARANTOR,
AGENT, LENDER AND ISSUING BANK MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS
104
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(e) Agent, Lenders and each Issuing Bank shall not have any liability
to any Obligor (whether in tort, contract, equity or otherwise) for losses
suffered by such Obligor in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
Agent, such Lender and such Issuing Bank, that the losses were the result of
acts or omissions constituting gross negligence or willful misconduct. Each
Obligor: (i) certifies that neither Agent, any Lender, any Issuing Bank nor any
representative, agent or attorney acting for or on behalf of Agent, any Lender
or Issuing Bank has represented, expressly or otherwise, that Agent, Lenders and
Issuing Bank would not, in the event of litigation, seek to enforce any of the
waivers provided for in this Agreement or any of the other Financing Agreements
and (ii) acknowledges that in entering into this Agreement and the other
Financing Agreements, Agent, Lenders and each Issuing Bank are relying upon,
among other things, the waivers and certifications set forth in this Section
11.1 and elsewhere herein and therein.
11.2 Waiver of Notices. Each Obligor hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and chattel paper, included in or evidencing any of
the Obligations or the Collateral, and any and all other demands and notices of
any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on any Obligor which Agent or any Lender may elect to give shall
entitle any Obligor to any other or further notice or demand in the same,
similar or other circumstances.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing Agreement nor any
terms hereof or thereof may be amended, waived, discharged or terminated unless
such amendment, waiver, discharge or termination is in writing signed by Agent
and the Required Lenders (or at Agent's option, by Agent with the authorization
or consent of the Required Lenders), and as to amendments to any of the
Financing Agreements (other than with respect to any provision of Section 12
hereof but exclusive of Sections 12.11, 12.13 and 12.15 hereof), by
Administrative Borrower and such amendment, waiver, discharge or termination
shall be effective and binding as to all Lenders and each Issuing Bank only in
the specific instance and for the specific purpose for which given; except,
that, no such amendment, waiver, discharge or termination shall:
(i) reduce the interest rate or any fees or extend the time of
payment of principal, interest or any fees or reduce the principal
amount of any Loan or Letters of Credit, in each case without the
consent of each Lender directly affected thereby,
(ii) increase the Commitment of any Lender over the amount thereof then in
effect or provided hereunder, in each case without the consent of the
Lender directly affected thereby,
105
(iii) release any Collateral or Obligor (except as expressly
required hereunder or under any of the other Financing Agreements or
applicable law and except as permitted under Section 12.11(b) hereof),
without the consent of Agent and all Lenders,
(iv) reduce any percentage specified in the definition of
Required Lenders, without the consent of Agent and all Lenders,
(v) consent to the assignment or transfer by any Obligor of
any of their rights and obligations under this Agreement, without the
consent of Agent and all Lenders,
(vi) amend, modify or waive any terms of this Section 11.3 or
Section 6.4(a) hereof, without the consent of Agent and all Lenders, or
(vii) increase the advance rates constituting part of the
Borrowing Base or increase the Letter of Credit Limit, without the
consent of Agent and all Lenders.
(b) Agent, Lenders and each Issuing Bank shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any of its
or their rights, powers and/or remedies unless such waiver shall be in writing
and signed as provided herein. Any such waiver shall be enforceable only to the
extent specifically set forth therein. A waiver by Agent, any Lender or Issuing
Bank of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which
Agent, any Lender or Issuing Bank would otherwise have on any future occasion,
whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section
11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required are
obtained, if any, then Wachovia shall have the right, but not the obligation, at
any time thereafter, and upon the exercise by Wachovia of such right, such
Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Wachovia or such Eligible Transferee as Wachovia may specify, the Commitment of
such Non-Consenting Lender and all rights and interests of such Non-Consenting
Lender pursuant thereto. Wachovia shall provide the Non-Consenting Lender with
prior written notice of its intent to exercise its right under this Section,
which notice shall specify on date on which such purchase and sale shall occur.
Such purchase and sale shall be pursuant to the terms of an Assignment and
Acceptance (whether or not executed by the Non-Consenting Lender), except that
on the date of such purchase and sale, Wachovia, or such Eligible Transferee
specified by Wachovia, shall pay to the Non-Consenting Lender (except as
Wachovia and such Non-Consenting Lender may otherwise agree) the amount equal
to: (i) the principal balance of the Loans held by the Non-Consenting Lender
outstanding as of the close of business on the business day immediately
preceding the effective date of such purchase and sale, plus (ii) amounts
accrued and unpaid in respect of interest and fees payable to the Non-Consenting
Lender to the effective date of the purchase (but in no event shall the
Non-Consenting Lender be deemed entitled to any early termination fee). Such
purchase and sale
106
shall be effective on the date of the payment of such amount to the
Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall
terminate on such date.
(d) The consent of Agent shall be required for any amendment, waiver or
consent affecting the rights or duties of Agent hereunder or under any of the
other Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory
shall not be deemed an amendment to the advance rates provided for in this
Section 11.3. The consent of an Issuing Bank shall be required for any
amendment, waiver or consent affecting the rights or duties of such Issuing Bank
hereunder or under any of the other Financing Agreements, in addition to the
consent of the Lenders otherwise required by this Section, provided, that, the
consent of any Issuing Bank shall not be required for any other amendments,
waivers or consents. Notwithstanding anything to the contrary contained in
Section 11.3(a) above, (i) in the event that Agent shall agree that any items
otherwise required to be delivered to Agent as a condition of the initial Loans
and Letters of Credit hereunder may be delivered after the date hereof, Agent
may, in its discretion, agree to extend the date for delivery of such items or
take such other action as Agent may deem appropriate as a result of the failure
to receive such items as Agent may determine or may waive any Event of Default
as a result of the failure to receive such items, in each case without the
consent of any Lender and (ii) Agent may consent to any change in the type of
organization, jurisdiction of organization or other legal structure of any
Obligor and amend the terms hereof or of any of the other Financing Agreements
as may be necessary or desirable to reflect any such change, in each case
without the approval of any Lender.
11.4 Waiver of Counterclaims. Each Obligor waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
then compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Each Obligor shall, jointly and severally,
indemnify and hold Agent, each Lender and Issuing Bank, and their respective
officers, directors, agents, employees, advisors and counsel and their
respective Affiliates (each such person being an "Indemnitee"), harmless from
and against any and all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees and expenses) imposed on, incurred by or asserted
against any of them in connection with any litigation, investigation, claim or
proceeding commenced or threatened related to the negotiation, preparation,
execution, delivery, enforcement, performance or administration of this
Agreement, any other Financing Agreements, or any undertaking or proceeding
related to any of the transactions contemplated hereby or any act, omission,
event or transaction related or attendant thereto, including amounts paid in
settlement, court costs, and the fees and expenses of counsel except that
Obligors shall not have any obligation under this Section 11.5 to indemnify an
Indemnitee with respect to a matter covered hereby resulting from the gross
negligence or willful misconduct of such Indemnitee as determined pursuant to a
final, non-appealable order of a court of competent jurisdiction (but without
limiting the obligations of Obligors as to any other Indemnitee). To the extent
that the undertaking to indemnify, pay and hold harmless set forth in this
Section may be unenforceable because it violates any law or public policy,
Obligors shall pay the maximum portion which it is permitted to pay under
applicable law to Agent and Lenders in satisfaction of indemnified matters under
this Section. To the
107
extent permitted by applicable law, no Obligor shall assert, and each Obligor
hereby waives, any claim against any Indemnitee, on any theory of liability for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any of the other Financing Agreements or any undertaking or
transaction contemplated hereby. No Indemnitee referred to above shall be liable
for any damages arising from the use by unintended recipients of any information
or other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or any
of the other Financing Agreements or the transaction contemplated hereby or
thereby except those damages resulting from the gross negligence or willful
misconduct of such Indemnitee as determined pursuant to a final, non-appealable
order of a court of competent jurisdiction (but without limiting the obligations
of Obligors as to any other Indemnitee). All amounts due under this Section
shall be payable within thirty (30) days of written demand by Agent. The
foregoing indemnity shall survive the payment of the Obligations and the
termination of this Agreement.
SECTION 12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender and Issuing Bank
irrevocably designates, appoints and authorizes Wachovia to act as Agent
hereunder and under the other Financing Agreements with such powers as are
specifically delegated to Agent by the terms of this Agreement and of the other
Financing Agreements, together with such other powers as are reasonably
incidental thereto. Agent (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement and in the other Financing
Agreements, and shall not by reason of this Agreement or any other Financing
Agreement be a trustee or fiduciary for any Lender; (b) shall not be responsible
to Lenders for any recitals, statements, representations or warranties contained
in this Agreement or in any of the other Financing Agreements, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement or any other Financing Agreement, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Financing Agreement or any other document referred
to or provided for herein or therein or for any failure by any Obligor or any
other Person to perform any of its obligations hereunder or thereunder; and (c)
shall not be responsible to Lenders for any action taken or omitted to be taken
by it hereunder or under any other Financing Agreement or under any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction. Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and until
the assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered to
and acknowledged by Agent. The provisions of this Section 12 are solely for the
benefit of Agent and Lenders. Obligors shall not have any rights as a third
party beneficiary of any of the provisions contained in this Section 12.
Notwithstanding anything to the contrary contained in Section 11.3 hereof, no
amendments to this Section 12 shall require the written agreement of any Obligor
other than amendments to Sections 12.11, 12.13 and 12.15 hereof.
108
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, electronic mail, telecopy, telex, telegram or cable) believed by it
to be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected, in good faith by Agent. As
to any matters not expressly provided for by this Agreement or any other
Financing Agreement, Agent shall in all cases be fully protected in acting, or
in refraining from acting, hereunder or thereunder in accordance with
instructions given by the Required Lenders or all of Lenders as is required in
such circumstance, and such instructions of Agent and any action taken or
failure to act pursuant thereto shall be binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or an Event of Default or other failure of a condition
precedent to the Loans and Letters of Credit hereunder, unless and until Agent
has received written notice from a Lender, or Borrower specifying such Event of
Default or any unfulfilled condition precedent, and stating that such notice is
a "Notice of Default or Failure of Condition". In the event that Agent receives
such a Notice of Default or Failure of Condition, Agent shall give prompt notice
thereof to the Lenders. Agent shall (subject to Section 12.7 hereof) take such
action with respect to any such Event of Default or failure of condition
precedent as shall be directed by the Required Lenders to the extent provided
for herein; provided, that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to or by reason of such Event of
Default or failure of condition precedent, as it shall deem advisable in the
best interest of Lenders. Without limiting the foregoing, and notwithstanding
the occurrence and continuance of an Event of Default or any other failure to
satisfy any of the conditions precedent set forth in Section 4 of this Agreement
to the contrary, unless and until otherwise directed by the Required Lenders,
Agent may, but shall have no obligation to, continue to make Loans and an
Issuing Bank may, but shall have no obligation to, issue or cause to be issued
any Letter of Credit for the ratable account and risk of Lenders from time to
time if Agent believes making such Loans or issuing or causing to be issued such
Letter of Credit is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender or
Issuing Bank may assert or exercise any enforcement right or remedy in respect
of the Loans, Letters of Credit or other Obligations, as against any Obligor or
any of the Collateral or other property of any Obligor.
12.4 Wachovia in its Individual Capacity. With respect to its
Commitment and the Loans made and Letters of Credit issued or caused to be
issued by it (and any successor acting as Agent), so long as Wachovia shall be a
Lender hereunder, it shall have the same rights and powers hereunder as any
other Lender (except as set forth in Section 13.7 hereof) and may exercise the
same as though it were not acting as Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include Wachovia in its
individual capacity as Lender hereunder. Wachovia (and any successor acting as
Agent) and its Affiliates may (without having to account therefor to any Lender)
lend money to, make investments in and generally engage in any kind of business
with Borrowers (and any of its Subsidiaries or
109
Affiliates) as if it were not acting as Agent, and Wachovia and its Affiliates
may accept fees and other consideration from Borrowers and any of their
Subsidiaries and Affiliates for services in connection with this Agreement or
otherwise without having to account for the same to Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent and each Issuing
Bank (to the extent not reimbursed by Obligors hereunder and without limiting
any obligations of Obligors hereunder) ratably, in accordance with their Pro
Rata Shares, for any and all claims of any kind and nature whatsoever that may
be imposed on, incurred by or asserted against Agent (including by any Lender)
arising out of or by reason of any investigation in or in any way relating to or
arising out of this Agreement or any other Financing Agreement or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and termination
of this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of Obligors and has made its own decision to enter into this
Agreement and that it will, independently and without reliance upon 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 analysis and decisions in
taking or not taking action under this Agreement or any of the other Financing
Agreements. Agent shall not be required to keep itself informed as to the
performance or observance by Obligors of any term or provision of this Agreement
or any of the other Financing Agreements or any other document referred to or
provided for herein or therein or to inspect the properties or books of any
Obligor. Agent will use reasonable efforts to provide Lenders with any
information received by Agent from any Obligor which is required to be provided
to Lenders hereunder and with a copy of any Notice of Default or Failure of
Condition received by Agent from Administrative Borrower or any Lender;
provided, that, Agent shall not be liable to any Lender for any failure to do
so, except to the extent that such failure is attributable to Agent's own gross
negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Except for notices, reports and
other documents expressly required to be furnished to Lenders by Agent
hereunder, Agent shall not have any duty or responsibility to provide any Lender
with any other credit or other information concerning the affairs, financial
condition or business of any Obligor that may come into the possession of Agent.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
110
12.8 Additional Revolving Loans. Agent and Swing Line Lender shall not
make any Loans nor shall any Issuing Bank provide any Letters of Credit to
Borrowers on behalf of Lenders intentionally and with actual knowledge that such
Revolving Loans or Letters of Credit would cause the aggregate amount of the
total outstanding Revolving Loans and Letters of Credit to Borrowers to exceed
the Borrowing Base, without the prior consent of all Lenders, except, that,
Agent may make such additional Revolving Loans or provide such additional
Letters of Credit on behalf of Lenders, intentionally and with actual knowledge
that such Revolving Loans or Letters of Credit will cause the total outstanding
Revolving Loans and Letters of Credit to Borrowers to exceed the Borrowing Base
(an "Over Advance"), as Agent may deem necessary or advisable in its discretion,
provided, that: (a) the total principal amount of the additional Revolving Loans
or additional Letters of Credit to any Borrower which Agent may make or provide
after obtaining such actual knowledge that the aggregate principal amount of the
Loans and Letters of Credit equals or exceeds the Borrowing Base, plus the
amount of Special Agent Advances made pursuant to Section 12.11(a)(ii) hereof
then outstanding, shall not exceed the aggregate amount equal to five (5%) of
the Maximum Credit and shall not cause the total principal amount of the Loans
and Letters of Credit to exceed the Maximum Credit and (b) no such additional
Revolving Loan or Letter of Credit shall be outstanding more than ninety (90)
days after the date such additional Revolving Loan or Letter of Credit is made
or issued (as the case may be), except as the Required Lenders may otherwise
agree. Each Lender shall be obligated to pay Agent the amount of its Pro Rata
Share of any such additional Revolving Loans or Letters of Credit.
12.9 Concerning the Collateral and the Related Financing Agreements.
Each Lender authorizes and directs Agent to enter into this Agreement and the
other Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
12.10 Field Audit, Examination Reports and other information;
Disclaimer by Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report and each report with respect to the Borrowing Base prepared or received
by Agent (each field audit or examination report and report with respect to the
Borrowing Base being referred to herein as a "Report" and collectively,
"Reports"), appraisals with respect to the Collateral and financial statements
with respect to Parent and its Subsidiaries received by Agent;
(b) expressly agrees and acknowledges that Agent (A) does not make any
representation or warranty as to the accuracy of any Report, appraisal or
financial statements, or (B) shall not be liable for any information contained
in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Obligors and will rely significantly
111
upon each Obligor's books and records, as well as on representations of any
Obligor's personnel; and
(d) agrees to keep all Reports confidential and strictly for its
internal use in accordance with the terms of Section 13.6 hereof, and not to
distribute or use any Report in any other manner.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any time on or
after an Event of Default and for so long as the same is continuing or upon any
other failure of a condition precedent to the Revolving Loans and Letters of
Credit hereunder, make such disbursements and advances ("Special Agent
Advances") which Agent, in its sole discretion, (i) deems necessary or desirable
either to preserve or protect the Collateral or any portion thereof or (ii) to
enhance the likelihood or maximize the amount of repayment by Obligors of the
Revolving Loans and other Obligations, provided, that, (A) the aggregate
principal amount of the Special Agent Advances pursuant to this clause (ii)
outstanding at any time, plus the then outstanding principal amount of the
additional Revolving Loans and Letters of Credit which Agent may make or provide
as set forth in Section 12.8 hereof, shall not exceed the amount equal to five
(5%) percent of the Maximum Credit and (B) the aggregate principal amount of the
Special Agent Advances pursuant to this clause (ii) outstanding at any time,
plus the then outstanding principal amount of the Loans and Letters of Credit,
shall not exceed the Maximum Credit, except at Agent's option, provided, that,
to the extent that the aggregate principal amount of Special Agent Advances plus
the then outstanding principal amount of the Loans and Letters of Credit exceed
the Maximum Credit, the Special Agent Advances that are in excess of the Maximum
Credit shall be for the sole account and risk of Agent and notwithstanding
anything to the contrary set forth below, no Lender shall have any obligation to
provide its share of such Special Agent Advances in excess of the Maximum
Credit, or (iii) to pay any other amount chargeable to any Obligor pursuant to
the terms of this Agreement or any of the other Financing Agreements consisting
of (A) costs, fees and expenses and (B) payments to any Issuing Bank in respect
of any Letter of Credit Obligations. The Special Agent Advances shall be
repayable within ten (10) days of written demand by Agent and together with all
interest thereon shall constitute Obligations secured by the Collateral. Special
Agent Advances shall not constitute Revolving Loans or Swing Line Loans but
shall otherwise constitute Obligations hereunder. Interest on Special Agent
Advances shall be payable at the Interest Rate then applicable to Prime Rate
Loans and shall be payable on demand. Without limitation of its obligations
pursuant to Section 6.10, each Lender agrees that it shall make available to
Agent, upon Agent's demand, in immediately available funds, the amount equal to
such Lender's Pro Rata Share of each such Special Agent Advance. If such funds
are not made available to Agent by such Lender, such Lender shall be deemed a
Defaulting Lender and Agent shall be entitled to recover such funds, on demand
from such Lender together with interest thereon for each day from the date such
payment was due until the date such amount is paid to Agent at the Federal Funds
Rate for each day during such period (as published by the Federal Reserve Bank
of New York or at Agent's option based on the arithmetic mean determined by
Agent of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of the three leading
brokers of Federal funds transactions in New York City selected by Agent) and
112
if such amounts are not paid within three (3) days of Agent's demand, at the
highest Interest Rate provided for in Section 3.1 hereof applicable to Prime
Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its option and in
its discretion to release any security interest in, mortgage or Lien upon, any
of the Collateral or release any Obligor from the Obligations (i) upon
termination of the Commitments and payment and satisfaction of all of the
Obligations and delivery of cash collateral to the extent required under Section
13.1 below, or (ii) upon any sale, disposition or other transfer of Collateral
if Administrative Borrower certifies to Agent that the sale or disposition is
made in compliance with Section 9.7 (b) or 9.8 of this Agreement (and Agent may
rely conclusively on any such certificate, without further inquiry), or (iii)
constituting property in which any Obligor did not own an interest at the time
the security interest, mortgage or Lien was granted or at any time thereafter,
or (iv) having a value in the aggregate in any twelve (12) month period of less
than $25,000,000, and to the extent Agent may release its security interest in
and lien upon any such Collateral pursuant to the sale or other disposition or
transaction, such sale, transaction or other disposition shall be deemed
consented to by all Lenders, or (v) if required or permitted under the terms of
any of the other Financing Agreements, including any intercreditor agreement, or
(vi) approved, authorized or ratified in writing by all of Lenders. Except as
provided above, Agent will not release any security interest in, mortgage or
lien upon, any of the Collateral without the prior written authorization of all
of Lenders. Upon request by Agent at any time, Lenders will promptly confirm in
writing Agent's authority to release particular types or items of Collateral
pursuant to this Section. In no event shall the consent or approval of an
Issuing Bank to any release of Collateral be required.
(c) Without in any manner limiting Agent's authority to act without any
specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in writing, upon request by Agent, the authority to
release Collateral or Obligors conferred upon Agent under this Section 12.11.
Agent shall (and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of any Obligor or of the
security interest, mortgage or Liens granted to Agent upon any Collateral to the
extent set forth in this Section 12.11 and Section 5.5; provided, that, (i)
Agent shall not be required to execute any such document on terms which, in
Agent's opinion, would expose Agent to liability or create any obligations or
entail any consequence other than the release of such Obligor or security
interest, mortgage or Liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
security interest, mortgage or Lien upon (or obligations of Obligors in respect
of) the Collateral retained by Obligors.
(d) Agent shall have no obligation whatsoever to Issuing Bank, any
Lender or any other Person to investigate, confirm or assure that the Collateral
exists or is owned by any Obligor or is cared for, protected or insured or has
been encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Revolving Loans or Letters of Credit
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities
113
and powers granted or available to Agent in this Agreement or in any of the
other Financing Agreements, it being understood and agreed that in respect of
the Collateral, or any act, omission or event related thereto, Agent may act in
any manner it may deem appropriate, in its discretion, given Agent's own
interest in the Collateral as a Lender and that Agent shall have no duty or
liability whatsoever to any Issuing Bank or any other Lender.
12.12 Agency for Perfection. Issuing Bank and each Lender hereby
appoints Agent and each other Lender and Issuing Bank as agent for the purpose
of perfecting the security interests in and liens upon the Collateral of Agent
in assets which, in accordance with Article 9 of the UCC can be perfected only
by possession and Agent, Issuing Bank and each Lender hereby acknowledges that
it holds possession of any such Collateral for the benefit of Agent as secured
party. Should Issuing Bank or any Lender obtain possession of any such
Collateral, Issuing Bank or such Lender, as the case may be, shall notify Agent
thereof, and, promptly upon Agent's request therefor shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
12.13 Successor Agent. Agent may resign as Agent upon thirty (30) days'
notice to Lenders and Administrative Borrower. If Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
agent for Lenders. If no successor agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, after consulting with
Lenders and Administrative Borrower, a successor agent from among Lenders. Upon
the acceptance by the Lender so selected of its appointment as successor agent
hereunder, such successor agent shall succeed to all of the rights, powers and
duties of the retiring Agent and the term "Agent" as used herein and in the
other Financing Agreements shall mean such successor agent and the retiring
Agent's appointment, powers and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Section
12 shall inure to its benefit as to any actions taken or omitted by it while it
was Agent under this Agreement. If no successor agent has accepted appointment
as Agent by the date which is thirty (30) days after the date of a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nonetheless thereupon become effective and Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.
12.14 Other Agent Designations. Agent may at any time and from time to
time determine that a Lender may, in addition, be a "Co-Agent", "Syndication
Agent", "Documentation Agent" or similar designation hereunder and enter into an
agreement with such Lender to have it so identified for purposes of this
Agreement. Any such designation shall be effective upon written notice by Agent
to Administrative Borrower of any such designation. Any Lender that is so
designated as a Co-Agent, Syndication Agent, Documentation Agent or such similar
designation by Agent shall have no right, power, obligation, liability,
responsibility or duty under this Agreement or any of the other Financing
Agreements other than those applicable to all Lenders as such. Without limiting
the foregoing, the Lenders so identified shall not have or be deemed to have any
fiduciary relationship with any Lender and no Lender shall be deemed to have
relied, nor shall any Lender rely, on a Lender so identified as a Co-Agent,
Syndication Agent, Documentation Agent or such similar designation in deciding
to enter into this Agreement or in taking or not taking action hereunder.
114
12.15 Resignation of Issuing Bank. Any Issuing Bank may resign as an
Issuing Bank upon thirty (30) days' notice to Agent (with copies to the Lenders)
and Administrative Borrower. If any Issuing Bank resigns under this Agreement,
the Agent, to the extent it determines is necessary, shall appoint a successor
Issuing Bank, provided, that, such successor Issuing Bank shall have the same or
better rating than the resigning Issuing Bank. Upon the appointment of any
successor Issuing Bank hereunder, such successor Issuing Bank shall succeed to
all of the rights, powers and duties of the retiring Issuing Bank and the term
"Issuing Bank" as used herein and in the other Financing Agreements shall mean
such successor Issuing Bank and the retiring Issuing Bank's appointment, powers
and duties as Issuing Bank shall be terminated except with respect to its
Letters of Credit outstanding as of the effective date of its resignation and
all Letter of Credit Obligations with respect thereto (including the right to
require Lenders to make Loans or fund risk participations in outstanding Letter
of Credit Obligations), shall continue.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on July 28, 2010 (the "Termination
Date"). Administrative Borrower, may, on behalf of Borrowers, at any time, upon
ten (10) Business Days prior written notice to Agent, terminate this Agreement;
provided, that, this Agreement and all other Financing Agreements must be
terminated simultaneously. Upon the effective date of termination of the
Financing Agreements, Borrowers shall pay to Agent all outstanding and unpaid
Obligations and shall furnish cash collateral to Agent (or at Agent's option, a
letter of credit issued for the account of Borrowers and at Borrowers' expense,
in form and substance satisfactory to Agent, by an issuer acceptable to Agent
and payable to Agent as beneficiary) in such amounts as Agent reasonably
determines are necessary to secure Agent, Lenders and Issuing Bank from loss,
cost, damage or expense, including attorneys' fees and expenses, in connection
with any contingent Obligations, including issued and outstanding Letter of
Credit Obligations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received final
payment and any continuing obligations of Agent or any Lender pursuant to any
Deposit Account Control Agreement. The amount of such cash collateral (or letter
of credit, as Agent may determine) as to any Letter of Credit Obligations shall
be in the amount equal to one hundred three (103%) percent of the amount of the
Letter of Credit Obligations plus the amount of any fees and expenses payable in
connection therewith through the end of the latest expiration date of the
Letters of Credit giving rise to such Letter of Credit Obligations. Such
payments in respect of the Obligations and cash collateral shall be remitted by
wire transfer in Federal funds to the Agent Payment Account or such other bank
account of Agent, as Agent may, in its discretion, designate in writing to
Administrative Borrower for such purpose. Interest shall be due until and
including the next Business Day, if the amounts so paid by Borrowers to the
Agent Payment Account or other bank account designated by Agent are received in
such bank account later than noon, New York City time.
(b) No termination of the Commitments, this Agreement or the other
Financing Agreements shall relieve or discharge any Obligor of its duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have
115
been fully and finally discharged and paid, and Agent's continuing security
interest in the Collateral and the rights and remedies of Agent hereunder, under
the other Financing Agreements and applicable law, shall remain in effect until
all such Obligations have been fully and finally discharged and paid.
Accordingly, each Obligor waives any rights it may have under the UCC to demand
the filing of termination statements with respect to the Collateral and Agent
shall not be required to send such termination statements to Obligor, or to file
them with any filing office, unless and until this Agreement shall have been
terminated in accordance with its terms and all Obligations paid in full in
immediately available funds or as otherwise required under Sections 12.11(b) and
Section 5.5 hereof.
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1, Article 8 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural unless the context otherwise
requires.
(c) All references to Borrower, Obligor, Administrative Borrower, Agent
and Lenders pursuant to the definitions set forth in the recitals hereto, or to
any other person herein, shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "herewith", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation".
(f) All references to the terms "good faith" used herein or in the
other Financing Agreements when applicable to Agent or any Lender shall mean,
notwithstanding anything to the contrary contained herein or in the UCC, honesty
in fact in the conduct or transaction concerned. Obligors shall have the burden
of proving any lack of good faith on the part of Agent or any Lender alleged by
any Obligor at any time.
(g) An Event of Default shall be continuing until such Event of Default
is waived in accordance with Section 11.3 or , if capable of being cured, is
cured.
(h) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied.
(i) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including".
116
(j) Unless otherwise expressly provided herein, (i) references herein
to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(m) All Schedules annexed hereto are deemed to include information as
of the date hereof.
(n) This Agreement and the other Financing Agreements are the result of
negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent's or any Lender's involvement in their preparation.
13.3 Notices. (a) All notices, requests and demands hereunder shall be
in writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. Notices delivered through
electronic communications shall be effective to the extent set forth in Section
13.3(b) below . All notices, requests and demands upon the parties are to be
given to the following addresses (or to such other address as any party may
designate by notice in accordance with this Section):
If to Obligors: Charming Shoppes of Delaware, Inc.
Administrative Borrower
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
117
and Charming Shoppes of Delaware, Inc.,
Administrative Borrower
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
with a copy to: Drinker Xxxxxx & Xxxxx, LLP
One Xxxxx Square
18th and Cherry
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telephone No.: 000-000-0000
Telecopy No.: 215-988-2757
If to Agent or Wachovia, as Wachovia Bank, National Association
Issuing Bank: 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Portfolio Manager --
Charming Shoppes
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
(b) Notices and other communications to Lenders and an Issuing Bank
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by
Agent or as otherwise determined by Agent, provided, that, the foregoing shall
not apply to notices to any Lender or Issuing Bank pursuant to Section 2 hereof
if such Lender or Issuing Bank, as applicable, has notified Agent that it is
incapable of receiving notices under such Section by electronic communication.
Unless Agent otherwise requires, (i) notices and other communications sent to an
e-mail address shall be deemed received upon the sender's receipt of an
acknowledgement from the intended recipient (such as by the "return receipt
requested" function, as available, return e-mail or other written
acknowledgement), provided, that, if such notice or other communication is not
given during the normal business hours of the recipient, such notice shall be
deemed to have been sent at the opening of business on the next Business Day for
the recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause
(i) of notification that such notice or communications is available and
identifying the website address therefor.
13.4 Partial Invalidity. If any provision of this Agreement is held to
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
118
13.5 Confidentiality.
(a) Agent, each Lender and Issuing Bank shall use all reasonable
efforts to keep confidential, in accordance with its customary procedures for
handling confidential information and safe and sound lending practices, any
non-public information supplied to it by any Borrower pursuant to this
Agreement, provided, that, nothing contained herein shall limit the disclosure
of any such information: (i) to the extent required by statute, rule,
regulation, subpoena or court order, (ii) to bank examiners and other
regulators, auditors and/or accountants, (iii) in connection with any litigation
to which Agent, any Lender or Issuing Bank is a party, (iv) to any Lender or
Participant (or prospective Lender or Participant) or Issuing Bank or to any
Affiliate of any Lender so long as such assignee or Participant (or prospective
assignee or Participant), Issuing Bank or Affiliate shall have been instructed
to treat such information as confidential in accordance with this Section 13.5
and shall have acknowledged such instructions and agreed to comply therewith, or
(v) to counsel for Agent or any Participant, Lender (or prospective Participant,
Lender or Issuing Bank) or Issuing Bank.
(b) In the event that Agent, any Issuing Bank or Lender receives a
request or demand to disclose any confidential information pursuant to any
subpoena or court order, Agent, such Issuing Bank or Lender, as the case may be,
agrees (i) to the extent permitted by applicable law or if permitted by
applicable law, statute, rule or regulation to the extent Agent determines in
good faith that it will not create any risk of liability to Agent, such Issuing
Bank or Lender, that Agent, such Issuing Bank or Lender will promptly notify
Administrative Borrower of such request so that Borrowers may seek a protective
order or other appropriate relief or remedy and (ii) if disclosure of such
information is required, disclose such information and, subject to reimbursement
by Borrowers of Agent's, or such Issuing Bank's or such Lender's reasonable
expenses, cooperate with Borrowers in their reasonable efforts to obtain an
order or other reliable assurance that confidential treatment will be accorded
to such portion of the disclosed information which Borrowers so designates, to
the extent permitted by applicable law or if permitted by applicable law, to the
extent Agent, Issuing Bank or such Lender determines in good faith that it will
not create any risk of liability to Agent, such Issuing Bank or Lender.
(c) In no event shall this Section 13.5 or any other provision of this
Agreement or applicable law be deemed: (i) to apply to or restrict disclosure of
information that has been or is made public by any Borrower or any third party
without breach of this Section 13.5 or otherwise become generally available to
the public other than as a result of a disclosure in violation hereof, or in
violation of any other confidentiality agreement in favor of Obligors to the
extent Agent, any Issuing Bank or Lender involved has actual knowledge of such
agreement and the violation thereof at the time it receives or discloses such
information, (ii) to apply to or restrict disclosure of information that was or
becomes available to Agent, any Issuing Bank or any Lender on a non-confidential
basis from a person other than any Borrower other than in violation of a
confidentiality agreement in favor of any Obligor by such person to the extent
Agent, any Issuing Bank or Lender involved has actual knowledge of such
agreement and the violation thereof at the time it receives or discloses such
information, (iii) to require Agent, any Issuing Bank or any Lender to return
any materials furnished by Obligors to Agent, any Issuing Bank or any Lender as
the case may be or (iv) to prevent Agent from responding to routine
informational requests in accordance with the Code of Ethics for the Exchange of
Credit Information promulgated by The Xxxxxx Xxxxxx Associates or other
applicable industry standards
119
relating to the exchange of credit information. The obligations of Agent,
Lenders and any Issuing Bank under this Section 13.5 shall supersede and replace
the obligations of Agent, any Issuing Bank and Lenders under any confidentiality
letter signed prior to the date hereof.
13.6 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Agent, Lenders, Issuing Bank, Borrowers,
Guarantors and their respective successors and assigns, except that Borrowers
may not assign its rights under this Agreement, the other Financing Agreements
and any other document referred to herein or therein without the prior written
consent of Agent and Lenders. Any such purported assignment without such express
prior written consent shall be void. No Lender may assign its rights and
obligations under this Agreement without the prior written consent of Agent,
except as provided in Section 13.7 below. The terms and provisions of this
Agreement and the other Financing Agreements are for the purpose of defining the
relative rights and obligations of Borrowers, Guarantors, Agent, Lenders and
Issuing Bank with respect to the transactions contemplated hereby and there
shall be no third party beneficiaries of any of the terms and provisions of this
Agreement or any of the other Financing Agreements.
13.7 Assignments; Participations.
(a) Each Lender may, with the prior written consent of Agent, assign
all or, if less than all, a portion equal to at least $5,000,000 in the
aggregate for the assigning Lender, of such rights and obligations under this
Agreement to one or more Eligible Transferees (but not including for this
purpose any assignments in the form of a participation), each of which assignees
shall become a party to this Agreement as a Lender by execution of an Assignment
and Acceptance; provided, that, (i) such transfer or assignment will not be
effective until recorded by Agent on the Register, (ii) Agent shall have
received for its sole account payment of a processing fee from the assigning
Lender or the assignee in the amount of $3,000 (such fee shall be waived if the
assigning Lender is the Agent or any Syndication Agent); and (iii) in the event
the proposed assignee is not an Eligible Transferee, such assignee shall be
approved in writing, by Administrative Borrower (which approval shall not be
unreasonably withheld or delayed) prior to any assignment pursuant to Section
13.7(a) hereof, except that, the approval of the Administrative Borrower shall
not be required in respect of any assignment by any Lender made either (A) after
the occurrence and during the continuance of any Event of Default, or (B) in
connection with an assignment by any Lender upon the merger, consolidation,
sale, transfer or other disposition of all or any substantial portion of any
Lender's business, loan portfolio or other assets.
(b) Agent shall maintain a register of the names and addresses of
Lenders, their Commitments and the principal amount of their Loans (the
"Register"). Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall modify the Register to give effect to
each Assignment and Acceptance. The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and any Borrowers,
Obligors, Agent and Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by Administrative Borrower and any Lender at
any reasonable time and from time to time upon reasonable prior notice.
120
(c) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Obligations) of a Lender hereunder and thereunder and the
assigning Lender shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance, the
assignor and assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the other
Financing Agreements or the execution, legality, enforceability, genuineness,
sufficiency or value of this Agreement or any of the other Financing Agreements
furnished pursuant hereto, (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Obligor or any of its Subsidiaries or the performance or observance by
any Obligor of any of the Obligations; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Financing Agreements, together
with such other documents and information it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(iv) such assignee will, independently and without reliance upon the assigning
Lender, Agent and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Financing Agreements, (v)
such assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Financing
Agreements as are delegated to Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto, and (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Financing
Agreements are required to be performed by it as a Lender. Agent and Lenders may
furnish any information concerning any Obligor in the possession of Agent or any
Lender from time to time to assignees and Participants.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Financing Agreements (including, without limitation, all
or a portion of its Commitments and the Loans owing to it and its participation
in the Letter of Credit Obligations, without the consent of Agent or the other
Lenders); provided, that, (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment hereunder) and the other
Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Guarantors, the other Lenders and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Financing
Agreements, and (iii) the Participant shall not have any rights under this
Agreement or any of the other Financing Agreements (the Participant's rights
against such Lender in respect of such participation to be
121
those set forth in the agreement executed by such Lender in favor of the
Participant relating thereto) and all amounts payable by any Borrower or
Guarantor hereunder shall be determined as if such Lender had not sold such
participation.
(f) Nothing in this Agreement shall prevent or prohibit any Lender from
pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings
made by such Lenders from such Federal Reserve Bank; provided, that, no such
pledge shall release such Lender from any of its obligations hereunder or
substitute any such pledgee for such Lender as a party hereto.
(g) At any time prior to the date that Agent confirms to Administrative
Borrower that there has been a successful syndication and at any time after an
Event of Default has occurred and is continuing, Obligors shall assist Agent or
any Lender permitted to sell assignments or participations under this Section
13.7 in whatever manner reasonably necessary in order to enable or effect any
such assignment or participation, including (but not limited to) the execution
and delivery of any and all agreements, notes and other documents and
instruments as shall be requested and the delivery of informational materials,
appraisals or other documents for, and the participation of relevant management
in meetings and conference calls with, potential Lenders or Participants. In
connection with the foregoing, Administrative Borrower shall upon request of
Agent, certify the correctness, completeness and accuracy, in all material
respects, of all descriptions of Obligors and their affairs provided, prepared
or reviewed by any Obligor that are contained in any selling materials and all
other information provided by it and included in such materials.
(h) Any Lender that is an Issuing Bank may at any time assign all of
its Commitments pursuant to this Section 13.7. If such Issuing Bank ceases to be
Lender, it may, at its option, resign as Issuing Bank in accordance with Section
12.15 and such Issuing Bank's obligations to issue Letters of Credit shall
terminate but it shall retain all of the rights and obligations of Issuing Bank
hereunder with respect to Letters of Credit outstanding as of the effective date
of its resignation and all Letter of Credit Obligations with respect thereto
(including the right to require Lenders to make Loans or fund risk
participations in outstanding Letter of Credit Obligations), shall continue.
13.8 Entire Agreement. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
13.9 USA Patriot Act. Each Lender subject to the USA PATRIOT Act (Title
III of Pub.L. 107-56 (signed into law October 26, 2001) (the "Act") hereby
notifies each Obligor that pursuant to the requirements of the Act, it is
required to obtain, verify and record information that identifies each person or
corporation who opens an account and/or enters into a business relationship with
it, which information includes the name and address of each Obligor and other
122
information that will allow such Lender to identify such person in accordance
with the Act and any other applicable law.
13.10 Counterparts. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile or other electronic method of
transmission shall have the same force and effect as the delivery of an original
executed counterpart of this Agreement or any of such other Financing
Agreements. Any party delivering an executed counterpart of any such agreement
by telefacsimile or other electronic method of transmission shall also deliver
an original executed counterpart, but the failure to do so shall not affect the
validity, enforceability or binding effect of such agreement.
SECTION 14. ACKNOWLEDGMENT AND RESTATEMENT
14.1 Acknowledgment of Existing Obligations. Each Obligor hereby
acknowledges, confirms and agrees that Obligors are indebted to Agent and
Lenders for loans and advances to Borrowers under the Existing Financing
Agreements, as of the close of business on July 27, 2005, in the aggregate
principal amount of $110,000,000, together with all interest accrued and
accruing thereon (to the extent applicable), and all fees, costs, expenses and
other charges relating thereto (including reasonable fees and expenses of
counsel to Agent), all of which are unconditionally owing by Obligors to Agent
and Lenders, without offset, defense or counterclaim of any kind, nature or
description whatsoever and the aggregate outstanding face amount of all Letter
of Credit Accommodations (as defined in the Existing Financing Agreements)
issued and outstanding as of the close of business on July 27, 2005 was
$93,320,586.
14.2 Acknowledgment of Security Interests.
(a) Each Obligor hereby acknowledges, confirms and agrees that Agent,
has and shall continue to have a security interest in and lien upon the
Collateral (as such term is amended herein) granted to Agent pursuant to the
Existing Financing Agreements to secure the Obligations, as well as any
Collateral granted under this Agreement or under any of the other Financing
Agreements or otherwise granted to or held by Agent.
(b) The Liens and security interests of Agent in the Collateral (as
such term is amended herein) shall be deemed to be continuously granted and
perfected from the earliest date of the granting and perfection of such Liens
and security interests, whether under the Existing Financing Agreements, this
Agreement or any other Financing Agreements.
14.3 Existing Financing Agreements. Each Obligor hereby acknowledges,
confirms and agrees that: (a) the Existing Financing Agreements have been duly
executed and delivered by such Obligor and are in full force and effect as of
the date hereof, and (b) the agreements and obligations of such Obligor
contained in the Existing Financing Agreements on the date hereof constitute the
legal, valid and binding obligations of such Obligor enforceable against it in
accordance with their respective terms and such Obligor has no defense to the
enforcement of
123
such obligations and (c) Agent and Lenders are entitled to all of the rights and
remedies provided for in the Existing Financing Agreements as in effect on the
date hereof.
14.4 Restatement.
(a) Except as otherwise stated in Section 14.1 hereof and this Section
14.4, as of the date hereof, the terms, conditions, agreements, covenants,
representations and warranties set forth in the Existing Loan Agreement, the
Amended and Restated Guarantee, dated January 29, 2004, executed by the
Guarantors parties thereto and the Amended and Restated General Security
Agreement, dated January 29, 2004, executed by the Guarantors parties thereto
are hereby amended and restated in their entirety on the date hereof, and as so
amended and restated, replaced and superseded, by the terms, conditions,
agreements, covenants, representations and warranties set forth in this
Agreement and the other Financing Agreements, except that nothing herein or in
the other Financing Agreements shall impair or adversely affect the continuation
of the liability of Obligors for the Obligations. The amendment and restatement
contained herein shall not, in any manner, be construed to constitute payment
of, or impair, limit, cancel or extinguish, or constitute a novation in respect
of, the Indebtedness and other obligations and liabilities of Obligors evidenced
by or arising under the Existing Financing Agreements, and the liens and
security interests securing such Indebtedness and other obligations and
liabilities, which shall not in any manner be impaired, limited, terminated,
waived or released except for the termination and release of any Liens and
security interests of Agent in and to any Excluded Property.
(b) The principal amount of the Revolving Loans and Letters of Credit
outstanding as of the date hereof under the Existing Financing Agreements shall
be allocated to the Revolving Loans and Letters of Credit hereunder in such
amounts as Agent shall determine based upon the Commitments.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
124
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
duly executed as of the day and year first above written.
BORROWERS
CHARMING SHOPPES, INC.
By: _____________________________
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
Chief Executive Office:
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
CHARMING SHOPPES OF DELAWARE, INC.
By: _____________________________
Name: Xxxx X. Xxxxxxx
Title: Vice President
Chief Executive Office:
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
CSI INDUSTRIES, INC.
By: _____________________________
Name: Xxxx X. Xxxxxxx
Title: President
Chief Executive Office:
0000 Xxxxxxxxxx Xxxx
000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
FB APPAREL, INC.
By: _____________________________
Name: Xxxx X. Xxxxxxx
Title: President
Chief Executive Office:
0000 Xxxxx Xxxx 000X
Xxxxxxxxxxx, Xxxxxxx 00000
LANE XXXXXX, INC.
By: _____________________________
Name: Xxxx X. Xxxxxxx
Title: Vice President
Chief Executive Office:
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxx 00000
CATHERINES STORES CORPORATION
By: _____________________________
Name: Xxxx X. Xxxxxxx
Title: Vice President
Chief Executive Office:
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
CROSSTOWN TRADERS, INC.
By: _____________________________
Name: Xxxx X. Xxxxxxx
Title: Vice President
Chief Executive Office:
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
ADMINISTRATIVE BORROWER
CHARMING SHOPPES OF DELAWARE, INC.,
as Administrative Borrower
By: _____________________________
Name: Xxxx X. Xxxxxxx
Title: Vice President
Chief Executive Office:
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
GUARANTORS
CSPE, LLC
By: Charming Shoppes of Delaware, Inc.
Its: Sole Member
By: __________________________
Name: Xxxx X. Xxxxxxx
Title: Vice President
CATHERINES PARTNERS-INDIANA, LLP
By: Catherines Stores of Indiana, Inc.
Its: Managing Partner
By: __________________________
Name: Xxxx X. Xxxxxxx
Title: President
CATHERINES PARTNERS-TEXAS, L.P.
By: Catherines Stores of Texas, Inc.
Its: General Partner
By: __________________________
Name: Xxxx X. Xxxxxxx
Title: President
CATHERINES PARTNERS-WASHINGTON, G.P.
By: Catherines, Inc.
Its: Managing Partner
By: __________________________
Name: Xxxx X. Xxxxxxx
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
LBFMC, LLC
By: Lane Xxxxxx, Inc.
Its: Sole Member
By: __________________________
Name: Xxxx X. Xxxxxxx
Title: Vice President
CAFMC, LLC
By: Catherines, Inc.
Its: Sole Member
By: __________________________
Name: Xxxx X. Xxxxxxx
Title: Vice President
FBFMC, LLC
By: FBRC, Inc.
Its: Sole Member
By: __________________________
Name: Xxxx X. Xxxxxxx
Title: President
PC FLOWERS & XXXXX.XXX LLC
By: Crosstown Traders, Inc.
Its: Sole Member
By: __________________________
Name: Xxxx X. Xxxxxxx
Title: Vice President
FOR EACH ENTITY LISTED ON SCHEDULE 1.83A
By: ____________________________
Name: Xxxx X. Xxxxxxx
Title: Authorized Officer in the capacity shown
on Schedule 1.83A hereto
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
FASHION BUG #2421, LLC
By: CSGC, Inc.
Its: Sole Member
By: __________________________
Name: Xxxxx X. Xxxxx
Title: Vice President
CATHERINES #5163, LLC
By: CSGC, Inc.
Its: Sole Member
By: __________________________
Name: Xxxxx X. Xxxxx
Title: Vice President
LANE XXXXXX #6898, LLC
By: CSGC, Inc.
Its: Sole Member
By: __________________________
Name: Xxxxx X. Xxxxx
Title: Vice President
C.S.A.C., INC.
By: __________________________
Name: Xxxxx X. Xxxxx
Title: Vice President
C.S.F. CORP.
By: __________________________
Name: Xxxxx X. Xxxxx
Title: Vice President
CSGC, INC.
By: __________________________
Name: Xxxxx X. Xxxxx
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
AGENT
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent and Issuing Bank
By: ________________________________
Title: _______________________________
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
LENDERS
WACHOVIA BANK, NATIONAL ASSOCIATION
By: ________________________________
Title: _______________________________
JPMORGAN CHASE BANK, N.A.
By: ________________________________
Title: _______________________________
BANK OF AMERICA, N.A.
By: ________________________________
Title: _______________________________
THE CIT GROUP/BUSINESS CREDIT, INC.
By: ________________________________
Title: _______________________________
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
XXXXX FARGO FOOTHILL, LLC
By: ________________________________
Title: _______________________________
GMAC COMMERCIAL FINANCE LLC
By: ________________________________
Title: _______________________________
NATIONAL CITY BUSINESS CREDIT, INC.
By: ________________________________
Title: _______________________________
PNC BANK, NATIONAL ASSOCIATION
By: ________________________________
Title: _______________________________
CITIZENS BANK OF PENNSYLVANIA
By: ________________________________
Title: _______________________________
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
ISRAEL DISCOUNT BANK OF NEW YORK
By: ________________________________
Title: _______________________________
By: ________________________________
Title: _______________________________
U.S. BANK NATIONAL ASSOCIATION
By: ________________________________
Title: _______________________________
EXHIBIT A
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Assignment And Acceptance Agreement
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of _____________, 200_ is made between
________________________ (the "Assignor") and ____________________ (the
"Assignee").
W I T N E S S E T H:
WHEREAS, Wachovia Bank, National Association, in its capacity as
administrative agent (in such capacity, "Agent") for itself and the Lenders (as
hereinafter defined), the financial institutions from time to time party to the
Loan Agreement (as hereinafter defined), as lenders (collectively, "Lenders")
have entered into financing arrangements pursuant to which Agent and Lenders may
make loans and advances and provide other financial accommodations to Charming
Shoppes, Inc., a Pennsylvania corporation ("Parent"), Charming Shoppes of
Delaware, Inc., a Pennsylvania corporation ("CS Delaware"), CSI Industries,
Inc., a Delaware corporation ("CSI"), FB Apparel, Inc., an Indiana corporation
("FB Apparel"), Catherines Stores Corporation, a Tennessee corporation
("Catherines"), Lane Xxxxxx, Inc., a Delaware corporation ("LB"); Crosstown
Traders, Inc., a Delaware corporation ("Crosstown" and , together with Parent,
CS Delaware, CSI, FB Apparel, Catherines, LB, and Crosstown hereinafter referred
to individually as a "Borrower" and collectively as "Borrowers") and CS Delaware
in its capacity as agent for itself as a Borrower and for the other Borrowers
("Administrative Borrower") as set forth in the Second Amended and Restated Loan
and Security Agreement, dated July 28, 2005, by and among Agent, Lenders,
Borrowers and Administrative Borrower (as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced, the
"Loan Agreement"), and the other agreements, documents and instruments referred
to therein or at any time executed and/or delivered in connection therewith or
related thereto (all of the foregoing, together with the Loan Agreement, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, being collectively referred to herein as the
"Financing Agreements");
WHEREAS, as provided under the Loan Agreement, Assignor committed to
making Revolving Loans (the "Committed Loans") to Borrowers in an aggregate
amount not to exceed $___________;
WHEREAS, Assignor wishes to assign to Assignee [part of the] [all]
rights and obligations of Assignor under the Loan Agreement in respect of its
Commitment in an amount equal to $______________ (the "Assigned Commitment
Amount") on the terms and subject to the conditions set forth herein and
Assignee wishes to accept assignment of such rights and to assume such
obligations from Assignor on such terms and subject to such conditions;
A-1
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) Assignor hereby sells, transfers and assigns to Assignee, and
(ii) Assignee hereby purchases, assumes and undertakes from Assignor, without
recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) an interest in (A) the Commitment and each of the
Committed Loans of Assignor, and (B) all related rights, benefits, obligations,
liabilities and indemnities of the Assignor under and in connection with the
Loan Agreement and the other Financing Agreements, so that after giving effect
thereto, the Commitment of Assignee and the Commitment of Assignor shall be as
set forth below in Section 1(c) and the Pro Rata Share of Assignee in respect of
the Commitment shall be _______ (__%) percent.
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), Assignee shall be a party to the Loan Agreement and succeed
to all of the rights and be obligated to perform all of the obligations of a
Lender under the Loan Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Commitment Amount. Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Agreement are required to be performed by it as a Lender. It is the
intent of the parties hereto that the Commitment shall, as of the Effective
Date, be reduced by an amount equal to the Assigned Commitment Amount and
Assignor shall relinquish its rights and be released from its obligations under
the Loan Agreement to the extent such obligations have been assumed by Assignee;
provided, that, Assignor shall not relinquish its rights under Sections 2.1,
6.4, 6.9 and 6.10 of the Loan Agreement to the extent such rights relate to the
time prior to the Effective Date.
(c) (i) After giving effect to the assignment and assumption
set forth herein, on the Effective Date Assignee's Commitment will be
$_____________.
(ii) After giving effect to the assignment and
assumption set forth herein, on the Effective Date
Assignor's Commitment will be $______________.
2. Payments. As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the
Effective Date in immediately available funds an amount equal to $____________,
representing Assignee's Pro Rata Share of the outstanding principal amount of
all Committed Loans.
3. Reallocation of Payments. Any interest, fees and other payments
accrued to the Effective Date with respect to the Commitment, Committed Loans,
and outstanding Letters of Credit shall be for the account of Assignor. Any
interest, fees and other payments accrued on and after the Effective Date with
respect to the Assigned Commitment Amount shall be for the account of Assignee.
Each of Assignor and Assignee agrees that it will hold in trust for the other
party any interest, fees and other amounts which it may receive to which the
other party is
A-2
entitled pursuant to the preceding sentence and pay to the other party any such
amounts which it may receive promptly upon receipt.
4. Independent Credit Decision. Assignee (1) acknowledges that it has
received a copy of the Loan Agreement and the Schedules and Exhibits thereto
together with copies of the most recent financial statements of Charming
Shoppes, Inc. and its Subsidiaries, and such other documents and information as
it has deemed appropriate to make its own credit and legal analysis and decision
to enter into this Assignment and Acceptance and (2) agrees that it will,
independently and without reliance upon Assignor, Agent or any Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Loan Agreement.
5. Effective Date; Notices.
(a) As between Assignor and Assignee, the effective date for
this Assignment and Acceptance shall be _______________, 200_ (the "Effective
Date"); provided, that, the following conditions precedent have been satisfied
on or before the Effective Date:
(i) this Assignment and Acceptance shall be executed
and delivered by Assignor and Assignee;
(ii) the consent of Agent and Administrative
Borrower, as required, for an effective assignment of the Assigned Commitment
Amount by Assignor to Assignee shall have been duly obtained and shall be in
full force and effect as of the Effective Date;
(iii) written notice of such assignment, together
with payment instructions, addresses and related information with respect to
Assignee, shall have been given to Administrative Borrower and Agent; and
(iv) Assignee shall pay to Assignor all amounts due
to Assignor under this Assignment and Acceptance.
(b) Promptly following the execution of this Assignment and
Acceptance, Assignor shall deliver to Administrative Borrower and Agent for
acknowledgment by Agent, a Notice of Assignment in the form attached hereto as
Schedule 1.
[6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]
(a) Assignee hereby appoints and authorizes Assignor in its
capacity as Agent to take such action as agent on its behalf to exercise such
powers under the Loan Agreement as are delegated to Agent by Lenders pursuant to
the terms of the Loan Agreement.
(b) Assignee shall assume no duties or obligations held by
Assignor in its capacity as Agent under the Loan Agreement.]
7. Withholding Tax. Assignee (a) represents and warrants to Assignor,
Agent and Borrowers that under applicable law and treaties no tax will be
required to be withheld by Assignee, Agent or Borrowers with respect to any
payments to be made to Assignee hereunder or
A-3
under any of the Financing Agreements, (b) agrees to furnish (if it is organized
under the laws of any jurisdiction other than the United States or any State
thereof) to Agent and Administrative Borrower prior to the time that Agent or
any Borrower is required to make any payment of principal, interest or fees
hereunder, duplicate executed originals of either U.S. Internal Revenue Service
Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein Assignee claims
entitlement to the benefits of a tax treaty that provides for a complete
exemption from U.S. federal income withholding tax on all payments hereunder)
and agrees to provide new Forms 4224 or 1001 upon the expiration of any
previously delivered form or comparable statements in accordance with applicable
U.S. law and regulations and amendments thereto, duly executed and completed by
Assignee, and (c) agrees to comply with all applicable U.S. laws and regulations
with regard to such withholding tax exemption.
8. Representations and Warranties.
(a) Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any security interest, lien, encumbrance or
other adverse claim, (ii) it is duly organized and existing and it has the full
power and authority to take, and has taken, all action necessary to execute and
deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this Assignment
and Acceptance and to fulfill its obligations hereunder, (iii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance, and apart from any agreements or undertakings
or filings required by the Loan Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance, and (iv) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) Assignor makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any of the other Financing
Agreements or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto. Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of Borrowers, Obligors or any of their
respective Affiliates, or the performance or observance by Borrowers, Obligors
or any other Person, of any of its respective obligations under the Loan
Agreement or any other instrument or document furnished in connection therewith.
(c) Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder, (ii) no notices to, or consents,
authorizations or approvals of, any Person
A-4
are required (other than any already given or obtained) for its due execution,
delivery and performance of this Assignment and Acceptance, and apart from any
agreements or undertakings or filings required by the Loan Agreement, no further
action by, or notice to, or filing with, any Person is required of it for such
execution, delivery or performance; and (iii) this Assignment and Acceptance has
been duly executed and delivered by it and constitutes the legal, valid and
binding obligation of Assignee, enforceable against Assignee in accordance with
the terms hereof, subject, as to enforcement, to bankruptcy, insolvency,
moratorium, reorganization and other laws of general application relating to or
affecting creditors' rights to general equitable principles.
9. Further Assurances. Assignor and Assignee each hereby agree to
execute and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the transactions
contemplated by this Assignment and Acceptance, including the delivery of any
notices or other documents or instruments to Administrative Borrower or Agent,
which may be required in connection with the assignment and assumption
contemplated hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties hereto.
No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other for further breach thereof.
(b) All payments made hereunder shall be made without any set
off or counterclaim.
(c) Assignor and Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) All capitalized terms used in this Assignment and
Acceptance which are defined in the Loan Agreement shall have the meanings
assigned thereto in the Loan Agreement, except as otherwise defined herein.
(e) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(f) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, Assignor and
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in New York County, New York over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or Federal court. Each party to
this Assignment and Acceptance hereby irrevocably waives, to the fullest extent
it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding.
A-5
(g) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING
AGREEMENTS OR ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).
[REMAINDER OF PAGE INTENTIONALLY OMITTED]
A-6
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment
and Acceptance to be executed and delivered by their duly authorized officers as
of the date first above written.
[ASSIGNOR]
By: _____________________________
Title: ____________________________
[ASSIGNEE]
By: _____________________________
Title: ____________________________
A-7
572988.7
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
______________, 200_
------------------------
------------------------
------------------------
Attn.:
------------------
Re:
------------------------------
Ladies and Gentlemen:
Wachovia Bank, National Association, in its capacity as administrative
agent (in such capacity, "Agent") for itself and the Lenders (as hereinafter
defined), the financial institutions from time to time party to the Loan
Agreement (as hereinafter defined), as lenders (collectively, "Lenders") have
entered into financing arrangements pursuant to which Agent and Lenders may make
loans and advances and provide other financial accommodations to Charming
Shoppes, Inc., a Pennsylvania corporation ("Parent"), Charming Shoppes of
Delaware, Inc., a Pennsylvania corporation ("CS Delaware"), CSI Industries,
Inc., a Delaware corporation ("CSI"), FB Apparel, Inc., an Indiana corporation
("FB Apparel"), Catherines Stores Corporation, a Tennessee corporation
("Catherines"), Lane Xxxxxx, Inc., a Delaware corporation ("LB"); Crosstown
Traders, Inc., a Delaware corporation ("Crosstown" and , together with Parent,
CS Delaware, CSI, FB Apparel, Catherines, LB, and Crosstown hereinafter referred
to individually as a "Borrower" and collectively as "Borrowers") and CS Delaware
in its capacity as agent for itself as a Borrower and for the other Borrowers
("Administrative Borrower"), as set forth in the Second Amended and Restated
Loan and Security Agreement, dated July28, 2005, by and among Agent, Lenders,
Borrowers, certain other Subsidiaries of Parent from time to time parties
thereto as Guarantors and Administrative Borrower (as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the "Loan Agreement"), and the other agreements, documents and
instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto (all of the foregoing, together with the
Loan Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements"). Capitalized terms not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Loan Agreement.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________________ (the "Assignor") to
___________________________ (the "Assignee") such that after giving effect to
the assignment Assignee shall have an interest equal to ________ (__%) percent
of the total Commitment pursuant to the Assignment and Acceptance Agreement
attached hereto (the "Assignment and Acceptance"). We understand and agree that
the Assignor's Commitment shall be reduced by $_____________.
2. Assignee agrees that, upon receiving the consent of Agent and, if
applicable, Administrative Borrower to such assignment, Assignee will be bound
by the terms of the each of
the Loan Agreement as fully and to the same extent as if the Assignee were the
Lender originally holding such interest under the Loan Agreement.
3. The following administrative details apply to Assignee:
(A) Notice address: Assignee name: Address: Attention:
Telephone: Telecopier:
(B) Payment instructions:
Account No.:
At:
Reference:
Attention:
4. You are entitled to rely upon the representations, warranties and
covenants of each of Assignor and Assignee contained in the Assignment and
Acceptance.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
-----------------------------------------
Title:
--------------------------------------
[NAME OF ASSIGNEE]
By:
-----------------------------------------
Title:
--------------------------------------
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Agent
By: _______________________________
Title: ______________________________
[CHARMING SHOPPES OF DELAWARE, INC.,
as Administrative Borrower(1)]
By: _______________________________
Title: ______________________________
____________________
(1) if required
EXHIBIT B
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Form of Compliance Certificate
To: Wachovia Bank, National Association, as Agent
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
I hereby certify to you as follows:
1. I am a duly elected financial officer of Charming Shoppes, Inc., a
Pennsylvania corporation ("Parent"). Capitalized terms used herein without
definition shall have the meanings given to such terms in the Second Amended and
Restated Loan and Security Agreement, dated July 28, 2005, by and among Wachovia
Bank, National Association, in its capacity as administrative agent (in such
capacity, "Agent") for itself and the Lenders (as hereinafter defined), the
financial institutions from time to time party thereto as lenders (collectively,
"Lenders"), Parent, Charming Shoppes of Delaware, Inc., a Pennsylvania
corporation ("CS Delaware"), CSI Industries, Inc., a Delaware corporation
("CSI"), FB Apparel, Inc., an Indiana corporation ("FB Apparel"), Catherines
Stores Corporation, a Tennessee corporation ("Catherines"), Lane Xxxxxx, Inc., a
Delaware corporation ("LB"); Crosstown Traders, Inc., a Delaware corporation
("Crosstown" and , together with Parent, CS Delaware, CSI, FB Apparel,
Catherines, LB, and Crosstown hereinafter referred to individually as a
"Borrower" and collectively as "Borrowers") and CS Delaware, as Administrative
Borrower, and certain other Subsidiaries of Parent from time to time parties
thereto, as Guarantors (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, the "Loan
Agreement").
2. I have generally reviewed the covenants in Articles V, VII, IX and X
of the Loan Agreement, and have made, or have caused to be made under my
supervision, a review in reasonable detail of the financial condition and
operations of Parent and each of its Subsidiaries, during the immediately
preceding [fiscal month(2)/fiscal quarter].
3. The review described in Section 2 above did not disclose the
existence during or at the end of such [fiscal month(3)/fiscal quarter], and I
have no knowledge of the existence and continuance on the date hereof, of any
condition or event which constitutes a Default or an Event of Default, except as
set forth on Schedule I attached hereto. Described on Schedule I attached hereto
are the exceptions, if any, to this Section 3 listing, in detail, the nature of
the condition or
_________________________ (
2) Only if Compliance Certificate is required to be delivered on a monthly basis
pursuant to Section 9.6(a)(i) of the Loan Agreement.
3) Only if Compliance Certificate is required to be delivered on a monthly basis
pursuant to Section 9.6(a)(i) of the Loan Agreement.
B-1
event, the period during which it has existed and the action which any Obligor
or Additional L/C Debtor has taken, is taking, or proposes to take with respect
to such condition or event.
4. I further certify that, based on the review described in Section 2
above, Obligors and the Additional L/C Debtors (for the purposes of clauses (a)
and (c) below) have not at any time during or at the end of such [fiscal
month(4)/fiscal quarter], except as specifically described on Schedule II
attached hereto or as permitted by the Loan Agreement, done any of the
following:
(a) Changed its respective corporate name, other than in
accordance with the terms of the Financing Agreement.
(b) Changed the location of its chief executive office,
changed its jurisdiction of incorporation or
established any new asset locations except in
accordance with the terms of Financing Agreements.
(c) Permitted or suffered to exist any Liens on any of
the Collateral or the Additional L/C Collateral other
than as specifically permitted in the Financing
Agreements except as set forth on Schedule A annexed
hereto.
(d) Become aware of, obtained knowledge of, or received
notification of, any breach or violation of any
material covenant contained in any instrument or
agreement in respect of Indebtedness for money
borrowed with an outstanding principal balance in
excess of $25,000,000 by any Obligor except as set
forth on Schedule A annexed hereto.
If required under the Loan Agreement, attached hereto as Schedule III
is the calculation used in determining, as of the end of such period, whether
Parent and its Subsidiaries were in compliance with the covenant set forth in
Section 9.21 of the Loan Agreement as of the end of the immediately preceding
fiscal quarter.
The foregoing certifications are made on behalf of the Parent and
delivered this day of ___________, _____.
Very truly yours,
CHARMING SHOPPES, INC.
By:_____________________
Title:____________________
4) Only if Compliance Certificate is required to be delivered on a monthly basis
pursuant to Section 9.6(a)(i) of the Loan Agreement.
EXHIBIT C
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Commitments
--------------------------------------------------------------------------------
Lender Commitments Pro Rata Share
--------------------------------------------------------------------------------
Wachovia Bank, National Association $85,000,000 22.7%
--------------------------------------------------------------------------------
JPMorgan Chase Bank, N.A. $60,000,000 16.0%
--------------------------------------------------------------------------------
Bank of America, N.A. $60,000,000 16.0%
--------------------------------------------------------------------------------
Xxxxx Fargo Foothill, LLC $40,000,000 10.7%
--------------------------------------------------------------------------------
The CIT Group/Business Credit, Inc. $30,000,000 8.0%
--------------------------------------------------------------------------------
GMAC Commercial Finance LLC $25,000,000 6.7%
--------------------------------------------------------------------------------
National City Business Credit, Inc. $25,000,000 6.7%
--------------------------------------------------------------------------------
PNC Bank, National Association $15,000,000 4.0%
--------------------------------------------------------------------------------
Citizens Bank of Pennsylvania $15,000,000 4.0%
--------------------------------------------------------------------------------
Israel Discount Bank of New York $10,000,000 2.6%
--------------------------------------------------------------------------------
U.S. Bank National Association $10,000,000 2.6%
--------------------------------------------------------------------------------
TOTAL $375,000,000 100%
--------------------------------------------------------------------------------
C-1
EXHIBIT D
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Form of Investment Property Control Agreement
See attached
EXHIBIT E
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Form of Guarantor Joinder Agreement
See attached
EXHIBIT 1.17
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Form of Borrowing Base Certificate
See attached
EXHIBIT 5.5
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Form of Form of UCC-3 Release for Excluded Property
See attached
EXHIBIT 9.6
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Form of Inventory Report
See attached
