1
EXHIBIT 10.10
FORM OF
LOAN AND SECURITY AGREEMENT
DATED AS OF MAY __, 1997
AMONG
CHIEF AUTO PARTS INC.,
AS BORROWER,
THE LENDERS PARTY HERETO
AND
XXXXXX FINANCIAL, INC.,
AS AGENT
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . 19
1.3 Other Definitional Provisions . . . . . . . . . . . . . 19
SECTION 2. LOANS AND COLLATERAL. . . . . . . . . . . . . . . . . . . . . 20
2.1 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . 20
(A) Revolving Loan . . . . . . . . . . . . . . . . 20
(B) Swingline Loan . . . . . . . . . . . . . . . . 20
(C) Eligible Collateral . . . . . . . . . . . . . . 22
(D) Borrowing Mechanics . . . . . . . . . . . . . . 24
(E) Notes . . . . . . . . . . . . . . . . . . . . . 25
(F) Evidence of Revolving Loan Obligations and
Swingline Loan Obligations. . . . . . . . . . . 25
(G) Letters of Credit . . . . . . . . . . . . . . . 26
(1) Maximum Amount . . . . . . . . . . . . . 26
(2) Reimbursement . . . . . . . . . . . . . 26
(3) Conditions of Issuance . . . . . . . . . 27
(4) Request for Letters of Credit . . . . . 27
(H) Other Letter of Credit Provisions . . . . . . . 27
(1) Obligations Absolute . . . . . . . . . . 27
(2) Nature of Lender's Duties . . . . . . . 28
(3) Liability . . . . . . . . . . . . . . . 28
(I) Defaulting Lenders . . . . . . . . . . . . . . 29
2.2 Interest . . . . . . . . . . . . . . . . . . . . . . . . 30
(A) Rate of Interest. . . . . . . . . . . . . . . . 30
(B) Interest Periods. . . . . . . . . . . . . . . . 31
(C) Computation and Payment of Interest . . . . . . 31
(D) Interest Laws . . . . . . . . . . . . . . . . . 32
(E) Conversion or Continuation . . . . . . . . . . 32
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(A) Unused Line Fee . . . . . . . . . . . . . . . . 33
(B) Letter of Credit Fees . . . . . . . . . . . . . 34
(C) Audit Fees . . . . . . . . . . . . . . . . . . 34
(D) Other Fees and Expenses . . . . . . . . . . . . 34
2.4 Payments and Prepayments . . . . . . . . . . . . . . . . 34
(A) Manner and Time of Payment . . . . . . . . . . 34
(B) Mandatory Prepayments . . . . . . . . . . . . . 35
(1) Overadvance. . . . . . . . . . . . . . . 35
(2) Proceeds of Asset Dispositions . . . . . 35
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(C) Voluntary Prepayments and Repayments . . . . . 36
(D) Payments on Business Days . . . . . . . . . . . 36
2.5 Term of this Agreement . . . . . . . . . . . . . . . . . 36
2.6 Statements . . . . . . . . . . . . . . . . . . . . . . . 36
2.7 Grant of Security Interest . . . . . . . . . . . . . . . 37
2.8 Capital Adequacy and Other Adjustments . . . . . . . . . 37
2.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 37
(A) No Deductions . . . . . . . . . . . . . . . . . 37
(B) Changes in Tax Laws . . . . . . . . . . . . . . 38
(C) Foreign Lenders . . . . . . . . . . . . . . . . 38
2.10 Required Termination and Prepayment . . . . . . . . . . 39
2.11 Optional Prepayment/Replacement of Agent or Lenders in
Respect of Increased Costs . . . . . . . . . . . . . . 39
2.12 Compensation . . . . . . . . . . . . . . . . . . . . . . 40
2.13 Booking of LIBOR Loans . . . . . . . . . . . . . . . . . 41
2.14 Assumptions Concerning Funding of LIBOR Loans . . . . . 41
SECTION 3. CONDITIONS TO LOANS . . . . . . . . . . . . . . . . . . . . . 41
3.1 Conditions to Loans . . . . . . . . . . . . . . . . . . 41
(A) Closing Deliveries . . . . . . . . . . . . . . 41
(B) Security Interests . . . . . . . . . . . . . . 41
(C) Closing Date Availability . . . . . . . . . . . 41
(D) Representations and Warranties . . . . . . . . 42
(E) Fees. . . . . . . . . . . . . . . . . . . . . . 42
(F) No Default . . . . . . . . . . . . . . . . . . 42
(G) Performance of Agreements . . . . . . . . . . . 42
(H) No Prohibition . . . . . . . . . . . . . . . . 42
(I) No Litigation . . . . . . . . . . . . . . . . . 42
(J) No Material Adverse Effect . . . . . . . . . . 42
(K) Opinions of Counsel . . . . . . . . . . . . . . 42
(L) Financial Information . . . . . . . . . . . . . 43
(M) Qualification . . . . . . . . . . . . . . . . . 43
(N) Consents and Terminations . . . . . . . . . . . 43
(O) Evidence of Insurance . . . . . . . . . . . . . 43
(P) Examination of Books. . . . . . . . . . . . . . 43
(Q) Recapitalization. . . . . . . . . . . . . . . . 43
(R) Senior Notes . . . . . . . . . . . . . . . . . 43
(S) Collateral Audit. . . . . . . . . . . . . . . . 44
(T) Environmental Matters . . . . . . . . . . . . . 44
(U) Cash Management . . . . . . . . . . . . . . . . 44
(V) Compliance with Law . . . . . . . . . . . . . . 44
(W) Proceedings; Receipt of Documents . . . . . . . 44
(X) Solvency . . . . . . . . . . . . . . . . . . . 45
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(Y) Capital, Organization, Legal Structure, Taxes . . 45
(Z) Mortgagee WAIVER . . . . . . . . . . . . . . . . 46
(AA) Special Counsel Fees . . . . . . . . . . . . . . 46
(BB) Other Conditions Precedent . . . . . . . . . . . 46
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . 46
4.1 Organization, Powers, Capitalization . . . . . . . . . . . 46
(A) Organization and Powers . . . . . . . . . . . . . 46
(B) Capitalization. . . . . . . . . . . . . . . . . . 46
4.2 Authorization of Borrowing, No Conflict . . . . . . . . . 47
4.3 Financial Condition . . . . . . . . . . . . . . . . . . . 47
4.4 Indebtedness and Liabilities . . . . . . . 47
4.5 Account Warranties . . . . . . . . . . . . . . . . . . . . 48
4.6 Names. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.7 Locations; FEIN. . . . . . . . . . . . . . . . . . . . . . 48
4.8 Title to Properties; Liens . . . . . . . . . . . . . . . . 48
4.9 Litigation; Adverse Facts . . . . . . . . . . . . . . . . 48
4.10 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . 49
4.11 Performance of Agreements . . . . . . . . . . . . . . . . 49
4.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 49
4.13 Intellectual Property. . . . . . . . . . . . . . . . . . . 49
4.14 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . 49
4.15 Environmental Matters . . . . . . . . . . . . . . . . . . 49
4.16 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.17 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 51
4.18 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 52
4.19 Compliance with Laws . . . . . . . . . . . . . . . . . . . 52
4.20 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . 52
4.21 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 52
4.22 Employee Matters . . . . . . . . . . . . . . . . . . . . . 52
4.23 Governmental Regulation . . . . . . . . . . . . . . . . . 53
4.24 Capital Leases . . . . . . . . . . . . . . . . . . . . . . 53
4.25 Co-Op Contracts. . . . . . . . . . . . . . . . . . . . . . 53
4.26 INACTIVE SUBSIDIARY . . . . . . . . . . . . . . . . . . . 54
SECTION 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 54
5.1 Financial Statements and Other Reports . . . . . . . . . . 54
(A) Monthly Financials . . . . . . . . . . . . . . . 54
(B) Quarterly Financials . . . . . . . . . . . . . . 54
(C) Year-End Financials . . . . . . . . . . . . . . . 55
(D) Accountants' Certification and Reports . . . . . 55
(E) Compliance Certificate . . . . . . . . . . . . . 55
(F) Borrowing Base Certificates, Registers and
Journals. . . . . . . . . . . . . . . . . . . . . 56
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(G) Reconciliation Reports, Inventory Reports and
Listings and Agings . . . . . . . . . . . . . . . . . 56
(H) Management Report . . . . . . . . . . . . . . . . . . 56
(I) Appraisals. . . . . . . . . . . . . . . . . . . . . . 56
(J) Government Notices . . . . . . . . . . . . . . . . . 57
(K) Events of Default, etc. . . . . . . . . . . . . . . . 57
(L) Trade Names . . . . . . . . . . . . . . . . . . . . . 57
(M) Locations . . . . . . . . . . . . . . . . . . . . . . 57
(N) Bank Accounts . . . . . . . . . . . . . . . . . . . . 57
(O) Litigation. . . . . . . . . . . . . . . . . . . . . . 57
(P) BUDGETS . . . . . . . . . . . . . . . . . . . . . . . 58
(Q) Senior Note Debt and Other Indebtedness Notices . . . 58
(R) SEC Filings and Press Releases . . . . . . . . . . . 58
(S) Insurance . . . . . . . . . . . . . . . . . . . . . . 58
(T) Other Information . . . . . . . . . . . . . . . . . . 58
5.2 Access to Accountants and Management . . . . . . . . . . . . . 59
5.3 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.4 Collateral Records . . . . . . . . . . . . . . . . . . . . . . 59
5.5 Account Covenants; Verification . . . . . . . . . . . . . . . 59
5.6 Collection of Accounts and Payments . . . . . . . . . . . . . 60
5.7 Endorsement. . . . . . . . . . . . . . . . . . . . . . . . . . 61
5.8 Corporate Existence . . . . . . . . . . . . . . . . . . . . . 61
5.9 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . 61
5.10 Maintenance of Properties; Insurance . . . . . . . . . . . . . 61
5.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 62
5.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 62
5.13 Collateral Locations . . . . . . . . . . . . . . . . . . . . . 63
5.14 Bailees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.15 Use of Proceeds and Margin Security . . . . . . . . . . . . . 63
SECTION 6. FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . 63
6.1 Minimum EBITDA . . . . . . . . . . . . . . . . . . . . . . . . 63
6.2 Fixed Charge Coverage . . . . . . . . . . . . . . . . . . . . 64
SECTION 7. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . 64
7.1 Indebtedness and Liabilities . . . . . . . . . . . . . . . . . 64
7.2 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.3 Transfers, Liens and Related Matters . . . . . . . . . . . . . 66
(A) Transfers . . . . . . . . . . . . . . . . . . . . . . 66
(B) Liens . . . . . . . . . . . . . . . . . . . . . . . . 66
(C) No Negative Pledges . . . . . . . . . . . . . . . . . 66
(D) No Restrictions on Subsidiary transfers to Borrower . 66
7.4 Investments and Loans . . . . . . . . . . . . . . . . . . . . 67
7.5 Restricted Junior Payments . . . . . . . . . . . . . . . . . . 67
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7.6 Restriction on Fundamental Changes . . . . . . . . . . . . . . 67
7.7 Changes Relating to Senior Note Debt . . . . . . . . . . . . . 68
7.8 Transactions with Affiliates . . . . . . . . . . . . . . . . . 69
7.9 Environmental Liabilities . . . . . . . . . . . . . . . . . . 69
7.10 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . 69
7.11 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . 69
7.12 Tax Consolidations . . . . . . . . . . . . . . . . . . . . . . 69
7.13 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.14 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.15 Press Release; Public Offering Materials . . . . . . . . . . . 70
7.16 Certain Bank Accounts. . . . . . . . . . . . . . . . . . . . . 70
SECTION 8. DEFAULT, RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . 70
8.1 Event of Default . . . . . . . . . . . . . . . . . . . . . . . 70
(A) Payment . . . . . . . . . . . . . . . . . . . . . . . 70
(B) Default in Other Agreements . . . . . . . . . . . . . 70
(C) Breach of Certain Provisions . . . . . . . . . . . . 70
(D) Breach of Warranty . . . . . . . . . . . . . . . . . 70
(E) Other Defaults Under Loan Documents . . . . . . . . . 70
(F) Change in Control . . . . . . . . . . . . . . . . . . 71
(G) Involuntary Bankruptcy; Appointment of
Receiver, etc.. . . . . . . . . . . . . . . . . . . . 71
(H) Voluntary Bankruptcy; Appointment of
Receiver, etc . . . . . . . . . . . . . . . . . . . . 71
(I) Liens . . . . . . . . . . . . . . . . . . . . . . . . 71
(J) Judgment and Attachments . . . . . . . . . . . . . . 71
(K) Dissolution . . . . . . . . . . . . . . . . . . . . . 72
(L) Solvency . . . . . . . . . . . . . . . . . . . . . . 72
(M) Injunction. . . . . . . . . . . . . . . . . . . . . . 72
(N) Invalidity of Loan Documents . . . . . . . . . . . . 72
(O) Failure of Security . . . . . . . . . . . . . . . . . 72
(P) Damage, Strike, Casualty . . . . . . . . . . . . . . 72
(Q) Licenses and Permits . . . . . . . . . . . . . . . . 72
(R) Forfeiture. . . . . . . . . . . . . . . . . . . . . . 73
8.2 Suspension of Commitments . . . . . . . . . . . . . . . . . . 73
8.3 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.5 Appointment of Attorney-in-Fact . . . . . . . . . . . . . . . 74
8.6 Limitation on Duty of Agent with Respect to Collateral . . . . 74
8.7 Application of Proceeds . . . . . . . . . . . . . . . . . . . 74
8.8 License of Intellectual Property . . . . . . . . . . . . . . . 75
8.9 Waivers, Non-Exclusive Remedies. . . . . . . . . . . . . . . . 75
SECTION 9. ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . . . . . 75
9.1 Assignments and Participations in Loans. . . . . . . . . . . . 75
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9.2 Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
(A) Appointment . . . . . . . . . . . . . . . . . . . . . 78
(B) Nature of Duties . . . . . . . . . . . . . . . . . . 78
(C) Rights, Exculpation, Etc. . . . . . . . . . . . . . . 79
(D) Reliance . . . . . . . . . . . . . . . . . . . . . . 79
(E) Indemnification . . . . . . . . . . . . . . . . . . . 80
(F) Xxxxxx Individually . . . . . . . . . . . . . . . . . 80
(G) Successor Agent . . . . . . . . . . . . . . . . . . . 80
(1) Resignation . . . . . . . . . . . . . . . . . 80
(2) Appointment of Successor . . . . . . . . . . . 80
(3) Successor Agent . . . . . . . . . . . . . . . 80
(H) Collateral Matters . . . . . . . . . . . . . . . . . 81
(1) Release of Collateral . . . . . . . . . . . . 81
(2) Confirmation of Authority; Execution of
Releases . . . . . . . . . . . . . . . . . . . 81
(3) Absence of Duty . . . . . . . . . . . . . . . 81
(I) Agency for Perfection . . . . . . . . . . . . . . . . 82
(J) Exercise of Remedies. . . . . . . . . . . . . . . . . 82
9.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
9.4 Set Off and Sharing of Payments . . . . . . . . . . . . . . . 82
9.5 Dissemination of Information . . . . . . . . . . . . . . . . . 83
9.6 Return of Payments . . . . . . . . . . . . . . . . . . . . . . 83
9.7 Discretionary Advances . . . . . . . . . . . . . . . . . . . . 83
SECTION 10. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 84
10.1 Expenses and Attorneys' Fees. . . . . . . . . . . . . . . . . . 84
10.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.3 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . 85
10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.5 Survival of Warranties and Certain Agreements . . . . . . . . . 87
10.6 Indulgence Not Waiver . . . . . . . . . . . . . . . . . . . . . 87
10.7 Marshaling; Payments Set Aside. . . . . . . . . . . . . . . . . 87
10.8 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 87
10.9 Independence of Covenants . . . . . . . . . . . . . . . . . . . 88
10.10 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 88
10.11 Lenders' Obligations Several; Independent Nature of Lenders'
Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
10.12 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
10.13 APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . . . 88
10.14 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . 88
10.15 No Fiduciary Relationship; Limitation of Liabilities. . . . . . 88
10.16 CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . . . . 89
10.17 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . 89
10.18 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . 89
10.19 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . 89
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10.20 No Duty . . . . . . . . . . . . . . . . . . . . . 90
10.21 Confidentiality . . . . . . . . . . . . . . . . . . . . . 90
SCHEDULES
Schedule 1.1(A) Other Liens
Schedule 1.1(B) Other Indebtedness
Schedule 1.1(C) Lien States
Schedule 3.1(A) List of Closing Documents
Schedule 4.1(B) Capitalization of Loan Parties
Schedule 4.6 Trade Names (Present and Past Five Years)
Schedule 4.7 Location of Principal Place of Business, Books and Records and
Collateral
Schedule 4.9 Litigation
Schedule 4.13 Intellectual Property
Schedule 4.15 Environmental Matters
Schedule 4.20 Bank Accounts
Schedule 4.21 Subsidiaries
Schedule 4.22 Employee Matters
SCHEDULE 7.4 OTHER INVESTMENTS, LOANS AND ADVANCES
EXHIBITS
Exhibit A Form of Borrowing Base Certificate
Exhibit B Form of Compliance Certificate
Exhibit C Form of Inventory Report
Exhibit D Form of Assignment and Acceptance
Exhibit E Pro Forma
Exhibit F Form of Reconciliation Report
Exhibit G Form of Notice of Borrowing
Exhibit H Form of Revolving Note
Exhibit I Form of Swingline Note
Exhibit J Form of Notice of Conversion/Continuation
EXHIBIT 2.1(C) INVENTORY RESERVES AS OF CLOSING DATE
EXHIBIT 5.1(D) FORM OF ACCOUNTANTS LETTER
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LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT is dated as of May __, 1997
and entered into among CHIEF AUTO PARTS INC., a Delaware corporation
("Borrower"), with its principal place of business at One Lincoln Centre, Suite
200, 0000 XXX Xxxxxxx, Xxxxxx, Xxxxx 00000-0000, the financial institution(s)
listed on the signature pages hereof and their respective successors and
assigns (each individually a "Lender" and collectively "Lenders") and XXXXXX
FINANCIAL, INC., a Delaware corporation (in its individual capacity, "Xxxxxx"),
with offices at 000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, for itself as a
Lender and as Agent. All capitalized terms used herein are defined in Section
1 of this Agreement.
WHEREAS, Borrower desires that Lenders extend a credit
facility to refinance Indebtedness and other amounts owing under the Existing
Credit Agreement, to provide working capital financing to Borrower and to
provide funds for other general corporate purposes of Borrower permitted
hereunder; and
WHEREAS, Borrower desires to secure its obligations under the
Loan Documents by granting to Agent, for benefit of Agent and Lenders, a
security interest in and lien upon certain of Borrower's property;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Borrower, Agent and
Lenders agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. The following terms used in
this Agreement shall have the following meanings:
"Accounts" means all "accounts" (as defined in the UCC),
accounts receivable, contract rights and general intangibles relating thereto,
notes, drafts and other forms of obligations owed to or owned by Borrower
arising or resulting from the sale of goods or the rendering of services.
"Adjusted EBITDA" means for any period [the sum of (a)
any increase (without giving effect to any decrease) on or after April ___,
1997 but on or prior to the last day of such period in Other Accrued
Liabilities plus (b) any increase (without giving effect to any decrease) on or
after April ___, 1997 but on or prior to the last day of such period in those
reserves and liabilities of Borrower and its Subsidiaries of the type included
in Other Noncurrent Liabilities under either or both of the categories
"Store-closing provision" and "Other (including legal)"] EBITDA.
"Affiliate" means any Person (other than Agent or a Lender):
(a) directly or indirectly controlling, controlled by, or under common control
with, any Loan Party; (b) directly or indirectly owning or holding ten percent
(10%) or more of any equity interest in Borrower; (c) ten percent (10%) or
more of whose stock or other equity interest having ordinary voting power for
the election of directors or the power to direct or cause the direction of
management, is directly or indirectly owned or held by Borrower; or (d) which
has a senior executive officer who is also a senior executive officer of
Borrower. For purposes of this definition, "control" (including with
correlative
10
meanings, the terms "controlling", "controlled by" and "under common control
with") means the possession directly or indirectly of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities or other equity interest, or by contract or
otherwise.
"Agent" means Xxxxxx in its capacity as agent for the Lenders
under the Loan Documents and any successor in such capacity appointed pursuant
to subsection 9.2.
"Agent's Account" means ABA No. 0000-0000-0, Account No.
________ at First National Bank of Chicago, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx,
XX 00000, Reference: Xxxxxx Business Credit for the benefit of Chief Auto
Parts Inc.
"Agreement" means this Loan and Security Agreement as it may
be amended, restated, supplemented or otherwise modified from time to time.
"Applicable Margin" means initially one-half of one percent
(.50%) with respect to Base Rate Loans and two percent (2.00%) with respect to
LIBOR Loans, and from and after the first day of the month immediately
following the date of delivery by Borrower to Agent of the financial statements
with respect to the then most recently completed fiscal quarter (commencing
with the fiscal quarter ending June 29, 1998) of Borrower as required under
subsection 5.1(B) (the "Financials"), together with calculations in form and
substance satisfactory to Agent supporting the calculation of the Leverage
Ratio for the period of four consecutive fiscal quarters of Borrower ended with
such most recently completed fiscal quarter (such four fiscal quarter period,
the "Test Period") and a written certification from the chief financial officer
of Borrower to such effect, the Applicable Margin shall mean that amount set
forth below opposite the Leverage Ratio achieved for such Test Period:
Applicable Margin Applicable Margin
Leverage Ratio For Base Rate Loans for LIBOR Loans
-------------- ------------------- ---------------
Equal to or greater than 6.00/1 1.00 2.50
Greater than 5.50/1 and less than 6.00/1 .75 2.25
Greater than 4.50/1 and less than or equal to .50 2.00
5.50/1
Equal to or greater than 4.00/1 and less than or .25 1.75
equal to 4.50/1
Less than 4.00/1 .00 1.50
;provided, that notwithstanding the foregoing the Applicable Margin shall be
one percent (1.00%) with respect to Base Rate Loans and two and one-half
percent (2.50%) with respect to LIBOR Loans at all times (x) on and after the
occurrence and during the continuance of a Default or an Event of Default (and
the Default Rate payable on overdue Obligations as provided in the second
paragraph
2
11
of subsection 2.2(A) shall be determined after giving effect to this proviso)
or (y) after the failure of Borrower to timely deliver the Financials for any
fiscal quarter of Borrower prior to and including the then most recently
completed fiscal quarter of Borrower when required by subsection 5.1(B)
(together with the related calculations and certification required above) and
until the first day of the month following the date of delivery to Agent of the
Financials for the then most recently completed fiscal quarter of Borrower
(together with the related calculations and certification).
"Asset Disposition" means the disposition, whether by sale,
lease, transfer, loss, damage, destruction, condemnation or otherwise, of any
or all of the assets of Borrower or any of its Subsidiaries other than sales of
Inventory in the ordinary course of business.
"Assignee" has the meaning assigned to that term in subsection
9.1(A).
"Assignment and Acceptance" has the meaning assigned to that
term in subsection 9.1(A).
"Availability" means, at any time, the excess of (A) the
lesser of (x) the Revolving Loan Commitments of all Lenders and (y) the
Borrowing Base over (B) the sum of (w) the Revolving Loan, (x) the Swingline
Loan, (y) the Letter of Credit Reserve and (z) with respect to subsections
3.1(C), 5.1(F), 5.6 and 7.6 only, the amount of those payables of Borrower and
its Subsidiaries which at such time remain unpaid beyond customary terms
therefor.
"Bank Letter of Credit" means each letter of credit issued by
a bank [REASONABLY] acceptable to and approved by Agent for the account of
Borrower and supported by a Risk Participation Agreement.
"Base Rate" means a variable rate of interest per annum equal
to the higher of (a) the highest of the "prime rate", "reference rate", "base
rate", or other similar rate announced from time to time by any of The Chase
Manhattan Bank, Citibank, N.A. or First National Bank of Chicago or their
successors (with the understanding that any such rate may merely be a reference
rate and may not necessarily represent the lowest or best rate actually charged
to any customer by any such bank), or (b) the Federal Funds Effective Rate plus
one-half of one percent (.50%).
"Base Rate Loans" means Loans bearing interest at rates
determined by reference to the Base Rate.
"Borrower" has the meaning assigned to that term in the
preamble to this Agreement.
"Borrowing Base" has the meaning assigned to that term in
subsection 2.1(A).
"Borrowing Base Certificate" means a certificate and
assignment schedule duly executed by A Financial Officer of Borrower
appropriately completed and in substantially the form of Exhibit A.
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"Budgets" means Borrower's forecasted consolidated and, with
respect to Borrower and each Restricted Subsidiary, consolidating: (a) balance
sheets; (b) profit and loss statements; (c) cash flow statements; and (d)
capitalization statements, all in such scope, detail and format acceptable to
Agent and the Requisite Lenders and consistent with Borrower's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
"Business Day" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the States of Illinois or
New York, or is a day on which banking institutions located in any such state
are closed, or for the purposes of LIBOR Loans only, a day on which commercial
banks are open for dealings in Dollar deposits in the London, England (U.K.)
market.
"Capital Expenditures" means, with respect to any Person, all
expenditures (including deposits) for, or contracts for expenditures (excluding
contracts for expenditures under or with respect to Capital Leases, but
including cash down payments for assets acquired under Capital Leases)
capitalized on such Person's balance sheet in accordance with GAAP with respect
to any fixed assets or improvements, or for replacements, substitutions or
additions thereto, which have a useful life of more than one year, including
the direct or indirect acquisition of such assets by way of increased product
or service charges, offset items or otherwise.
"Capital Lease" means any lease of any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease for financial reporting purposes in accordance with GAAP, and the
amount of Indebtedness represented by such capital lease shall be the
capitalized amount of such obligation determined in accordance with GAAP.
"Cash Equivalents" means: (a) marketable direct obligations
issued or unconditionally guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (b) commercial paper maturing no more than one year from the date
issued and, at the time of acquisition, having a rating of at least A-1 from
Standard & Poor's Corporation or at least P-1 from Xxxxx'x Investors Service,
Inc.; (c) certificates of deposit or bankers' acceptances maturing within one
year from the date of issuance thereof issued by, or overnight reverse
repurchase agreements from, any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia
having combined capital and surplus of not less than $250,000,000 (a "Cash
Equivalent Bank"); (d) Eurodollar time deposits having a maturity of less than
one year purchased from a Cash Equivalent Bank (whether such deposit is with
such Cash Equivalent Bank or any other Cash Equivalent Bank); and (e)
investments in any mutual fund or money market fund that invests exculsively in
one or more of the foregoing.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), as such law
has been and hereafter may be amended or supplemented.
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"Change of Control" means, [To be conformed to Senior Note Indenture]
"Closing Date" means May __, 1997.
"Collateral" means, collectively, (a) all property or interests in
property in which a Lien has purportedly been granted by Borrower to Agent
pursuant to subsection 2.7 and (b) all other property or interests in property
at any time purportedly granted by Borrower or any other Person in addition to
or in substitution for any of the foregoing as security for the payment of any
of the Obligations.
"Collateral Location" means each store, distribution center, warehouse
or other location, whether owned or leased by Borrower or any of the Restricted
Subsidiaries, at which any Collateral is situated at any time or from time to
time.
"Commitment" or "Commitments" means the commitment or commitments of
Lenders to make Loans as set forth in subsections 2.1(A) and/or 2.1(B) and to
provide Lender Letters of Credit as set forth in subsection 2.1(G).
"Commitment Percentage" means, as to any Lender, and whether or not the
Revolving Loan Commitments are then in effect, the percentage for such Lender
determined under clause (i) of the definition of "Pro Rata Share" (without
regard to the proviso to such definition).
"Compensation Claims" has the meaning assigned to that term in
subsection 4.22.
"Compliance Certificate" means a certificate duly executed by an
Executive Officer or a Financial Officer of Borrower appropriately completed
and in substantially the form of Exhibit B.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or a beneficiary.
"Default" means a condition, act or event that, after notice or lapse of
time or both, would constitute an Event of Default if that condition or event
were not cured or removed within any applicable grace or cure period.
"Default Rate" means, with respect to any Obligations, a rate per annum equal
to two percent (2%) plus the applicable Interest Rate therefor (or with respect
to those Obligations for which no Interest Rate is specified, a rate per annum
equal to two percent (2%) plus the Interest Rate payable on Base Rate Loans).
"Defaulting Lender" has the meaning assigned to that term in subsection
2.1(I)(2).
"EBITDA" means, without duplication, for any period, the following,
each calculated for Borrower and its Subsidiaries on a consolidated basis, in
each instance determined in
5
14
accordance with GAAP, for such period: (a) Net Income; plus (b) any provision
for income or franchise taxes included in the determination of Net Income; plus
(c) Interest Expense deducted in the determination of Net Income; plus (d)
amortization and depreciation expenses deducted in the determination of Net
Income; less (e) extraordinary gains, net of extraordinary losses; plus (f) any
cost attributable to changes in the value of Borrower's Inventory caused by
changes in Borrower's reserves (including purchase accounting inventory
writeups); less (g) any income attributable to changes in the value of
Borrower's Inventory caused by changes in Borrower's reserves (including
purchase accounting inventory writeups).
"Eligible Accounts" has the meaning assigned to that term in subsection
2.1(C).
"Eligible Institution" means (i) a commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia having combined capital and surplus in excess of $100,000,000 as of
the date such Person becomes a Lender, (ii) a savings and loan association or
savings bank organized under the laws of the United States of America or any
state thereof or the District of Columbia having combined capital and surplus
in excess of $100,000,000 as of the date such Person becomes a Lender, (iii) a
commercial bank, savings and loan association, savings bank or similar
financial institution organized under the laws of any other country or any
political subdivision thereof having combined capital and surplus (or the
equivalent) in excess of $100,000,000 (or the equivalent) as of the date such
Person becomes a Lender, provided, that (x) such foreign bank, association or
similar financial institution is acting through a branch or agency located in
the United States of America or (y) such foreign bank, association or similar
financial institution is organized under the laws of a country that is a member
of the Organization for Economic Cooperation and Development or a political
subdivision of such country, (iv) any mutual or other fund which regularly
purchases senior secured debt, (v) any financial institution having total
assets on a consolidated basis of not less than $1,000,000,000 or a net worth
of not less than $50,000,000 which is also an "accredited investor" (as defined
in Regulation D under the Securities Act of 1933) which extends credit or buys
loans as one of its businesses including, but not limited to, insurance
companies, mutual funds, commercial finance companies and lease financing
companies; provided that neither any Person which as of the date such Person
becomes a Lender is a competitor of Borrower in the automotive replacement
parts business nor any Person that as of the date such Person becomes a Lender
owns more than 10% of the issued and outstanding voting capital stock of any
such competitor shall be an Eligible Institution and (vi) any other financial
institution or other entity which is approved in writing by Agent and Borrower.
"Eligible Inventory" has the meaning assigned to that term in subsection
2.1(C).
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of any
Loan Party or any ERISA Affiliate or (b) has at any time within the preceding
six (6) years been maintained for the employees of any Loan Party or any
current or former ERISA Affiliate.
"Environmental Claims" means claims, liabilities, investigations,
litigation, administrative proceedings, judgments or orders relating to
Hazardous Materials.
6
15
"Environmental Laws" means all present and future statutes, ordinances,
orders, rules, regulations or decrees and the like relating to (i)
environmental matters, including those relating to fines, injunctions,
penalties, damages, contribution, cost recovery compensation, losses or
injuries resulting from the release or threatened release of Hazardous
Materials, (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials, or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human , plant or animal health or
welfare, in any manner applicable to Borrower or any of its Restricted
Subsidiaries or any of their respective properties, including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C.Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section
2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7
U.S.C. Section 136 et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.) and the Emergency Planning and Community Right-to-Know
Act (42 U.S.C. Section 11001 et seq.), each as amended or supplemented from
time to time, and any analogous present or future local, state and federal
statutes and regulations promulgated pursuant thereto, each as in effect from
time to time.
"Equipment" means all "equipment" (as defined in the UCC), including,
without limitation, all furniture, furnishings, fixtures, machinery, motor
vehicles, trucks, trailers, vessels, aircraft and rolling stock and all parts
thereof and all additions and accessions thereto and replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Loan Party, means any Person who is
a member of a group which is under common control with any Loan Party, who
together with any Loan Party is treated as a single employer within the meaning
of Section 414(b) and (c) of the IRC.
"Event of Default" means each of the events set forth in subsection 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means the chief executive officer, chief financial
officer or general counsel of Borrower.
"Existing Credit Agreement" means _________________.
"Federal Funds Effective Rate" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
immediately following Business Day by the Federal Reserve Bank of New York or,
if such rate is not published for any Business Day, the average of the
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quotations for the day of the requested Loan received by Agent from three
Federal funds brokers of recognized standing selected by Agent.
"Financial Officer" means the chief financial officer, treasurer,
assistant treasurer, controller or principal accounting officer of Borrower.
"Fiscal Year" means the 52 or 53 week accounting period of Borrower and
its Subsidiaries ending on the Sunday closest to December 31 in each year.
"Fixed Charge Coverage" means, for any period, the quotient of (a)
Fixed Charge Adjusted EBITDA, less Unfinanced Capital Expenditures, less Other
Capitalized Costs, and less any income or franchise taxes of Borrower or any of
its Subsidiaries paid in cash (regardless when accrued) divided by (b) Fixed
Charges. [Fixed Charge Adjusted EBITDA" means, for any period, EBITDA less the
sum of (a) the aggregate amount of cash payments made by Borrower and its
Subsidiaries during such period against or with respect to reserves or
liabilities of the type which at any time were or are included in either or
both of Other Accrued Liabilities and Other Noncurrent Liabilities (other than
reserves and liabilities included therein under the category "Other (including
legal)") plus (b) the greater of (i) zero and (ii) the lesser of (1) the
aggregate amount of cash payments made by Borrower and its Subsidiares during
such period against or with respect to reserves or liabilities of the type
which at any time were or are included in either or both of Other Accrued
Liabilities and Other Noncurrent Liabilities under the category "Other
(including legal)" and (2) the aggregate amount of cash payments in excess of
$10,000,000 made by Borrower and its Subsidiaries on or after April __, 1997
but on or prior to the last day of such period against or with respect to
reserves or liabilities of the type which at any time were or are included in
either or both of Other Accrued Liabilities and Other Noncurrent Liabilities
under the category "Other (including legal)".]
"Fixed Charges" means, without duplication, for any period, the total of
the following for Borrower and its Subsidiaries on a consolidated basis in
accordance with GAAP, each calculated for such period: (a) Interest Expense;
plus (b) scheduled payments of principal with respect to all Indebtedness of
Borrower and its Subsidiaries on a consolidated basis (whether or not actually
made), including, but not limited to, the principal component of any scheduled
payments on Capital Leases, Synthetic Loans and Senior Note Debt (whether or
not actually made); but excluding any repayments of the Loans.
"Funded Debt" means the Senior Note Debt, any Indebtedness refinancing
or refunding any Senior Note Debt, the Loans, Capital Leases of Borrower and
its Subsidiaries and Indebtedness of Borrower and its Subsidiaries secured by a
mortgage, deed of trust or any similar Liens.
"Funding Date" means the date of each funding of a Loan or issuance of a
Lender Letter of Credit.
"GAAP" means generally accepted accounting principles in the United
States of America, including those set forth (i) in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants, (ii) in statements and pronouncements of the
Financial Accounting Standards Board, (iii) in such other statements by such
other entity as approved by a significant segment of the accounting profession,
and (iv) in the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in periodic
reports required to be filed pursuant to Section 13 of the Exchange Act,
including opinions and pronouncements in staff accounting bulletins and similar
written statements from the accounting staff of the SEC. [This definition was
taken from the Senior Note Indenture]
"Guarantor" means each Restricted Subsidiary.
8
17
"Guarantor Security Agreement" means each guarantor security agreement
to be executed and delivered by one or more Guarantors, in a form acceptable to
Agent, as each such agreement may be amended, restated, supplemented or
otherwise modified from time to time.
"Guaranty" means each continuing guaranty by one or more Restricted
Subsidiaries of the payment of the Obligations in a form acceptable to Agent,
as each such agreement may be amended, restated, supplemented or otherwise
modified from time to time.
"Hazardous Material" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
Environmental Laws or regulations as "hazardous substances", "hazardous
materials", "hazardous wastes", "toxic substances" or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity, or
toxicity; (b) oil, petroleum or petroleum derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced waters and
other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; and (d) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
polychlorinated biphenyls.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Xxxxxx" has the meaning assigned to that term in the preamble to this
Agreement.
"Inchoate Indemnity Obligations" means, at any time after the
termination of the Commitments, that portion, if any, of Borrower's Obligations
under subsection 10.2 consisting of indemnities of Borrower which are at such
time contingent, uncertain or unknown.
"Indebtedness", as applied to any Person, means without duplication: (a)
all indebtedness for borrowed money; (b) obligations under leases which in
accordance with GAAP constitute Capital Leases; (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is
due more than six months from the date the obligation is incurred or is
evidenced by a note or similar written instrument; (e) all indebtedness secured
by any Lien on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by that Person
or is non recourse to the credit of that Person, (f) obligations in respect of
letters of credit (including in any event Lender Letters of Credit), (g) any
advances under any factoring arrangement and (h) all indebtedness and
obligations under any Synthetic Leases.
"Intangible Assets" means all intangible assets (determined in
conformity with GAAP) including, without limitation, goodwill, Intellectual
Property, licenses, organizational costs, deferred amounts, covenants not to
compete, unearned income and restricted funds.
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"Intellectual Property" means all present and future designs, patents,
patent rights and applications therefor, trademarks and registrations or
applications therefor, trade names, inventions, copyrights and all applications
and registrations therefor, software or computer programs, license rights,
trade secrets, methods, processes, know-how, drawings, specifications,
descriptions, and all memoranda, notes and records with respect to any research
and development, whether now owned or hereafter acquired, all goodwill
associated with any of the foregoing, and proceeds of all of the foregoing,
including, without limitation, proceeds of insurance policies thereon.
"Intellectual Property Security Agreement" means each intellectual
property security agreement to be executed and delivered by one or more Loan
Parties, in a form acceptable to Agent, as each such agreement may be amended,
restated, supplemented or otherwise modified from time to time.
"Interest Expense" means, for any period, the total interest expense of
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP,
plus, to the extent not included in such total interest expense, and to the
extent incurred by Borrower or its Subsidiaries, (i) interest, (ii) non-cash
interest expense, (iii) commissions, discounts and other fees and charges with
respect to letters of credit and bankers' acceptance financing and (iv) net
costs associated with Hedging Obligations (including amortization of fees) (v)
and interest expense attributable to Synthetic Leases.
"Interest Period" has the meaning assigned to that term in subsection
2.2(B).
"Interest Rate" has the meaning assigned to that term in subsection
2.2(A).
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement or other financial agreement or arrangement
designed solely to protect Borrower or any of its Subsidiaries against
fluctuations in interest rates.
"Inventory" means all "inventory" (as defined in the UCC), including,
without limitation, finished goods, raw materials, work in process and other
materials and supplies used or consumed in a Person's business, and goods which
are returned or repossessed.
"Inventory Report" means a report duly executed by a Financial Officer
appropriately completed and in substantially the form of Exhibit C.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute and all rules and regulations promulgated
thereunder.
"Lender" or "Lenders" has the meaning assigned to that term in the
preamble to this Agreement.
"Lender Letter of Credit" has the meaning assigned to that term in
subsection 2.1(G).
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"Letter of Credit Liability" means, all reimbursement and other
liabilities of Borrower or any of its Subsidiaries with respect to each Lender
Letter of Credit, whether contingent or otherwise, including: (a) the amount
available to be drawn or which may become available to be drawn; (b) all
amounts which have been paid or made available by any Lender issuing a Lender
Letter of Credit or any bank issuing a Bank Letter of Credit to the extent not
reimbursed; and (c) all unpaid interest, fees and expenses related thereto.
"Leverage Ratio" means for any period of four consecutive fiscal
quarters of Borrower (such four fiscal quarter period, the "Test Period") the
ratio of (x) the average amount of Funded Debt outstanding during such period
to (y) Fixed Charge Adjusted EBITDA for such Test Period.
"Letter of Credit Reserve" means, at any time, an amount equal to (a)
the aggregate amount of Letter of Credit Liability with respect to all Lender
Letters of Credit outstanding at such time plus, without duplication, (b) the
aggregate amount theretofore paid by Agent or any Lender under Lender Letters
of Credit and not debited to Borrower's loan account pursuant to subsection
2.1(G)(2) or otherwise reimbursed by Borrower.
"Liabilities" shall have the meaning given that term in accordance with
GAAP and shall include Indebtedness.
"LIBOR" means, for each Interest Period, a rate of interest equal to:
(a) the rate of interest determined by Agent at which deposits
in Dollars for the relevant Interest Period are offered based on
information presented on the Reuters Screen LIBOR Page as of 11:00 A.M.
(London time) on the day which is two (2) Business Days prior to the
first day of such Interest Period; provided that if at least two such
offered rates appear on the Reuters Screen LIBOR Page in respect of such
Interest Period, the arithmetic mean of all such rates (as determined by
Agent) will be the rate used; provided further that if Reuters ceases to
provide LIBOR quotations, such rate shall be the average rate of
interest determined by Agent at which deposits in Dollars are offered
for the relevant Interest Period by The Chase Manhattan Bank, Citibank,
N.A. and First National Bank of Chicago or their successors to prime
banks in the London interbank market as of 11:00 A.M. (London time) on
the applicable interest rate determination date, divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior
to the beginning of such Interest Period (including, without limitation,
basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or
other governmental authority having jurisdiction with respect thereto,
as now and from time to time in effect) for Eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) which are required to be maintained by a member bank of the
Federal Reserve System:
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(such rate to be adjusted to the nearest one sixteenth of one percent (1/16 of
1%) or, if there is not a nearest one sixteenth of one percent (1/16 of 1%), to
the next higher one sixteenth of one percent (1/16 of 1%).
"LIBOR Loans" means at any time that portion of the Loans bearing
interest at rates determined by reference to LIBOR.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Lien State" means all those States listed on Schedule 1.1(C) plus any
other State in which on or subsequent to the Closing Date a landlord's Lien for
unpaid rent or a warehouseman's lien for unpaid storage charges is recognized,
by statute or common law, as prior in right and claim to the rights and claims
of Agent as secured party on behalf of Agent and Lenders in respect of any
Inventory."Lien Waiver" means a written agreement, in form and substance
acceptable to Agent, pursuant to which a Person shall waive or subordinate its
rights and claims as landlord or public warehouseman, as the case may be, in
any Inventory of Borrower and/or any Restricted Subsidiary, as applicable, for
unpaid rents or unpaid storage charges, as appropriate, grant access to Agent
for the repossession and sale of such Inventory and make other agreements
relative thereto.
"Loan" or "Loans" means an advance or advances under the Swingline Loan
Commitment or the Revolving Loan Commitment.
"Loan Documents" means this Agreement, the Revolving Notes, the
Swingline Note, the Guaranties, the Guarantor Security Agreements, the Pledge
Agreements, the Intellectual Property Security Agreements and all other
instruments, documents and agreements executed by or on behalf of Borrower or
any Guarantor or other Loan Party and delivered concurrently herewith or at any
time hereafter to or for Agent or any Lender in connection with the Loans, any
Lender Letter of Credit, and other transactions contemplated by this Agreement,
all as amended, restated, supplemented or modified from time to time.
"Loan Party" means each of Borrower, the Guarantors and any other Person
(other than Agent or any Lender) which is or becomes a party to any Loan
Document.
"Loan Year" means each period of twelve (12) consecutive months
commencing on the Closing Date and on each anniversary thereof.
"Material Adverse Effect" means a material adverse effect upon (a) the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of the Loan Parties taken as a whole or (b) the ability of the Loan
Parties taken as a whole to perform their obligations under the Loan Documents.
It is acknowledged and agreed that payment of Compensation Claims
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shall be deemed not to have a Material Adverse Effect unless such payments
shall result in or constitute an Event of Default.
"Maximum Revolving Loan Amount" has the meaning assigned to that term in
subsection 2.1(A).
"Net Cash Proceeds" means, with respect to any Asset Disposition, cash
received by Borrower or any of its Subsidiaries from such Asset Disposition
(including cash received as consideration for the assumption or incurrence of
liabilities incurred in connection with or in anticipation of such Asset
Disposition, and cash proceeds received by means of deferred payment of
principal pursuant to a note, installment receivable or otherwise, but only as
and when received), after (a) provision for all income, title, recording or
other taxes measured by or resulting from such Asset Disposition, (b) payment
of all brokerage commissions, reasonable investment banking and legal fees and
other fees and expenses related to such Asset Disposition, (c) deduction of
appropriate amounts to be provided by Borrower or the applicable Subsidiary as
a reserve, in accordance with GAAP, against any liabilities associated with the
assets sold or disposed of in such Asset Disposition and retained by Borrower
or such Subsidiary after such Asset Disposition, including, without limitation,
pension and other post-employment benefit liabilities and liabilities related
to environmental matters or against any indemnification obligations associated
with the assets sold or disposed of in such Asset Disposition and (d) amounts
paid to satisfy Indebtedness (other than the Obligations and Senior Note Debt
or any refinancing or refunding thereof) which are required to be repaid in
connection with any such Asset Disposition.
"Net Income" means, for any period, the net income (or loss) of Borrower
and its Subsidiaries on a consolidated basis after provision for or benefit
from income and franchise taxes determined in accordance with GAAP.
"Notes" means the Revolving Notes and the Swingline Note.
"Notice of Borrowing" has the meaning assigned to that term in
subsection 2.1(D).
"Obligations" means all obligations, liabilities and indebtedness of
every nature of each Loan Party from time to time owed to Agent or to any
Lender under the Loan Documents including the principal amount of all debts,
claims and indebtedness (whether incurred before or after the Termination
Date), accrued and unpaid interest and all fees, costs and expenses, whether
primary, secondary, direct, contingent, fixed or otherwise, heretofore, now
and/or from time to time hereafter owing, due or payable including, without
limitation, all interest, fees, cost and expenses accrued or incurred after the
filing of any petition under any bankruptcy or insolvency law.
"Other Accrued Liabilities" means those accrued liabilities of Borrower
and its Subsidiaries which are of the type that would be included as part of
"Other accrued liabilities" on a Fiscal Year-end audited balance sheet of
Borrower.
"Other Capitalized Costs" for Borrower and its Subsidiaries means, to
the extent not included in Capital Expenditures, (i) all site selection costs,
(ii) all pre-opening expenses in excess of, in the aggregate, the percent of
new stores open year to date multiplied by $10,000 and (iii) all internal and
external software costs as they relate to projects outside the ordinary course
of business.
"Other Noncurrent Liabilities" mean those noncurrent liabilities of
Borrower and its Subsidiaries which are of the type that would be included as
part of "Other noncurrent liabilities" on a Fiscal Year-end audited balance
sheet of Borrower.
"Permitted Encumbrances" means the following types of Liens: (a) Liens
(other than Liens relating to Environmental Claims or ERISA) for taxes,
assessments or other governmental
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charges (i) not yet delinquent or (ii) which are being contested in good faith
by appropriate proceedings promptly instituted and diligently conducted for
which appropriate reserves in accordance with GAAP are established on the books
of Borrower or the appropriate Restricted Subsidiary and which do not in
Agent's judgment create a risk of foreclosure or sale of any property; (b)
statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen,
repairmen and other similar Liens imposed by law, which are incurred in the
ordinary course of business (i) for sums not more than thirty (30) days
delinquent or (ii) which are being diligently contested in good faith by
appropriate proceedings for which appropriate reserves in accordance with GAAP
are established on the books of Borrower or the appropriate Restricted
Subsidiary and which do not in Agent's judgment create a risk of foreclosure or
sale of any property and which secure amounts not to exceed $________ in the
aggregate at any time; provided that Agent may, in the reasonable exercise of
its credit judgment, or at the direction of the Requisite Lenders, acting in
the reasonable exercise of their collective judgment, Agent shall, establish a
reserve (including, as applicable, a Rent Reserve), bond or other appropriate
provision reasonably satisfactory to Agent or the Requisite Lenders, as
appropriate, therefor; (c) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money); (d) minor title defects, easements, licenses, zoning
restrictions, encroachments, rights-of-way, restrictions, and other similar
charges or encumbrances on real property not interfering in any material
respect with the ordinary conduct of the business of any Loan Party or any of
its Subsidiaries; (e) Liens for purchase money obligations, provided that (i)
the purchase of the asset subject to any such Lien is not prohibited under
this Agreement, (ii) the Indebtedness secured by any such Lien is permitted
under subsection 7.1, (iii) the principal amount secured by each such Lien does
not exceed the unpaid purchase price for such asset, (iv) such Lien secures the
obligation to pay the purchase price of such asset only and (v) such Lien
encumbers only the asset so purchased; (f) Liens in favor of Agent, on behalf
of Agent and Lenders, (g) Liens set forth on Schedule 1.1(A) (but not any
increase in the principal amount secured by any such Liens or the coverage to
other property or assets); (h) Liens to secure any refinancing of the
Indebtedness set forth on Schedule 1.1(B) relating to the Industrial Revenue
Bonds on the Seagoville, Texas facility, provided that (i) the Indebtedness
refinancing such bond Indebtedness is permitted under subsection 7.1 and (ii)
the Liens securing such new Indebtedness secure only such new Indebtedness and
do not extend to or cover any property or assets other than the property and
assets securing the refinanced bond Indebtedness; (i) Liens in favor of Agent
or the issuer of a Bank Letter of Credit encumbering documents of title and the
property covered thereby securing obligations in respect of letters of credit
permitted to be outstanding hereunder (it being understood that, so long as any
such Lien covers Inventory, in no event shall such Inventory be Eligible
Inventory); (j) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods in the ordinary course of business of Borrower or its
Restricted Subsidiaries (the aggregate amount of all such custom duties at any
one time not to exceed $_____); (k) condemnation, eminent domain or similar
proceedings affecting any real property which are not reasonably expected to
have a Material Adverse Effect; (l) any attachment or judgment Lien so long as
(i) no Event of Default is continuing as a result of or with respect to such
attachment or judgment
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and (ii) the enforcement of such Lien is effectively stayed; (m) operating
leases or subleases of real property and Equipment, including restrictions,
subordinations and other encumbrances incidental thereto, granted to or by
others not interfering in any material respect with the ordinary conduct of the
business of Borrower or any of its Restricted Subsidiaries; (n) Liens arising
from filing precautionary UCC financing statements relating solely to operating
leases not prohibited hereby; and (o) other Liens on assets and properties not
constituting Collateral or capital stock of any of the Borrower's Subsidiaries
securing Indebtedness permitted hereunder (other than Subordinated Debt, the
Senior Note Debt or any replacement, refunding or refinancing thereof) in an
aggregate principal amount not exceeding $5,000,000 at any time outstanding.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions
thereof.
"Pledge Agreement" means each equity pledge agreement executed and
delivered by Borrower or one or more Restricted Subsidiaries, in favor of
Agent, on behalf of Agent and Lenders, in form and substance satisfactory to
Agent.
"Pro Forma" means the unaudited consolidated balance sheet of Borrower
and its Subsidiaries as of the end of the monthly accounting period of Borrower
most recently closed prior to the Closing Date after giving effect to the
transactions contemplated by this Agreement. The Pro Forma is annexed hereto
as Exhibit E.
"Pro Rata Share" means with respect to any Lender the percentage
obtained by dividing (i) the Revolving Commitment of such Lender by (ii) the
Revolving Commitments of all Lenders, as such percentage may be adjusted by
assignments permitted pursuant to subsection 9.1; provided, however, if the
Revolving Commitments are terminated pursuant to the terms hereof, then "Pro
Rata Share" means the percentage obtained by dividing (x) the aggregate amount
of such Lender's portion of the Revolving Loan by (y) the aggregate amount of
the Revolving Loan.
"Purchase Money Indebtedness" means any Indebtedness of Borrower or any
Subsidiary of Borrower incurred in connection with its purchase, construction
or improvement of any machinery, equipment, or real property solely for the
purpose of financing such purchase, construction or improvement constituting
either the deferred purchase price of the property so purchased, constructed or
improved or money borrowed in respect thereof; but, expressly excluding
herefrom any Capital Leases or Loans.
"Recapitalization" means the recapitalization of Borrower as of the
Closing Date as described in the Form S-1 filed by Borrower with the SEC on May
5, 1997, prepared in connection with the issuance of the Senior Notes.
"Reconciliation Report" means a report duly executed by an Executive
Officer or Financial Officer appropriately completed and in substantially the
form of Exhibit F.
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"Rent Reserve" means a reserve established by Agent, in the reasonable
exercise of its credit judgment, or the direction of the Requisite Lenders,
acting in the reasonable exercise of their collective judgment, of up to the
sum of three (3) months' rent at each affected leased Collateral Location and
three (3) months' average storage charges at each affected Collateral Location
which is a public warehouse, as determined in accordance with clauses (7) and
(8) of the definition of Eligible Inventory.
"Requisite Lenders" means Lenders holding or being responsible for
fifty-one percent (51%) or more of the Revolving Commitments (or if the
Revolving Commitments are terminated, of the Revolving Loan); provided that if
at any time there are only two Lenders, then "Requisite Lenders" means both
such Lenders.
"Restricted Junior Payment" means: (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Borrower or any of its Subsidiaries now or hereafter outstanding,
except a dividend payable solely with shares of the class of stock on which
such dividend is declared; (b) any payment or prepayment of principal of,
premium, if any, or interest on, or any redemption, conversion, exchange,
retirement, defeasance, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any Senior Note Debt , any
Indebtedness refinancing or refunding any Senior Note Debt or any subordinated
debt or any shares of any class of stock of Borrower or any of its Subsidiaries
now or hereafter outstanding, or the issuance of a notice of an intention to do
any of the foregoing; (c) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Borrower or any of its Subsidiaries now or
hereafter outstanding; and (d) any payment by Borrower or any of its
Subsidiaries of any management, consulting or similar fees to any Affiliate,
whether pursuant to a management agreement or otherwise.
"Restricted Subsidiary" means each Subsidiary of Borrower other than any
Subsidiary of Borrower created or acquired after the Closing Date which the
Requisite Lenders (in their sole discretion) agree in writing shall not
constitute a Restricted Subsidiary; provided that so long as CAP Merger Sub
Inc. shall not own any cash and other assets and properties with an aggregate
value in excess of $_______________, such Subsidiary shall not constitute a
Restricted Subsidiary.
"Retail Store Inventory" means at any time, with respect to Inventory of
Borrower, Inventory of Borrower which is located at any store of Borrower and,
with respect to any Restricted Subsidiary, Inventory of such Restricted
Subsidiary which is located at any store of such Restricted Subsidiary.
"Revolving Advance" means each advance made by Lender(s) pursuant to
subsection 2.1(A).
"Revolving Loan" means the outstanding balance of all Revolving Advances
and any amounts added to the principal balance of the Revolving Loan pursuant
to this Agreement.
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"Revolving Loan Commitment" means (a) as to any Lender, the commitment
of such Lender to make Revolving Advances pursuant to subsection 2.1(A), and to
purchase participations in Swingline Advances pursuant to subsection
2.1(B)(2)(ii) and in Lender Letters of Credit pursuant to subsection 2.1(G) in
the aggregate amount set forth on the signature page of this Agreement opposite
such Lender's signature or in the most recent Assignment and Acceptance (or
after giving effect thereto), if any, executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make Revolving Advances and
to purchase participations in Swingline Advances and Lender Letters of Credit.
"Revolving Note" means each promissory note of Borrower in substantially
the form of Exhibit H, issued pursuant to subsection 2.1(E).
"Risk Participation Agreement" has the meaning assigned to that term in
subsection 2.1(G).
"SEC" means the Securities and Exchange Commission. "Senior Note Debt"
means all Indebtedness owing by Borrower and its Subsidiaries under the Senior
Notes and other Senior Note Documents.
"Senior Note Documents" mean the Senior Notes, the Senior Note Indenture
and all documents, instruments and agreements executed and delivered in
connection therewith, each as amended, modified, supplemented or restated from
time to time in accordance with the terms thereof and hereof.
"Senior Note Indenture" means the Indenture, dated as of May __, 1997,
between Borrower and First Trust National Association, as trustee, as amended,
modified, supplemented or restated from time to time in accordance with the
terms thereof and hereof.
"Senior Notes" means the ___% Senior Notes due 2005 to be issued by
Borrower pursuant to the Senior Note Indenture, as amended, modified,
supplemented, restated, replaced or substituted for from time to time in
accordance with the terms thereof and hereof.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%) of
the total voting power of shares of stock (or equivalent ownership or
controlling interest) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof.
"Subordinated Debt" means any unsecured Indebtedness of Borrower which
(a) is junior in right of payment to the Obligations in a manner satisfactory
to the Requisite Lenders, (b) bears interest at no more than an amount
acceptable to, and approved in writing by, the Requisite Lenders and (c) is
governed by provisions (including subordination provisions, interest payment
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provisions, amortization schedules, covenants, events of default and maturity
date) acceptable to the Requisite Lenders; provided, that in no event shall any
Subordinated Debt have any scheduled amortization prior to one year after the
earlier of (A) the Termination Date or (B) the repayment in full of the
Obligations and termination of the Commitments.
"Swingline Advance" means each advance made by Swingline Lender under
the Swingline Loan Commitment pursuant to subsection 2.1(B).
"Swingline Lender" means Xxxxxx, or if Xxxxxx shall resign as Swingline
Lender, another Lender selected by Agent and reasonably acceptable to Borrower
which is agreeable to make Swingline Advances under the Swingline Loan
Commitment.
"Swingline Loan" means the outstanding balance of all Swingline
Advances.
"Swingline Loan Commitment" means at any time the lesser of (i)
$[10,000,000], (ii) the Revolving Loan Commitments of all Lenders at such time
and (iii) that amount which is the Borrowing Base at such time less the sum of
(x) the Revolving Loan at such time, plus (y) the Letter of Credit Reserve at
such time.
"Swingline Note" means the promissory note of Borrower in substantially
the form of Exhibit I, issued pursuant to subsection 2.1(E).
"Synthetic Lease" means [definition to be determined].
"Termination Date" means the date this Agreement is terminated as set
forth in subsection 2.5.
"Transaction Documents" has the meaning assigned to that term in
subsection 4.1(A).
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of New York, as amended from time to time, and any successor
statute.
"Unfinanced Capital Expenditures" means Capital Expenditures of Borrower
and its Subsidiaries which do not constitute Capital Leases and which were not
financed with Purchase Money Indebtedness.
"Valuation Method" means with respect to any Inventory of Borrower or a
Restricted Subsidiary in respect of which the value thereof is to be
determined for purposes of the defined term "Eligible Inventory", the following
method of valuation calculated in accordance with GAAP applied on a consistent
basis: (i) for Warehouse Inventory, cost (as reflected in the perpetual
inventory) as calculated on a weighted average cost basis and (ii) for Retail
Store Inventory, the lower of (a) cost (as reflected in Borrower's or the
Restricted Subsidiary's, as appropriate, general ledger) at such time or (b)
market value at such time, each as determined on the basis of the retail method
of accounting. It is understood and agreed that, for purposes of the
calculation in clause (ii) above, the cost of such
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Retail Store Inventory amount shall be calculated based on the total amount of
such inventory at retail multiplied by the Cost Complement as at any date of
determination, [where the Cost Complement shall mean the ratio of cost dollars
to retail dollars for the sum of the Retail Store Inventory balance as at any
date of determination plus year to date purchases and markups].
"Warehouse Inventory" means at any time, with respect to Inventory of
Borrower, Inventory of Borrower which is located at Borrower's Cerritos,
California or Seagoville, Texas warehouses or at any other warehouse owned or
leased by Borrower and, with respect to Inventory of any Restricted Subsidiary,
Inventory of such Restricted Subsidiary which is located at a warehouse owned
or leased by such Restricted Subsidiary.
1.2 Accounting Terms. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Financial statements and other information
furnished to Agent or any Lender pursuant to subsection 5.1 shall be prepared
in accordance with GAAP (as in effect at the time of such preparation) on a
consistent basis. In the event any "Accounting Changes" (as defined below)
shall occur and such changes affect financial covenants, standards or terms in
this Agreement, then Borrower and Lenders agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect
such Accounting Changes with the desired result that the criteria for
evaluating the financial condition of Borrower and its Subsidiaries shall be
the same after such Accounting Changes as if such Accounting Changes had not
been made, and until such time as such an amendment shall have been executed
and delivered by Borrower and Requisite Lenders, (A) all financial covenants,
standards and terms in this Agreement shall be calculated and/or construed as
if such Accounting Changes had not been made, and (B) Borrower shall prepare
separate footnotes to accompany each Compliance Certificate and the financial
statements required to be delivered hereunder that show the differences between
the financial statements delivered (which reflect such Accounting Changes) and
the basis for calculating financial covenant compliance (without reflecting
such Accounting Changes). "Accounting Changes" means: (a) changes in
accounting principles required by GAAP and implemented by Borrower or any of
its Subsidiaries; (b) changes in accounting principles recommended by
Borrower's certified public accountants, or concurred in by such accountants,
and implemented by Borrower or any of its Subsidiaries; and (c) changes in
carrying value of Borrower's or any of its Subsidiaries' assets, liabilities or
equity accounts resulting from any adjustments that, in each case, were
applicable to, but not included in, the Pro Forma. All such adjustments
resulting from expenditures made subsequent to the Closing Date (including, but
not limited to, capitalization of costs and expenses or payment of pre-Closing
Date liabilities) shall be treated as expenses in the period the expenditures
are made and deducted as part of the calculation of EBITDA in such period.
1.3 Other Definitional Provisions. References to "Sections",
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference. In this Agreement, words importing any gender include the
other genders; the words "including," "includes" and "include" shall be deemed
to be followed by the words "without
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limitation"; references to agreements and other contractual instruments shall
be deemed to include subsequent amendments, assignments, and other
modifications thereto, but only to the extent such amendments, assignments and
other modifications are not prohibited by the terms of this Agreement or any
other Loan Document; references to Persons include their respective permitted
successors and assigns or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.
SECTION 2. LOANS AND COLLATERAL
2.1 Loans.
(A) Revolving Loan. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of
Borrower and the other Loan Parties set forth herein and in the other Loan
Documents, each Lender, severally, agrees to lend to Borrower from time to time
its Pro Rata Share of each Revolving Advance. The aggregate amount of all
Revolving Loan Commitments shall not exceed at any time $100,000,000 as reduced
by Section 2.4(B). Amounts borrowed under this subsection 2.1(A) may be repaid
and reborrowed at any time prior to the earlier of (i) the termination of the
Revolving Loan Commitment pursuant to subsection 8.3 or (ii) the Termination
Date. Except as otherwise provided herein (including, without limitation,
subsection 2.1(B)), no Lender shall have any obligation to make an advance
under this subsection 2.1(A) to the extent such advance would cause the
Revolving Loan (after giving effect to any immediate application of the
proceeds thereof) to exceed the Maximum Revolving Loan Amount.
(1) "Maximum Revolving Loan Amount" means, as of any
date of determination, the lesser of (a) the Revolving Loan Commitments of all
Lenders minus the Letter of Credit Reserve, and the Swingline Loan and (b) the
Borrowing Base minus the Letter of Credit Reserve and the Swingline Loan;
provided that for purposes of repayment to Swingline Lender of a Swingline
Advance with proceeds of a Revolving Advance pursuant to subsection
2.1(B)(2)(i)(III), "Maximum Revolving Loan Amount" means, after giving effect
to the concurrent repayment of such Swingline Advance with the proceeds of a
Revolving Advance under such subsection 2.1(B)(2)(i)(III), $100,000,000 minus
the Letter of Credit Reserve and the Swingline Loan.
(2) "Borrowing Base" means, as of any date of
determination, an amount equal to the sum of (a) from and after the date
Borrower and Agent agree in writing that this clause (a) shall become effective
(which agreement of Agent shall be in its absolute and sole discretion), up to
eighty percent (80%) of Eligible Accounts plus (b) subject to the last
sentence of subsection 2.1(C), sixty percent (60%) of Eligible Inventory, and
less in each case such reserves as Agent in its reasonable discretion may elect
to establish.
(B) Swingline Loan. (1) Subject to the terms and conditions
of this Agreement and in reliance upon the representations and warranties of
Borrower and the other Loan Parties set forth herein and in the other Loan
Documents, Swingline Lender, in its individual capacity, agrees
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to lend to Borrower, from time to time on and after the Closing Date and before
the earlier of (i) the termination of the Swingline Loan Commitment pursuant to
subsection 8.3 or (ii) the Termination Date, Swingline Advances, which
Swingline Advances (i) shall be solely Base Rate Loans, (ii) shall not exceed
in the aggregate at any time outstanding the Swingline Loan Commitment, (iii)
shall be payable as provided in subsection 2.1(B)(2) or as otherwise provided
herein, (iv) shall be in an amount not less than $100,000, and (v) shall be
made on the dates specified in the written or telephonic notice described in
subsection 2.1(D).
(2) (i) (I) Subject to subsection 2.1(B)(2)(ii) below, in the
event that on any Business Day Swingline Lender desires that all or any portion
of one or more Swingline Advances be paid (Swingline Lender agreeing that it
shall require that the Swingline Loan be paid down to $250,000 or less at least
once every week), Swingline Lender shall promptly notify Agent to that effect
and indicating the portion of the Swingline Advance(s) to be paid.
(II) Agent agrees to promptly transmit to Lenders the
information contained in each notice received by Agent under subsection
2.1(B)(2)(i)(I), and shall concurrently notify Lenders of each Lender's Pro
Rata Share of the obligation to make a Revolving Advance to pay the Swingline
Advance(s) (or portion thereof) to be paid.
(III) Each of the Lenders hereby unconditionally and irrevocably
agrees to fund to Agent for the benefit of Swingline Lender, in lawful money of
the United States and in same day funds, not later than 1:00 p.m. Central time
on the Business Day immediately following the Business Day of such Lender's
receipt of such notice from Agent (provided that if any Lender shall receive
such notice at or prior to 11:00 a.m. Central time on a Business Day, such
funding shall be made by such Lender on such Business Day), such Lender's Pro
Rata Share of a Revolving Advance (which Revolving Advance shall initially be a
Base Rate Loan and shall be deemed to be requested by Borrower) in the
principal amount of such portion of the Swingline Advances which are required
to be paid under subsection 2.1(B)(2)(i)(I) above pursuant to the terms of this
Agreement relating to the borrowing of Revolving Advances (regardless, however,
of whether the conditions precedent thereto set forth in Section 3 are then
satisfied and whether or not Borrower has provided a notice of borrowing under
subsection 2.1(D) and whether or not any Revolving Loan Commitment is then in
effect, any Default or Event of Default exists or all or any of the Loans have
been accelerated, but subject to subsection 2.1(B)(2)(ii) and subject to the
limitation contained in the definition of Maximum Revolving Loan Amount), and
the proceeds of such Revolving Advance shall be immediately paid over to Agent
for the benefit of Swingline Lender for application to the Swingline Loan.
(ii) In the event that an Event of Default of the type
described in subsection 8.1(G) or (H) hereof shall occur with respect to
Borrower, no further Revolving Advances of the type described in subsection
2.1(B)(2)(i) shall be made (so long as any such Event of Default shall be
continuing), and each of the Lenders (other than Swingline Lender) shall be
deemed to have irrevocably, unconditionally and immediately purchased from
Swingline Lender such Lender's pro rata share of the Swingline Loan outstanding
as of the date of the occurrence of such Event of Default. Each Lender shall
effect such purchase by making available an amount equal to its
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participation on the date of such purchase in U.S. dollars in immediately
available funds at the office of Swingline Lender located at 000 Xxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000 or such other office as Swingline Lender may from time
to time direct for the account of Swingline Lender. In the event any Lender
fails to make available to Swingline Lender when due the amount of such
Lender's participation in the Swingline Loan, Swingline Lender shall be
entitled to recover such amount on demand from such Lender together with
interest at the Federal Funds Effective Rate (unless such amount is not paid
within three Business Days of such demand, in which case such interest shall be
payable (both before and after such third Business Day) at the Base Rate).
(iii) Each purchase made pursuant to subsection
2.1(B)(2)(ii) by a Lender shall be made without recourse to Swingline Lender,
and, except as to the absence of liens created by Swingline Lender on the
Swingline Loan and Swingline Lender's right to effect such sale, without
representation or warranty of any kind, and shall be effected and evidenced
pursuant to documents reasonably acceptable to Swingline Lender.
(iv) The obligations of the Lenders under this
subsection 2.1(B)(2) shall be absolute, irrevocable and unconditional, shall be
made under all circumstances and shall not be affected, reduced or impaired for
any reason whatsoever, including (without limitation): (1) any Default, Event
of Default, misrepresentation, negligence, misconduct or other action or
inaction of any kind by any of the Loan Parties or any other Person, whether
in, under or in connection with this Agreement or any other of the Loan
Documents; (2) any extension, renewal, release or waiver of the time of
performance of or compliance with any of the obligations or other provisions
hereof or of any other Loan Document; (3) any settlement, compromise or
subordination of any or all of the Obligations to the claims of others, or any
failure by Agent, Swingline Lender or other Lenders to mitigate damages; (4)
any amendment, modification or other waiver of any one or more of the Loan
Documents; (5) the insolvency, bankruptcy, reorganization or cessation of
existence of any of the Loan Parties; (6) impossibility or illegality of
performance or the lack of genuineness, validity, legality or enforceability of
any of this Agreement or the other Loan Documents, or any term thereof or any
other agreement or instrument relating thereto for any reason, or the lack of
power or authority of any party to enter into any of the Loan Documents; (7)
any defect in the title to or lien on the Collateral in favor of Agent; (8) any
dispute, setoff, recoupment, counterclaim or other defense or right any Lender
may have at any time, whether against Agent, Swingline Lender, any other Lender
or any of the Loan Parties; (9) any merger or consolidation of any of the Loan
Parties or any Lender, or any sale, lease or transfer of any or all of the
assets of any such Person; or (10) any other circumstances whether similar or
dissimilar to any of the foregoing.
(C) Eligible Collateral. "Eligible Accounts" means, as at any
date of determination, the aggregate of all Accounts that Agent, in the
reasonable exercise of its credit judgment, deems to be eligible or, at the
direction of the Requisite Lenders, acting in the reasonable exercise of their
collective credit judgment, deems to be eligible, for borrowing purposes.
"Eligible Inventory" means, as at any date of determination, the
value (determined at the applicable Valuation Method) of all Inventory
consisting of goods held for sale in the ordinary course of Borrower's or a
Restricted Subsidiary's, as appropriate, business which have been
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scheduled to Agent in accordance with subsection 5.1(G) owned by and in the
possession of Borrower or such Restricted Subsidiary, respectively, and located
in the United States of America; except that the following Inventory shall not
be considered "Eligible Inventory":
(1) Inventory with respect to which Agent does not have
a valid, first priority (subject to Permitted Encumbrances) and fully perfected
security interest;
(2) Inventory with respect to which there exists any
Lien (other than Permitted Encumbrances) in favor of any Person other than
Agent on behalf of Agent and Lenders;
(3) Inventory produced in violation of the Fair Labor
Standards Act and subject to the so-called "hot goods" provisions contained in
Title 29 U.S.C. 215(a);
(4) Inventory which consists of supplies or warranty
returns, or which is obsolete, unmerchantable or otherwise not in good and
saleable condition;
(5) Inventory with respect to which any covenant,
representation or warranty contained in this Agreement or in any other Loan
Document has been breached (unless cured or waived in writing);
(6) Inventory which was purchased by Borrower or a
Restricted Subsidiary in or as part of a "bulk" transfer of assets of the
seller (unless (a) there are no "bulk" transfer laws applicable thereto or (b)
the seller and Borrower or such Restricted Subsidiary, as appropriate, have
complied with all applicable "bulk" transfer laws or Borrower or such
Restricted Subsidiary, as appropriate, has been provided an indemnity agreement
reasonably acceptable to, and assigned to, Agent);
(7) If declared to be an eligibility factor by Agent in
the reasonable exercise of its credit judgment or at the direction of the
Requisite Lenders in the reasonable exercise of their collective credit
judgment, Inventory located at any leased location or public warehouse that was
a Collateral Location on the Closing Date and is in a Lien State unless (A) a
Rent Reserve applies thereto or (B) Borrower has provided Agent with a Lien
Waiver with respect thereto;
(8) If declared to be an eligibility factor by Agent in
the reasonable exercise of its credit judgment or at the direction of the
Requisite Lenders in the reasonable exercise of their collective credit
judgment, Inventory located at any leased location or public warehouse that was
not a Collateral Location on the Closing Date, whether or not in a Lien State,
unless (A) a Rent Reserve applies thereto or (B) Borrower has provided Agent
with a Lien Waiver with respect thereto;
(9) Inventory which is consigned;
(10) Inventory which is subject to any purchase money
Lien other than in Agent's favor (including, in this respect, any Lien
otherwise constituting a Permitted Encumbrance); and
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(11) Any other Inventory which from time to time Agent,
in the reasonable exercise of its credit judgment, may declare to be ineligible
or, at the direction of the Requisite Lenders, acting in the reasonable
exercise of their collective credit judgment, shall declare to be ineligible,
for purposes hereof, in each instance after notice thereof by Agent to Borrower
delivered to Borrower not less than five (5) Business Days prior to the
effective date of such declaration;
less the Rent Reserve and any other reserves on the amount of Eligible
Inventory imposed by Agent, in the reasonable exercise of its credit judgment
or, at the direction of the Requisite Lenders, acting in the reasonable
exercise of their collective credit judgment, at any time or from time to time
(it being agreed that the reserves established by Agent on the Closing Date for
Eligible Inventory shall be as set forth on Exhibit 2.1(C)). Notwithstanding
anything in this Agreement to the contrary, in no event shall any Inventory of
a Restricted Subsidiary or any Inventory acquired by Borrower pursuant to a
Permitted Acquisition be considered for inclusion as part of the Borrowing Base
unless and until Agent shall have conducted such appraisals and other due
diligence with respect to any such Inventory as Agent shall deem necessary to
make with respect to the inclusion of such Inventory in the Borrowing Base,
including, without limitation, as to eligibility, borrowing base percentages
and reserves therefor, and then only upon such terms, including, without
limitation, as to eligibility, borrowing base percentages and reserves
therefor, as Agent shall determine in the reasonable exercise of its credit
judgment or the Requisite Lenders shall determine in the reasonable exercise of
their collective credit judgment; provided, that as a condition to providing
any financial accommodations based upon any Inventory of a Restricted
Subsidiary, Agent or the Requisite Lenders, in its or their sole discretion,
may require that (i) this Agreement be amended in a manner acceptable to Agent
and the Requisite Lenders to add such Restricted Subsidiary as a direct
borrower hereunder with a separate borrowing base for its Inventory available
solely to such Restricted Subsidiary and (ii) such other amendments to then
existing Loan Documents be made and such other Loan Documents, opinions,
certificates and other agreements be executed and/or delivered, each of the
foregoing to be in form, scope and substance satisfactory to Agent and the
Requisite Lenders, as Agent or the Requisite Lenders may request or deem
necessary with respect to such separate borrowing base arrangements, including,
without limitation, amending Guaranties to additionally guarantee all
obligations and liabilities of such Restricted Subsidiary under the Loan
Documents, causing Borrower to enter into a guaranty of such obligations and
liabilities of such Restricted Subsidiary and amending security documentation
to secure such additional guarantee obligations.
(D) Borrowing Mechanics. (1) LIBOR Loans made on any Funding
Date shall be in an aggregate minimum amount of $1,000,000 and integral
multiples of $250,000 in excess of such amount. (2) On any day when Borrower
desires an advance under subsection 2.1(A), Borrower shall give Agent written
or telephonic notice of the proposed borrowing by 11:00 a.m. Central time on
the Funding Date of a Base Rate Loan and three (3) Business Days in advance of
the Funding Date of a LIBOR Loan, which notice shall be substantially in the
form of Exhibit G (a "Notice of Borrowing") and shall also specify the proposed
Funding Date (which shall be a Business Day), whether such Loans shall consist
of Base Rate Loans or LIBOR Loans, and for LIBOR Loans the Interest Period
applicable thereto; provided, however, that if Borrower shall be deemed to
request a Revolving Advance under subsection 2.1(B)(2), no notice of a
borrowing by Borrower shall be
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necessary and any such Revolving Advance shall be in the amount of the
reimbursement obligation of Borrower for the Swingline Advance(s) (or portion
thereof) which shall have become due and payable. Any such telephonic notice
shall be confirmed in writing to Agent on or before the date and time notice
of the proposed borrowing is required to be delivered to Agent therefor as
provided above. (3) On any day when Borrower desires an advance under
subsection 2.1(B)(1), Borrower shall give Swingline Lender and Agent written or
telephonic notice of the proposed borrowing by 11:00 a.m. Central time on the
Funding Date, which notice shall be substantially similar to a Notice of
Borrowing and shall also specify the proposed Funding Date (which shall be a
Business Day). Any such telephonic notice shall be confirmed in writing to
Agent on or before the date and time notice of the proposed borrowing is
required to be delivered to Agent therefor as provided above. Unless Swingline
Lender receives notice by 11:00 a.m. Central time from Agent that the
conditions precedent to the making of the requested Swingline Advance have not
been satisfied, Swingline Lender may presume that all such conditions precedent
have been satisfied and all Lenders, Agent and Borrower shall be bound thereby.
(4) Neither Agent nor any Lender (including, without limitation, Swingline
Lender) shall incur any liability to Borrower for acting upon any telephonic
notice Agent or Swingline Lender believes in good faith to have been given by a
duly authorized officer or other person authorized to borrow on behalf of
Borrower or for otherwise acting in good faith under this subsection 2.1(D).
Neither Agent nor any Lender (including, without limitation, Swingline Lender)
will make any advance pursuant to any telephonic notice unless Agent has also
received the most recent Borrowing Base Certificate and all other documents
required under subsection 5.1(E) by 11:00 a.m. Central time on the date of the
making of such telephonic notice. Each Revolving Advance and each Swingline
Advance shall be deposited on the appropriate Funding Date requested by
Borrower by wire transfer in immediately available funds in such account as
Borrower may from time to time designate to Agent in writing, except that with
respect to a Revolving Advance to be used to repay all or a portion of a
Swingline Advance as provided in subsection 2.1(B)(2), such Revolving Advance
shall be paid to Agent on behalf of Swingline Lender. (5) The becoming due of
any amount required to be paid under this Agreement or any of the other Loan
Documents as principal, accrued interest and fees shall be deemed irrevocably
to be a request by Borrower for a Base Rate Revolving Loan on the due date of,
and in the amount required to pay, such principal, accrued interest and fees,
and the proceeds of each such Revolving Advance if made by Agent or any Lender
shall be disbursed by Agent or such Lender by way of direct payment of the
relevant obligation.
(E) Notes. Borrower shall execute and deliver to (i) each
Lender a Revolving Note to evidence such Lender's Revolving Loan Commitment and
(ii) Swingline Lender the Swingline Note to evidence Swingline Lender's
Swingline Loan Commitment. In the event of an assignment under subsection 9.1,
Borrower shall, upon surrender of the assigning Lender's Revolving Note or
Swingline Note, issue a new Revolving Note or Swingline Note, as appropriate,
to reflect the interest held by the assigning Lender and its assignee.
(F) Evidence of Revolving Loan Obligations and Swingline Loan
Obligations. Each Revolving Advance shall be evidenced by this Agreement, the
Revolving Notes and notations made from time to time by Agent in its books and
records, including computer records. Agent shall record in its books and
records, including computer records, the principal amount of the portion of
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the Revolving Loan owing to each Lender from time to time. Each Swingline
Advance shall be evidenced by this Agreement, the Swingline Note and notations
made from time to time by Swingline Lender in its books and records, including
computer records. Swingline Lender shall record in its books and records,
including computer records, the Swingline Loan owing to Swingline Lender from
time to time. Agent's and Swingline Lender's books and records shall
constitute presumptive evidence, absent manifest error, of the accuracy of the
information contained therein. Failure by Agent or Swingline Lender to make
any such notation or record shall not affect the obligations of Borrower to
Lenders or of Borrower or Lenders to Swingline Lender with respect to the
Revolving Loans or Swingline Loans.
(G) Letters of Credit. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of
Borrower and the other Loan Parties set forth herein and in the other Loan
Documents, the Revolving Loan Commitments may, in addition to Revolving
Advances be utilized, upon the request of Borrower, for (i) the issuance of
letters of credit by Agent; or with Agent's consent any Lender, or (ii) the
issuance by Agent of risk participations (a "Risk Participation Agreement") to
banks to induce such banks to issue letters of credit for the account of
Borrower (each of (i) and (ii) above a "Lender Letter of Credit"). Each Lender
shall be deemed to have purchased a participation in each Lender Letter of
Credit issued on behalf of Borrower in an amount equal to its Pro Rata Share
thereof. In no event shall any Lender Letter of Credit be issued to the extent
that the issuance of such Lender Letter of Credit would cause the sum of the
Letter of Credit Reserve (after giving effect to such issuance) plus the
Revolving Loan and the Swingline Loan to exceed the lesser of (x) the Borrowing
Base and (y) the Revolving Loan Commitments of all Lenders.
(1) Maximum Amount. The aggregate amount of Letter of
Credit Liability with respect to all Lender Letters of Credit outstanding at
any time shall not exceed $10,000,000.
(2) Reimbursement. Borrower shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse Agent or the issuer for any amounts
paid with respect to a Lender Letter of Credit including all fees, costs and
expenses paid to any bank that issues a Bank Letter of Credit. Borrower hereby
authorizes and directs Agent, at Agent's option, to debit Borrower's account
(by increasing the Revolving Loan) in the amount of any payment made with
respect to any Lender Letter of Credit. Agent agrees to use reasonable efforts
to notify Borrower of any such debit made to Borrower's account; provided that
the failure of Agent to give such notice shall not affect the validity of such
debit or create any cause of action or liability against Agent or any Lender.
All amounts paid with respect to any Lender Letter of Credit that are not
immediately repaid by Borrower with the proceeds of a Revolving Advance or
otherwise shall bear interest at the Default Rate applicable to Base Rate
Revolving Loans. In the event that Borrower shall fail to reimburse Agent on
the date of any payment under a Lender Letter of Credit in an amount equal to
the amount of such payment, Agent shall promptly notify each Lender of the
unreimbursed amount of such payment together with accrued interest thereon and
each Lender, on the next Business Day, shall deliver to Agent an amount equal
to its respective participation in same day funds. The obligation of each
Lender to
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deliver to Agent an amount equal to its respective participation pursuant to
the foregoing sentence shall be absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in Section
3. In the event any Lender fails to make available to Agent when due the
amount of such Lender's participation in such Lender Letter of Credit, Agent
shall be entitled to recover such amount on demand from such Lender together
with interest at the Federal Funds Effective Rate (unless such amount is not
paid within three Business Days of such demand, in which case such interest
shall be payable (both before and after such third Business Day) at the Base
Rate).
(3) Conditions of Issuance. In addition to all other
terms and conditions set forth in this Agreement, the issuance of any Lender
Letter of Credit shall be subject to the satisfaction of all conditions
applicable to Revolving Advances, and the conditions that the letter of credit
which Borrower requests be in such form, be for such amount, contain such terms
and support such transactions as are reasonably satisfactory to Agent. The
expiration date of each Lender Letter of Credit shall be on a date which is at
least thirty (30) days prior to the Termination Date.
(4) Request for Letters of Credit. Borrower shall give
Agent at least three (3) Business Days prior notice specifying the date a
Lender Letter of Credit is to be issued, identifying the beneficiary and
describing the nature of the transactions proposed to be supported thereby.
The notice shall be accompanied by the form of the letter of credit being
requested.
(H) Other Letter of Credit Provisions.
(1) Obligations Absolute. The obligation of Borrower
to reimburse Agent or any Lender for payments made under, and other amounts
payable in connection with, any Lender Letter of Credit shall be unconditional
and irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including the following circumstances:
(a) any lack of validity or enforceability of
any Lender Letter of Credit, Bank Letter of Credit or any other agreement;
(b) the existence of any claim, set-off, defense
or other right which Borrower, any of its Affiliates, Agent or any Lender, on
the one hand, may at any time have against any beneficiary or transferee of any
Lender Letter of Credit or Bank Letter of Credit (or any Persons for whom any
such transferee may be acting), Agent, any Lender or any other Person, on the
other hand, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying
transaction between Borrower or any of its Affiliates and the beneficiary of
the letter of credit);
(c) any draft, demand, certificate or any other
document presented under any Lender Letter of Credit or Bank Letter of Credit
is alleged to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
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(d) payment under any Lender Letter of Credit or
Bank Letter of Credit against presentation of a demand, draft or certificate or
other document which does not comply with the terms of such letter of credit;
provided that, in the case of any payment by Agent or a Lender under any Lender
Letter of Credit, Agent or such Lender has not acted with gross negligence or
willful misconduct (as determined by a court of competent jurisdiction) in
determining that the demand for payment under such Lender Letter of Credit
complies on its face with any applicable requirements for a demand for payment
under such Lender Letter of Credit;
(e) any other circumstance or happening
whatsoever, which is similar to any of the foregoing; or
(f) the fact that a Default or an Event of
Default shall have occurred and be continuing.
(2) Nature of Lender's Duties. As between Agent and
Lenders, on the one hand, and Borrower, on the other hand, Borrower assumes all
risks of the acts and omissions of, or misuse of any Lender Letter of Credit by
the beneficiary thereof. In furtherance and not in limitation of the
foregoing, neither Agent nor any Lender shall be responsible: (a) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document by any party in connection with the application for and issuance of
any Lender Letter of Credit, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or forged; (b) for
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Lender Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason; (c) for failure of the beneficiary
of any Lender Letter of Credit to comply fully with conditions required in
order to demand payment thereunder; provided that, in the case of any payment
by Agent or any Lender under any Lender Letter of Credit, Agent or Lender has
not acted with gross negligence or willful misconduct (as determined by a court
of competent jurisdiction) in determining that the demand for payment under
such Lender Letter of Credit complies on its face with any applicable
requirements for a demand for payment thereunder; (d) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (e) for
errors in interpretation of technical terms; (f) for any loss or delay in the
transmission or otherwise of any document required in order to make a payment
under any Lender Letter of Credit; (g) for the credit of the proceeds of any
drawing under any Lender Letter of Credit; and (h) for any consequences arising
from causes beyond the control of Agent or any Lender as the case may be. None
of the above shall affect, impair, or prevent the vesting of any of Agent's or
any Lender's rights or powers hereunder.
(3) Liability. In furtherance and extension of and not
in limitation of, the specific provisions herein above set forth, any action
taken or omitted by Agent or any Lender under or in connection with any Lender
Letter of Credit, if taken or omitted without gross negligence or willful
misconduct (any gross negligence or willful misconduct to be determined by a
court of competent jurisdiction), shall not put Agent or any Lender under any
resulting liability to Borrower.
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(I) Defaulting Lenders.
(1) Unless Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Revolving Advance after the
Closing Date, at least one Business Day prior to the date of such Loan, that
such Lender will not make available as and when required hereunder to Agent for
the account of Borrower the amount of that Lender's Commitment Percentage of
such Loan, Agent may assume that each Lender has made such amount available to
Agent in immediately available funds on the Funding Date and Agent may (but
shall not be so required), in reliance upon such assumption, make available to
Borrower (or Swingline Lender, if applicable) on such date a corresponding
amount.
(2) If and to the extent any Lender shall not have made
its full Commitment Percentage of any Revolving Advance available to Agent in
immediately available funds and Agent in such circumstances has made available
to Borrower such amount, that Lender shall on the Business Day following such
Funding Date make such amount available to Agent, together with interest at the
Federal Funds Effective Rate (unless such amount is not made available by that
Lender to Agent within three Business Days of when due, in which case such
interest shall be payable (both before and after such third Business Day) at
the Base Rate) for each day during the period commencing on such Funding Date
and ending on the date such Lender makes such amount available to Agent. A
notice of Agent submitted to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error. If such amount is
so made available, such payment to Agent shall constitute such Lender's share
of such Revolving Advance on the Funding Date for all purposes of this
Agreement. If such amount is not made available to Agent on the Business Day
following the Funding Date, Agent will notify Borrower of such failure to fund
and, upon demand by Agent, Borrower shall pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed since the date of
such borrowing, at a rate per annum equal to the interest rate applicable at
the time to the Loan made by the other Lenders on such Funding Date. The
failure of any Lender to make available its Commitment Percentage of any
Revolving Advance on any Funding Date or to fund its participation in a
Swingline Advance under subsection 2.1(B)(ii) or to fund its participation in a
Lender Letter of Credit under subsection 2.2(G)(ii) (any such Lender, prior to
the cure of such failure, being hereinafter referred to as a "Defaulting
Lender") shall not relieve any other Lender of any obligation hereunder to fund
such Lender's Commitment Percentage of a Loan on such Funding Date or to fund
any such participation, but no Lender shall be responsible for the failure of
any other Lender to make such other Lender's Commitment Percentage of the Loan
to be made by such other Lender on any Funding Date or to fund any
participation to be funded by any other Lender.
(3) Agent shall not be obligated to transfer to a
Defaulting Lender any payment made by Borrower to Agent or any amount otherwise
received by Agent for application to the Obligations nor shall a Defaulting
Lender be entitled to the sharing of any payments hereunder (whether under
subsection 9.4 or otherwise). Amounts payable to a Defaulting Lender shall
instead be paid to or retained by Agent. Agent may hold and, in its
discretion, re-lend to Borrower the amount of all such payments received or
retained by it for the account of such Defaulting Lender. Any amounts so re-
lent to Borrower shall bear interest at the rate applicable to Base Rate Loans
and
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for all other purposes of this Agreement shall be treated as if they were
Revolving Advances. At any time, Agent may apply any such amounts to the
Obligations held by Lenders which are not Defaulting Lenders to the extent that
such Lenders (which are not Defaulting Lenders) hold Loans or participations in
Swingline Advances or Lender Letters of Credit in each case in excess of their
Commitment Percentages thereof. No Defaulting Lender shall acquire any
participation or other interest in any Obligations held by any other Lender by
virtue of any such application, the result of any such application being the
subordination of the interest of a Defaulting Lender with respect to the
Obligations to the interest therein of the Lenders which are not Defaulting
Lenders.
(4) For purposes of voting or consenting to matters
with respect to the Loan Documents and determining Pro Rata Shares and
Commitment Percentages, a Defaulting Lender shall be deemed not to be a
"Lender" and such Lender's Commitments shall be deemed to be zero (-0-). Until
a Defaulting Lender cures its failure to fund its Pro Rata Share of any Loan
and to fund its participation in any Swingline Advance or Lender Letter of
Credit (1) such Defaulting Lender shall not be entitled to any portion of the
Unused Line Fee or any Letter of Credit Fees referred to in subsection 2.3 and
(2) the Unused Line Fee and Letter of Credit Fees shall accrue in favor of
Lenders which are not Defaulting Lenders and shall be allocated among such
Lenders ratably based upon their relative Revolving Loan Commitments, and shall
be calculated based upon the average amount by which the aggregate Revolving
Loan Commitments of such Lenders exceeds the sum of outstanding Loans and the
Letter of Credit Reserve. The provisions of this subsection 2.1(I) shall
remain effective with respect to a Defaulting Lender until such time as the
Defaulting Lender shall no longer be in default of any of its obligations under
this Agreement. The terms of this subsection 2.1(I) shall not be construed to
increase or otherwise affect any Commitment of any Lender, or relieve or excuse
the performance by Borrower of its duties and obligations hereunder.
(5) At such time as there is a Defaulting Lender, any
one or more other Lenders may commit to make Loans or fund participations in
Swingline Advances or Lender Letters of Credit, in an amount necessary to
permit Borrower to repay in full the Defaulting Lender's defaulted obligations
hereunder. In such event, and upon Borrower making such repayment, the Default
Lender's Commitments shall be terminated, such Lender shall no longer be a
"Lender" hereunder and each such other Lender or Lenders shall acquire a
percentage of the Commitments of such Defaulting Lender equal to the percentage
of Loans and participations funded by such other Lender.
2.2 Interest.
(A) Rate of Interest. The Loans shall bear interest from the
date such Loans are made to the date paid at a rate per annum equal to (i) in
the case of Base Rate Loans , the Base Rate plus the Applicable Margin for Base
Rate Loans and (ii) in the case of LIBOR Loans, LIBOR plus the Applicable
Margin for LIBOR Loans (the "Interest Rate"). The applicable basis for
determining the rate of interest (other than with respect to Swingline
Advances, which shall be Base Rate Loans only) shall be selected by Borrower
initially at the time a Notice of Borrowing is given pursuant to subsection
2.1(D). The basis for determining the interest rate with respect to any Loan
(other than
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Swingline Advances) or a portion of any Loan (other than Swingline Advances)
may be changed from time to time pursuant to subsection 2.2(E). If on any day
a Loan or a portion of any Loan is outstanding with respect to which notice has
not been delivered to Agent in accordance with the terms of this Agreement
specifying the basis for determining the rate of interest, then for that day
that Loan or portion thereof shall bear interest determined by reference to the
Base Rate.
Any Loans, interest or fees not paid when due and payable and any
other Obligations not paid within 10 Business Days of when due and payable
shall, at the option of Requisite Lenders (or with respect to Swingline
Advances or interest thereon, at the option of Swingline Lender), bear interest
at the Default Rate. After the occurrence and during the continuance of an
Event of Default (i) each LIBOR Loan shall automatically convert to a Base Rate
Loan at the end of any applicable Interest Period and (ii) no Loans may be
converted to LIBOR Loans.
(B) Interest Periods. In connection with each LIBOR Loan,
Borrower shall elect an interest period (each an "Interest Period") to be
applicable to such Loan, which Interest Period shall be either a one, two,
three, six or (if and when available to all Lenders) nine month period;
provided that:
(1) the initial Interest Period for any LIBOR Loan
shall commence on the Funding Date of such Loan;
(2) in the case of successive Interest Periods, each
successive Interest Period shall commence on the day on which the immediately
preceding Interest Period expires;
(3) if an Interest Period expiration date is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day; provided that if any Interest Period expiration date is not a Business Day
but is a day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the immediately preceding Business
Day;
(4) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to part (5), below, end on the last Business Day of a calendar
month;
(5) no Interest Period shall extend beyond the
Termination Date; and
(6) there shall be no more than ten (10) Interest
Periods relating to LIBOR Loans outstanding at any time.
(C) Computation and Payment of Interest. Interest on the
Loans and all other Obligations shall be computed on the daily principal
balance on the basis of a 365 or 366 day year, as the case may be (360 day year
for LIBOR Loans), for the actual number of days elapsed in the period during
which it accrues. In computing interest on any Loan, the date of funding of
the Loan or the first day of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted from a LIBOR Loan, the date of
conversion of such LIBOR Loan to such Base Rate Loan, shall be included; and
the date of payment of such Loan or the expiration date of an Interest Period
applicable to such Loan, or with respect to a Base Rate Loan
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being converted to a LIBOR Loan, the date of conversion of such Base Rate Loan
to such LIBOR Loan, shall be excluded; provided that if a Loan is repaid on the
same day on which it is made, one day's interest shall be paid on that Loan.
Interest on Base Rate Loans (including, without limitation, Swingline Advances)
and all other Obligations other than LIBOR Loans shall be payable to Agent for
benefit of Lenders monthly in arrears on the first day of each month, on the
date of any prepayment of Loans, and at maturity, whether by acceleration or
otherwise. Interest on LIBOR Loans shall be payable to Agent for benefit of
Lenders on the last day of the applicable Interest Period for such Loan, on the
date of any prepayment of the Loans, on the date of any prepayment of any
portion of the relevant LIBOR Loan (with respect to the portion of such LIBOR
Loan being prepaid), and at maturity, whether by acceleration or otherwise. In
addition, for each LIBOR Loan having an Interest Period longer than three (3)
months, interest accrued on such Loan shall also be payable on the last day of
each three (3) month interval during such Interest Period.
(D) Interest Laws. Notwithstanding any provision to the
contrary contained in this Agreement or any other Loan Document, Borrower shall
not be required to pay, and neither Agent nor any Lender shall be permitted to
collect, any amount of interest in excess of the maximum amount of interest
permitted by applicable law ("Excess Interest"). If any Excess Interest is
provided for or determined by a court of competent jurisdiction to have been
provided for in this Agreement or in any other Loan Document, then in such
event: (1) the provisions of this subsection shall govern and control; (2)
neither Borrower nor any other Loan Party shall be obligated to pay any Excess
Interest; (3) any Excess Interest that Agent or any Lender may have received
hereunder shall be, at such Lender's option, (a) applied as a credit against
the outstanding principal balance of the appropriate Obligations or accrued and
unpaid interest (not to exceed the maximum amount permitted by law), (b)
refunded to the payor thereof, or (c) any combination of the foregoing; (4) the
interest rate(s) provided for herein for the applicable Obligations shall be
automatically reduced to the maximum lawful rate allowed from time to time
under applicable law (the "Maximum Rate"), and this Agreement and the other
Loan Documents shall be deemed to have been and shall be, reformed and modified
to reflect such reduction; and (5) neither Borrower nor any Loan Party shall
have any action against Agent or any Lender for any damages arising out of the
payment or collection of any Excess Interest. Notwithstanding the foregoing,
if for any period of time interest on any Obligations is calculated at the
Maximum Rate rather than the applicable rate under this Agreement, and
thereafter such applicable rate becomes less than the Maximum Rate, the rate of
interest payable on such Obligations shall remain at the Maximum Rate until
each Lender or Swingline Lender, as appropriate, shall have received the amount
of interest which such Lender would have received during such period on such
Obligations had the rate of interest not been limited to the Maximum Rate
during such period.
(E) Conversion or Continuation. Subject to the provisions of
subsections 2.2(A) and (B), Borrower shall have the option to (1) convert at
any time all or any part of outstanding Loans (other than Swingline Advances,
which shall at all times be Base Rate Loans) equal to $1,000,000 and integral
multiples of $250,000 in excess of that amount from Base Rate Loans to
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LIBOR Loans or (2) upon the expiration of any Interest Period applicable to a
LIBOR Loan, to (a) continue all or any portion of such LIBOR Loan equal to
$1,000,000 and integral multiples of $250,000 in excess of that amount as a
LIBOR Loan or (b) convert all or any portion of such LIBOR Loan to a Base Rate
Loan. The succeeding Interest Period(s) of such continued or converted Loan
commence on the last day of the Interest Period of the Loan to be continued or
converted; provided that no outstanding Loan may be continued as, or be
converted into, a LIBOR Loan, when any Event of Default or Default has occurred
and is continuing.
Borrower shall deliver a notice of conversion/continuation
substantially in the form of Exhibit J ("Notice of Conversion/Continuation") to
Agent no later than 11:00 a.m. Central time at least one Business Day in
advance of the proposed date of conversion of all or any portion of a LIBOR
Loan to a Base Rate Loan and no later than 11:00 a.m Central time at least
three (3) Business Days in advance of the proposed date of the conversion to,
or continuation of, a LIBOR Loan. A Notice of Conversion/Continuation shall
certify: (1) the proposed conversion/continuation date (which shall be a
Business Day); (2) the amount of the Loan to be converted/continued; (3) the
nature of the proposed conversion/continuation (i.e. whether converting to a
Base Rate Loan or LIBOR Loan or continuing a LIBOR Loan); (4) in the case of
conversion to, or a continuation of, a LIBOR Loan, the requested Interest
Period; and (5) that no Default or Event of Default has occurred and is
continuing or would result from the proposed conversion/continuation.
In lieu of delivering the Notice of Conversion/Continuation,
Borrower may give Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2(E); provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Agent on or before the proposed
conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to
Borrower in acting upon any telephonic notice referred to above that Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to act on behalf of Borrower or for otherwise acting in good
faith under this subsection 2.2(E) and upon conversion/continuation by Lenders
in accordance with this Agreement pursuant to any telephonic notice, Borrower
shall have effected such conversion or continuation, as the case may be,
hereunder.
2.3 Fees.
(A) Unused Line Fee. Borrower shall pay to Agent, for the
benefit of Lenders, a fee in an amount equal to the Revolving Loan Commitments
of all Lenders less the sum of the average daily balance of the Loans plus the
average daily face amount of the Letter of Credit Reserve during the preceding
calendar quarter (or shorter period) multiplied by three-eighths of one percent
(3/8%) per annum, such fee to be calculated on the basis of a 365 or 366 day
year, as the case may be, for the actual number of days elapsed and to be
payable quarterly in arrears on July 1, 1997 and the first day of each October,
January, April and July thereafter and on the Termination Date or such earlier
date of termination of the Revolving Loan Commitment.
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(B) Letter of Credit Fees. Borrower shall pay to Agent, for
the benefit of Lenders, a fee with respect to the Lender Letters of Credit in
the aggregate amount of the daily amount of Letter of Credit Liability
outstanding during each day in the preceding calendar quarter (or shorter
period) multiplied by for each such day a per annum rate equal to the
Applicable Margin (as adjusted from time to time pursuant to the definition
thereof) for LIBOR Loans for each such day during such preceding calendar
quarter (or shorter period). Such fees will be calculated on the basis of a
365 or 366 day year, as the case may be, for the actual number of days elapsed
and will be payable quarterly in arrears on the first day of each July,
October, January and April and on the Termination Date or such earlier date of
termination of the Revolving Loan Commitment. Borrower shall also reimburse
Agent for any and all fees and expenses, if any, paid by Agent or any Lender to
the issuer of any Bank Letter of Credit and, without duplication, shall pay
Agent for any and all administrative, issuance, amendment, payment and
negotiation fees, charges and expenses invoiced or charged by Agent in
connection with Lender Letter of Credit.
(C) Audit Fees. Borrower agrees to pay to Agent for its own
account an audit fee for each inspection equal to the customary fee per
auditor per day or any portion thereof then charged by Agent (which audit fee
on the date hereof is $650 per auditor per day or any portion thereof),
together with reasonable out of pocket costs and expenses incurred by Agent in
connection therewith (or with respect to any inspection as to which Agent
utilizes third party auditors, the reasonable out of pocket fees, costs and
expenses paid by Agent to such auditors therefor); provided that Borrower shall
pay for no more than two such inspections in any Loan Year (other than those
inspections which are ordered or commenced during the continuance of an Event
of Default, for which Borrower shall also be liable to pay such fees, costs and
expenses) and Borrower shall not be liable for more than $25,000 in fees in
respect of any such inspection.
(D) Other Fees and Expenses. Borrower shall pay to Agent, for
its own account, all charges for returned items and all other bank charges
incurred by Agent, as well as Agent's standard wire transfer charges for each
wire transfer made under this Agreement. Borrower shall pay to Xxxxxx when due
all fees referred to in a separate Fee Letter dated May __, 1997 between
Borrower and Xxxxxx, for Xxxxxx'x own account or as otherwise specified
therein.
2.4 Payments and Prepayments.
(A) Manner and Time of Payment. In its sole discretion, Agent
may charge interest and other amounts payable hereunder to the Revolving Loan
(including, without limitation, amounts payable under subsection 10.1), all as
set forth on Agent's or Swingline Lender's books and records. Agent agrees to
use reasonable efforts to notify Borrower of any such charge made to the
Revolving Loan; provided that the failure of Agent to give such notice shall
not affect the validity of such charge or create any cause of action or
liability against Agent or any Lender. If Agent elects to xxxx Borrower for
any amount due hereunder, such amount shall be immediately due and payable with
interest thereon as provided herein. All payments made by Borrower with
respect to the Obligations shall be made without deduction, defense, setoff or
counterclaim. All payments to Agent hereunder shall, unless otherwise directed
by Agent, be made to Agent's Account. Proceeds remitted to Agent's Account by
wire transfer or otherwise in immediately available Federal funds
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shall be credited to the Obligations on the Business Day received and for the
purpose of calculating interest on the Obligations such funds shall be deemed
received on such Business Day received. Proceeds remitted to Agent's Account
in any other manner shall be credited to the Obligations on the second Business
Day following the day such proceeds were received in Agent's Account and for
the purpose of calculating interest on the Obligations, such funds shall be
deemed received on the second Business Day after such receipt in Agent's
Account. Unless otherwise provided herein (including, without limitation,
under subsections 2.1(B), 2.3, 2.4(B), 2.4(C), 2.8, 2.12 and 8.7) or in the
absence of a specific determination by Agent and Lenders with respect thereto,
all payments made to Agent with respect to the Obligations shall, when in the
form of immediately available funds, be applied in the following order: (i)
then due and payable fees and expenses owing under the Loan Documents; (ii)
then due and payable interest payments on the Obligations owing under the Loan
Documents; (iii) then due and payable principal payments on the Loans; (iv)
principal outstanding under the Swingline Loan until paid in full and then
principal outstanding under the Revolving Loan until paid in full; and (v)
other Obligations outstanding under the Loan Documents then due and payable.
(B) Mandatory Prepayments.
(1) Overadvance. At any time that the Revolving Loan
exceeds the Maximum Revolving Loan Amount, Borrower shall immediately repay the
Revolving Loan to the extent necessary to reduce the principal balance to an
amount equal to or less than the Maximum Revolving Loan Amount. At any time
that the Swingline Loan exceeds the Swingline Loan Commitment, Borrower shall
immediately repay the Swingline Loan to the extent necessary to reduce the
principal balance to an amount equal to or less than the Swingline Loan
Commitment. At any time the sum of the Letter of Credit Reserve plus the
Swingline Loan and Revolving Loan shall exceed the lesser of (x) the Borrowing
Base and (y) the Revolving Loan Commitments of all Lenders, Borrower shall
immediately eliminate such excess by first repaying the Swingline Loan until
the Swingline Loan is paid in full, then repaying the Revolving Loan until the
Revolving Loan is paid in full, and, to the extent then necessary to eliminate
any remaining excess, by depositing with Agent cash in an amount equal to the
remaining excess in a cash collateral account established by Agent on such
terms as are satisfactory to Agent.
(2) Proceeds of Asset Dispositions. Immediately upon
receipt by Borrower or any of its Subsidiaries of the Net Cash Proceeds of any
Asset Disposition (in one or a series of related transactions), which Net Cash
Proceeds exceed $1,000,000 (it being understood that if the Net Cash Proceeds
exceed $1,000,000, the entire amount and not just the portion above $1,000,000
shall be subject to this subsection 2.4(B)(2)), Borrower shall prepay the
Obligations in an amount equal to such Net Cash Proceeds. All such
prepayments shall first be applied in repayment of the Swingline Loan until
paid in full and then in repayment of the Revolving Loan. Notwithstanding
anything contained in this subsection 2.4(B) or any other provision of this
Agreement to the contrary, Borrower shall in any event make mandatory
prepayments on the Obligations (to be first applied in repayment of the
Revolving Loan until paid in full and then in repayment of the Swingline Loan)
with respect to Asset Dispositions within such time periods and in such amounts
so that Borrower shall not, with respect to any one or more Asset Dispositions,
have
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any obligation under the Senior Note Indenture or any documentation governing
any Indebtedness refinancing or refunding any Senior Note Debt to make an offer
to purchase any Senior Note Debt or any such refinancing or refunding
Indebtedness. Any prepayments of the Revolving Loan pursuant to the
immediately preceding sentence shall on the date of such prepayment permanently
reduce the Revolving Loan Commitments of the Lenders in an amount equal to such
prepayment (with the Revolving Loan Commitment of each Lender being permanently
reduced on the date of such prepayment by such Lender's Pro Rata Share of such
permanent reduction in the Revolving Loan Commitments of the Lenders).
(C) Voluntary Prepayments and Repayments. Borrower's
Obligations may at any time and from time to time be prepaid or repaid in full
or in part, without penalty or premium. Any prepayment of all or a portion of
a LIBOR Loan prior to the last day of the Interest Period therefor shall be
accompanied by those payments required therefor pursuant to subsection 2.12.
Borrower may, at any time upon not less than three Business Days' prior notice
to Agent, terminate (in full and not in part) the Revolving Loan Commitment (at
which time the Swingline Loan Commitment shall terminate automatically) or
terminate the Swingline Loan Commitment. Upon termination of the Revolving
Loan Commitment, Borrower shall cause Agent and each Lender to be released from
all liability under any Lender Letters of Credit or, at Agent's option,
Borrower will deposit cash collateral with Agent in an amount equal to 105% of
the Letter of Credit Liability that will remain outstanding after termination
of the Revolving Loan Commitment.
(D) Payments on Business Days. Whenever any payment to be
made hereunder (other than payment of principal or interest on a LIBOR Loan
which is due and payable on the last day of the Interest Period for such LIBOR
Loan) shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest or fees due
hereunder.
2.5 Term of this Agreement. This Agreement shall be effective
until the fifth anniversary of the Closing Date (the "Termination Date"). The
Commitments shall (unless earlier terminated) terminate upon the earlier of (i)
the occurrence of an event specified in subsection 8.3 or (ii) the Termination
Date. Upon termination in accordance with subsection 8.3 or on the Termination
Date, all Obligations shall become immediately due and payable without notice
or demand. Notwithstanding any termination, until all Obligations (other than
Inchoate Indemnity Obligations) have been fully paid and satisfied, Agent, on
behalf of Agent and Lenders, shall be entitled to retain security interests in
and liens upon all Collateral, and even after payment of all Obligations
hereunder, Borrower's obligation to indemnify Agent and each Lender in
accordance with the terms hereof shall continue.
2.6 Statements. Agent and Swingline Lender (with respect to
Swingline Loans) shall each render a monthly statement of account to Borrower
within twenty (20) days after the end of each month. Each such statement of
account shall constitute an account stated unless Borrower makes written
objection thereto to Agent or Swingline Lender, as appropriate, within thirty
(30) days from the date such statement is mailed to Borrower. Borrower
promises to pay all of its Obligations as such amounts become due or are
declared due pursuant to the terms of this Agreement.
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2.7 Grant of Security Interest. To secure the payment and
performance of the Obligations, including all renewals, extensions,
restructurings and refinancings of any or all of the Obligations, Borrower
hereby grants to Agent, on behalf of Agent and Lenders, a continuing security
interest, lien and mortgage in and to all right, title and interest of Borrower
in the following property of Borrower, whether now owned or existing or
hereafter acquired or arising and regardless of where located: (A) Accounts,
and all guaranties and security therefor, and all goods and rights represented
thereby or arising therefrom including the rights of stoppage in transit,
replevin and reclamation; (B) Inventory; (C) general intangibles (as defined in
the UCC); (D) documents (as defined in the UCC) or other receipts covering,
evidencing or representing goods; (E) instruments (as defined in the UCC) and
investment property; (F) chattel paper (as defined in the UCC); (G)
Intellectual Property; (H) all deposit accounts of Borrower maintained with any
bank or financial institution; (I) all cash and other monies and property of
Borrower in the possession or under the control of Agent, any Lender or any
participant; (J) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at
any time evidence or contain information relating to any of the property
described above or are otherwise necessary or helpful in the collection thereof
or realization thereon; and (K) proceeds of all or any of the property
described above, including, without limitation, the proceeds of any insurance
policies covering any of the above described property.
2.8 Capital Adequacy and Other Adjustments. In the event
Agent or any Lender shall have determined that the adoption after the date
hereof of any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by Agent or such Lender or any
corporation controlling Agent or such Lender with any request or directive
regarding capital adequacy, reserve requirements or similar requirements
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) from any central bank or governmental agency or
body having jurisdiction does or shall have the effect of increasing the amount
of capital, reserves or other funds required to be maintained by Agent or such
Lender or any corporation controlling Agent or such Lender and thereby reducing
the rate of return on Agent's or such Lender's or such corporation's capital as
a consequence of its obligations hereunder, then Borrower shall from time to
time within fifteen (15) days after notice and demand from such Lender (with a
copy to Agent) or Agent (together with the certificate referred to in the next
sentence) pay to Agent or such Lender additional amounts sufficient to
compensate Agent or such Lender for such reduction. A certificate as to the
amount of such cost and showing the basis of the computation of such cost
submitted by Agent or any Lender to Borrower shall, absent manifest error, be
final, conclusive and binding for all purposes.
2.9 Taxes.
(A) No Deductions. Any and all payments or reimbursements
made hereunder or under any of the Notes shall be made free and clear of and
without deduction for any and all taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto; excluding, however,
the following: income, franchise or similar taxes imposed on any Lender or
Agent by the jurisdiction under the laws of which Agent or such Lender, as
appropriate, is organized
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or doing business or any political subdivision thereof and income, franchise or
similar taxes imposed by the jurisdiction of Agent's or such Lender's
applicable lending office or any political subdivision thereof (all such taxes,
levies, imposts, deductions, charges or withholdings and all liabilities with
respect thereto excluding such income, franchise or similar taxes, herein "Tax
Liabilities"). If Borrower shall be required by law to deduct any such Tax
Liabilities from or in respect of any sum payable hereunder to Agent or any
Lender, then the sum payable hereunder shall be increased as may be necessary
so that, after making all required deductions, Agent or such Lender receives an
amount equal to the sum it would have received had no such deductions been
made.
(B) Changes in Tax Laws. In the event that, subsequent to the
Closing Date, (i) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (ii) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (iii) compliance by any Lender with any request or directive
(whether or not having the force of law) from any governmental authority,
agency or instrumentality:
(1) does or shall subject Agent or any Lender to any
tax of any kind whatsoever with respect to this Agreement, the other Loan
Documents or any Loans made or Lender Letters of Credit issued hereunder, or
change the basis of taxation of payments to Agent or such Lender of principal,
fees, interest or any other amount payable hereunder (except for income taxes,
or franchise taxes imposed in lieu of income taxes, or similar taxes imposed
generally by federal, state or local taxing authorities with respect to
interest or commitment or other fees payable hereunder or changes in the rate
of such tax); or
(2) does or shall impose on Agent or any Lender any
other condition or increased cost in connection with the transactions
contemplated hereby or participations herein; and the result of any of the
foregoing is to increase the cost to Agent or such Lender of issuing any Lender
Letter of Credit or making or continuing any Loan hereunder, as the case may
be, or to reduce any amount receivable hereunder,
then, in any such case, Borrower shall promptly pay to Agent or such Lender,
upon its demand, any additional amounts necessary to compensate Agent or such
Lender, on an after-tax basis, for such additional cost or reduced amount
receivable, as determined by Agent or such Lender with respect to this
Agreement or the other Loan Documents. If Agent or any Lender becomes entitled
to claim any additional amounts pursuant to this subsection, it shall promptly
notify Borrower of the event by reason of which Agent or such Lender has become
so entitled. A certificate as to any additional amounts payable pursuant to
the foregoing sentence submitted by Agent or any Lender to Borrower shall,
absent manifest error, be final, conclusive and binding for all purposes.
(C) Foreign Lenders. Each Lender organized under the laws of
a jurisdiction outside the United States (a "Foreign Lender") as to which
payments to be made under this Agreement or under any of the Notes are exempt
from United States withholding tax or are subject to United States withholding
tax at a reduced rate under an applicable statute or tax treaty shall provide
to Borrower and Agent (i) a properly completed and executed Internal Revenue
Service Form 4224 or Form 1001 or other applicable form, certificate or
document prescribed by the Internal
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Revenue Service of the United States certifying as to such Foreign Lender's
entitlement to such exemption or reduced rate of withholding with respect to
payments to be made to such Foreign Lender under this Agreement and under the
Notes (a "Certificate of Exemption"), or (ii) a letter from any such Foreign
Lender stating that it is not entitled to any such exemption or reduced rate of
withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender under
this Agreement and within fifteen (15) days after a reasonable written request
of Borrower or Agent from time to time thereafter, each Foreign Lender that
becomes a Lender under this Agreement shall provide a Certificate of Exemption
or a Letter of Non-Exemption to Borrower and Agent.
If a Foreign Lender is entitled to an exemption with respect to
payments to be made to such Foreign Lender under this Agreement (or to a
reduced rate of withholding) and does not provide a Certificate of Exemption to
Borrower and Agent within the time periods set forth in the preceding
paragraph, Borrower shall withhold taxes from payments to such Foreign Lender
at the applicable statutory rates and Borrower shall not be required to pay any
additional amounts as a result of such withholding; provided, however, that all
such withholding shall cease upon delivery by such Foreign Lender of a
Certificate of Exemption to Borrower and Agent.
2.10 Required Termination and Prepayment. If on any date any
Lender shall have reasonably determined (which determination shall be final and
conclusive and binding upon all parties) that the making or continuation of its
LIBOR Loans has become unlawful or impossible by compliance by such Lender in
good faith with any law, governmental rule, regulation or order (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful), then, and in any such event, that Lender shall promptly give notice
(by telephone confirmed in writing) to Borrower and Agent of that
determination. Subject to prior withdrawal of a Notice of Borrowing or a
Notice of Conversion/Continuation or prepayment of LIBOR Loans as contemplated
by the subsection 2.11, the obligation of such Lender to make or maintain its
LIBOR Loans during any such period shall be terminated at the earlier of the
termination of the Interest Period then in effect or when required by law and
Borrower shall no later than the termination of the Interest Period in effect
at the time any such determination pursuant to this subsection 2.10 is made or,
earlier when required by law, repay or prepay LIBOR Loans together with all
interest accrued thereon or convert LIBOR Loans to Base Rate Loans.
2.11 Optional Prepayment/Replacement of Agent or Lenders in
Respect of Increased Costs. Within fifteen (15) days after receipt by Borrower
of written notice and demand from Agent or any Lender (an "Affected Lender")
for payment of additional costs as provided in subsection 2.8 or subsection
2.9(B), Borrower may, at its option, notify Agent and such Affected Lender of
its intention to do one of the following:
(A) Borrower may obtain, at Borrower's expense, a replacement
Lender ("Replacement Lender") for such Affected Lender, which Replacement
Lender shall be reasonably satisfactory to Agent. In the event Borrower
obtains a Replacement Lender within ninety (90) days following notice of its
intention to do so, the Affected Lender shall sell and assign its Loans and
Commitments to such Replacement Lender without recourse to or warranty by, or
expense to, such Affected Lender for a purchase price equal to the outstanding
principal amount of the portion of the
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Loans owing to such Affected Lender plus any accrued but unpaid interest on its
portion of the Loans and accrued but unpaid fees and other Obligations accrued
or owing to such Affected Lender through the date of sale and assignment,
including, in any event, reimbursement to such Affected Lender for its
increased costs for which it is entitled to reimbursement under this Agreement
through the date of such sale and assignment. Upon such sale and assignment,
such Affected Lender shall no longer be a party hereto or have any rights or
benefits hereunder (except for rights or benefits that such Affected Lender
would retain hereunder and under the other Loan Documents upon payment in full
of all of the Obligations) and the Replacement Lender shall succeed to the
rights and benefits, and shall assume the obligations, of such Affected Lender
hereunder and thereunder. In no event may Borrower replace a Lender which is
also an issuer of a Lender Letter of Credit unless (x) all Lender Letters of
Credit issued by such Lender (whether as Agent, if applicable, or otherwise)
have expired or have been terminated or cancelled and such Lender shall have
been reimbursed for all payments made by it under the Lender Letters of Credit
issued by it or (y) such Lender shall have been indemnified in a manner
satisfactory to it for any outstanding Lender Letters of Credit issued by it
and other obligations, absolute or contingent, with respect to Lender Letters
of Credit issued by it.
(B) Borrower may prepay in full all outstanding Obligations
owed to such Affected Lender and terminate such Affected Lender's Commitments.
Borrower shall, within ninety (90) days following notice of its intention to do
so, prepay in full all outstanding Obligations owed to such Affected Lender
(including such Affected Lender's increased costs for which it is entitled to
reimbursement under this Agreement through the date of such prepayment) and
terminate such Affected Lender's Commitments. In no event may Borrower prepay
in full all outstanding Obligations owed to a Lender which is also an issuer of
a Lender Letter of Credit and terminate such Lender's Commitments unless (x)
all Lender Letters of Credit issued by such Lender (whether as Agent, if
applicable, or otherwise) have expired or have been terminated or cancelled and
such Lender shall have been reimbursed for all payments made by it under the
Lender Letters of Credit issued by it or (y) such Lender shall have been
indemnified in a manner satisfactory to it for any outstanding Lender Letters
of Credit issued by it and other obligations, absolute or contingent, with
respect to Lender Letters of Credit issued by it.
2.12 Compensation. Borrower shall compensate each Lender, upon
written request by such Lender (which request shall set forth in reasonable
detail the basis for requesting such amounts and which shall, absent manifest
error, be conclusive and binding upon all parties hereto), for all reasonable
losses, expenses and liabilities (other than lost profits) including, without
limitation, any loss sustained by such Lender in connection with the re-
employment of such funds: (i) if for any reason (other than a default by such
Lender) a borrowing or continuation or conversion of any LIBOR Loan does not
occur on a date specified therefor in a Notice of Borrowing, a Notice of
Conversion/Continuation or a telephonic request for borrowing or
Conversion/Continuation; (ii) if any prepayment of any of its LIBOR Loans
occurs on a date that is not the last day of an Interest Period applicable to
that Loan; (iii) if any prepayment of any of its LIBOR Loans is not made on any
date specified in a notice of prepayment given by Borrower; or (iv) as a
consequence of any other default by Borrower to repay its LIBOR Loans when
required by the terms of this Agreement; provided that during the period while
any such amounts have not been paid, such Lender shall
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reserve an equal amount from amounts otherwise available to be borrowed under
the Revolving Loan. In addition to and not in limitation of the foregoing, if
the credit facility provided under this Agreement has not been syndicated to
the satisfaction of Xxxxxx prior to the Closing Date, Borrower agrees to
immediately reimburse Xxxxxx upon demand for all breakage costs, charges or
fees incurred by Xxxxxx with respect to LIBOR Loans on account of Xxxxxx'x
syndication of this credit facility made during the sixty (60) day period
immediately following the Closing Date.
2.13 Booking of LIBOR Loans. Each Lender may make, carry or
transfer LIBOR Loans at, to, or for the account of, any of its branch offices
or the office of an affiliate of such Lender.
2.14 Assumptions Concerning Funding of LIBOR Loans.
Calculation of all amounts payable to any Lender under subsection 2.12 shall be
made as though such Lender had actually funded its relevant LIBOR Loan through
the purchase of a LIBOR deposit bearing interest at LIBOR in an amount equal to
the amount of that LIBOR Loan and having maturity comparable to the relevant
Interest Period and through the transfer of such LIBOR deposit from an offshore
office to a domestic office in the United States of America; provided, however,
that each Lender may fund each of its LIBOR Loans in any manner it sees fit and
the foregoing assumption shall be utilized only for the calculation of amounts
payable under subsection 2.12.
SECTION 3. CONDITIONS TO LOANS
3.1 Conditions to Loans. The obligations of Agent and each
Lender to make Loans and the obligation of Agent or any Lender to issue Lender
Letters of Credit on the Closing Date and on each Funding Date are subject to
satisfaction of all of the conditions set forth below.
(A) Closing Deliveries. Agent shall have received, in form
and substance reasonably satisfactory to Agent, all documents, instruments and
information identified on Schedule 3.1(A) and all other agreements, notes,
certificates, orders, authorizations, financing statements and other documents
which Agent may at any time reasonably request.
(B) Security Interests. Agent shall have received
satisfactory evidence that all security interests and liens granted to Agent
for the benefit of Agent and Lenders pursuant to this Agreement or the other
Loan Documents have been duly perfected and constitute first priority liens on
the Collateral, subject only to Permitted Encumbrances.
(C) Closing Date Availability. After giving effect to the
consummation of the transactions contemplated herein on the Closing Date
(including, without limitation, the Recapitalization and the borrowings of
Loans on the Closing Date) and the payment by Borrower of all costs, fees and
expenses relating thereto, Availability on the Closing Date shall be no less
than $55,000,000.
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(D) Representations and Warranties. The representations and
warranties contained herein and in the other Loan Documents shall be true,
correct and complete in all material respects on and as of that Funding Date to
the same extent as though made on and as of that date, except for any
representation or warranty limited by its terms to a specific date and taking
into account any amendments to the Schedules or Exhibits as a result of any
disclosures made by Borrower to Agent after the Closing Date and approved by
Agent.
(E) Fees. With respect to Loans or Lender Letters of Credit
to be made or issued on the Closing Date, Borrower shall have paid the fees
payable on the Closing Date referred to in Fee Letter, dated May __, 1997
between Borrower and Xxxxxx.
(F) No Default. No event shall have occurred and be
continuing or would result from the consummation of the requested borrowing or
notice requesting issuance of a Lender Letter of Credit that would constitute
an Event of Default or a Default.
(G) Performance of Agreements. Each Loan Party shall have
performed in all material respects all agreements and satisfied all conditions
which any Loan Document provides shall be performed by it on or before that
Funding Date.
(H) No Prohibition. No order, judgment or decree of any
court, arbitrator or governmental authority shall purport to enjoin or restrain
Agent or any Lender from making any Loans or issuing any Lender Letters of
Credit.
(I) No Litigation. Agent shall be satisfied that there shall
not be pending, entered or threatened any action, charge, claim, demand, suit,
proceeding, petition, governmental investigation, arbitration, inquiry,
injunction or restraining order (i) with respect to the Recapitalization or any
other transactions contemplated herein or (ii) which, if there is a probability
of an adverse determination, is reasonably likely to have a Material Adverse
Effect or a material adverse effect on the Recapitalization or any other
transactions contemplated herein.
(J) No Material Adverse Effect. There shall not have been any
change or development or event which has or is reasonably likely to have a
Material Adverse Effect or a material adverse effect on the Recapitalization or
any other transactions contemplated herein.
(K) Opinions of Counsel. Agent shall have received favorable
opinions of Xxxx X. Xxxxx, general counsel of the Loan Parties, and Xxxxxx,
Xxxx & Xxxxxxxx LLP, special counsel to the Loan Parties, in form and substance
reasonably satisfactory to Agent (and such other opinions of counsel,
including, without limitation, of local counsel and of intellectual property
counsel, each in form and substance reasonably satisfactory to Agent, as Agent
may reasonably request); it being understood that to the extent that such
opinions of counsel shall rely upon any other opinion of counsel, each such
other opinion shall be in form and substance reasonably satisfactory to Agent
and shall provide that Agent and Lenders may rely thereon.
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(L) Financial Information. The quantity and quality of
current financial and other information provided to Lenders will be
satisfactory for the Lenders' evaluation of the creditworthiness of Borrower
and its Subsidiaries.
(M) Qualification. Each Loan Party shall be duly qualified
and in good standing in each jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify, except where
the failure to so qualify could not be reasonably expected to have a Material
Adverse Effect.
(N) Consents and Terminations. Agent shall have received (i)
all necessary consents relating to the Loan Documents, the Recapitalization and
the other transactions contemplated herein from third parties so that the same
shall be valid and not result in any violation of any material agreement
running in favor of such third party, (ii) a payout and termination agreement
in form and substance reasonably satisfactory to Agent with respect to the
Existing Credit Agreement and all other Indebtedness of Borrower and the
Restricted Subsidiaries existing on the Closing Date which is not permitted
hereunder to survive the Closing Date and all satisfactions of mortgages,
termination statements under the UCC and other instruments releasing Liens as
may be necessary or desirable to release any Liens created under or securing
any of the foregoing, all in form and substance reasonably satisfactory to
Agent and (iii) evidence reasonably satisfactory to Agent that all the
Indebtedness referred to in clause (ii) above has been paid in full.
(O) Evidence of Insurance. Agent shall have received
evidence, in form, scope and substance and with such insurance carriers
reasonably satisfactory to Agent of all insurance policies required pursuant to
this Agreement and the other Loan Documents. Such insurance coverage shall
have been issued by responsible carriers reasonably acceptable to Agent and
shall include, without limitation, loss payee endorsements that name Agent as
loss payee and require at least thirty (30) days' prior written notice be
provided to Agent in the event of cancellation or material change thereof.
(P) Examination of Books. Agent shall have had the
opportunity to examine the governing documents, books, records, contracts,
leases, leases, pension plans, insurance coverage and properties of Borrower
and its Subsidiaries, and to perform such other due diligence regarding
Borrower and its Subsidiaries as Agent shall have requested, the results of all
of which shall have been satisfactory to Agent in all respects.
(Q) Recapitalization. Agent shall have approved the terms,
structure, effect, fees and expenses and all documentation and corporate
proceedings relating to the Recapitalization, the issuance of the Senior Notes
and the other transactions contemplated herein, and all charters, bylaws and
other corporate governance documents relating to Borrower and its Subsidiaries.
(R) Senior Notes. Borrower shall have issued the Senior Notes
in an aggregate principal amount of not less than $125,000,000 and shall have
received not less than $120,000,000 as net cash proceeds thereof. The Senior
Note Debt shall be unsecured and have terms and conditions pursuant to an
agreement which shall be in form and substance (including payment terms)
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reasonably acceptable to Agent. The proceeds of the Senior Note Debt shall be
used, among other things, to fund the entire amount of dividends or other
distributions contemplated under the Recapitalization. Borrower shall have
made available, in preliminary and final form, as and when created, all
documentation pertaining to the Senior Note Debt, which documentation would be
subject to Agent's review and approval.
(S) Collateral Audit. Agent shall have received a collateral
audit and valuation conducted by it or its representatives of Borrower's and
the Restricted Subsidiaries' (as applicable) business, operations, financial
condition, assets and liabilities and the systems of Borrower and the
Restricted Subsidiaries providing for the ordering and monitoring of inventory
(all of which shall be satisfactory in all respects to Agent). Additionally,
Agent or its representatives shall have had the opportunity to meet with
Borrower's management to discuss the results of such collateral audit and
valuation.
(T) Environmental Matters. Agent shall be reasonably
satisfied that there are no existing environmental liabilities which would have
a Material Adverse Effect. Agent shall have reviewed and found satisfactory
the indemnification by The Southland Corporation in favor of Borrower against
losses by Borrower associated with any environmental contamination existing on
the date of the sale of Borrower by The Southland Corporation.
(U) Cash Management. On or prior to the Closing Date,
Borrower and the Restricted Subsidiaries shall have established a cash
management and collection system complying with subsection 5.6. In any event,
Agent shall have received on or prior to the Closing Date [to be determined].
(V) Compliance with Law. Agent shall be satisfied that (a)
Borrower and each other Loan Party is in compliance with, and shall have
obtained appropriate approvals pertaining to, all applicable governmental,
environmental, labor, ERISA and other requirements, regulations and laws,
except to the extent noncompliance or the failure to obtain such approvals is
not reasonably likely to have a Material Adverse Effect; and (b) the credit
facilities herein provided, the issuance of the Senior Note Debt, the
Recapitalization and all other transactions contemplated herein shall be in
compliance in all material respects with all applicable laws and regulations
and shall not contravene any term or condition of any charter, bylaw, debt
instrument or other material agreement of Borrower or any of the other Loan
Parties.
(W) Proceedings; Receipt of Documents. All requisite
corporate action and proceedings in connection with the borrowings, the
issuance of Lender Letters of Credit and the execution and delivery of the Loan
Documents and the documents relating to the issuance of the Senior Note Debt
and the Recapitalization shall be satisfactory in form and substance to Agent
and Agent shall have received all information and copies of all documents,
including, without limitation, records of requisite corporate action and
proceedings, which Agent may have requested in connection therewith, such
documents where requested by Agent to be certified by appropriate corporate
Persons or governmental authorities. Without limiting the generality of the
foregoing, Agent shall have received on or before the Closing Date the
following, each dated such day (unless
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otherwise specified), in form and substance reasonably satisfactory to Agent
(unless otherwise specified):
(i) A copy of the certificate of incorporation of each Loan
Party, and all amendments thereto, certified (as of a date reasonably
near the date of the initial financial accommodation to be made
hereunder), by the Secretary of State of each of their respective states
as being a true and correct copy thereof.
(ii) Certified copies of the resolutions of the Board of
Directors of each Loan Party approving this Agreement, the Notes and the
other Loan Documents and documents with respect to the issuance of the
Senior Note Debt and the Recapitalization to which it is a party or by
which it is bound, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to
this Agreement, the Notes and the other Loan Documents and documents
with respect to the issuance of the Senior Note Debt and the
Recapitalization.
(iii) A copy of a certificate of the Secretary of State of each
State where each Loan Party is doing business dated a date reasonably
near the date of the initial financial accommodations to be made
hereunder, stating that each Loan Party, as the case may be, is duly
qualified and in good standing as a foreign entity in such State.
(iv) A certificate of each Loan Party signed on behalf of such
Person by its vice president or secretary, certifying as to (A) the
absence of any amendments to the charter of such Person since the date
of the Secretary of State's certificate for such Person referred to
above and (B) a true and correct copy of the by-laws of such Person as
in effect on the date of the initial financial accommodations to be made
hereunder.
(v) A certificate of the Secretary or an Assistant Secretary
of each Loan Party certifying the names and true signatures of the
officers of such Person authorized to sign, on behalf of such Person,
this Agreement, the Notes and each other Loan Document to which such
Person is a party or by which it is bound.
(X) Solvency. Agent shall have received evidence satisfactory
to Agent that on the Closing Date after giving effect to the Recapitalization
and other transactions contemplated herein to occur on the Closing Date
Borrower and the Restricted Subsidiaries on a consolidated basis are solvent,
able to meet their obligations as they mature and have sufficient capital to
enable them to operate their business. Agent shall have received an opinion of
Xxxxxxxx, Xxxxx Xxxxxx & Xxxxx or another appraisal or valuation firm
reasonably satisfactory to Agent, in form and substance satisfactory to Agent,
which shall document the compliance of Borrower and the Restricted Subsidiaries
with the foregoing after giving effect to the consummation of Recapitalization
and other transactions contemplated herein to occur on the Closing Date.
(Y) Capital, Organization, Legal Structure, Taxes. Borrower's
tax assumptions, capital, organization, ownership and legal structure shall be
satisfactory to Agent and not impair the
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ability of Agent to enforce its claims against the Collateral. All Collateral
shall be freely pledgeable to Agent, for the benefit of Agent and Lenders, as
collateral security for the Obligations, subject to Permitted Encumbrances.
(Z) Mortgagee Waiver. Agent shall have received evidence
satisfactory to Agent that Borrower used commercially reasonable efforts to
obtain a mortgagee waiver, in form and substance satisfactory to Agent, duly
executed by the mortgagee with respect to Borrower's Seagoville, Texas
facility.
(AA) Special Counsel Fees. Messrs. Xxxx, Scholer, Fierman,
Xxxx & Handler, LLP, special counsel to Agent, shall have received payment in
full of all fees, costs and expenses billed on or prior to the Closing Date
with respect to the transactions herein contemplated.
(BB) Other Conditions Precedent. Such other conditions
precedent requested by Agent as are customary in the view of Agent for secured
financings of this type.
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES
To induce Agent and each Lender to enter into this Agreement, and
to make Loans and to issue Lender Letters of Credit, Borrower represents and
warrants to Agent and each Lender that the following statements are , and on
each Funding Date shall (except for any representation or warranty limited by
its terms to a specific date, in which case such representation or warranty
shall be made as of such specific date) be, true, correct and complete:
4.1 Organization, Powers, Capitalization.
(A) Organization and Powers. Each of the Loan Parties is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and qualified to do business in all
states where such qualification is required except where failure to be so
qualified could not be reasonably expected to have a Material Adverse Effect.
Each of the Loan Parties has all requisite corporate power and authority to own
and operate its properties, to carry on its business as now conducted and
proposed to be conducted and to enter into and perform its obligations under
each of the Loan Documents, Senior Note Documents and documents with respect to
the Recapitalization (collectively, the "Transaction Documents") to which it is
a party.
(B) Capitalization. The authorized capital stock of each of
the Loan Parties is as set forth on Schedule 4.1(B) as updated from time to
time in a writing delivered by Borrower to Agent to reflect events, acts or
conditions permitted hereunder and which do not otherwise constitute or result
in a Default or Event of Default. All issued and outstanding shares of capital
stock of each of the Loan Parties are duly authorized and validly issued, fully
paid, nonassessable, free and clear of all Liens other than those in favor of
Agent for the benefit of Agent and Lenders, and such shares were issued in
compliance with all applicable state and federal laws concerning the issuance
of securities. The capital stock of each of the Loan Parties is owned by the
stockholders and in the
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amounts set forth on Schedule 4.1(B) as updated from time to time as aforesaid.
No shares of the capital stock of any Loan Party, other than those described
above, are issued and outstanding. Except as set forth on Schedule 4.1(B) as
updated from time to time as aforesaid, there are no preemptive or other
outstanding rights, options, warrants, conversion rights or similar agreements
or understandings for the purchase or acquisition from any Loan Party, of any
shares of capital stock or other securities of any such entity.
4.2 Authorization of Borrowing, No Conflict. Borrower has the
corporate power and authority to incur the Obligations and to grant security
interests in the Collateral. On the Closing Date, the execution, delivery and
performance of the Loan Documents and other Transaction Documents by each Loan
Party signatory thereto will have been duly authorized by all necessary
corporate and shareholder action. The execution, delivery and performance by
each Loan Party of each Loan Document and other Transaction Document to which
it is a party and the consummation of the transactions contemplated by this
Agreement and the other Loan Documents and Transaction Documents by each Loan
Party do not contravene and will not be in contravention of any applicable law,
the corporate charter or bylaws of any Loan Party or any material agreement or
order by which any Loan Party or any Loan Party's property is bound. This
Agreement is, and the other Loan Documents and Transaction Documents when
executed and delivered will be, the legally valid and binding obligations of
the applicable Loan Parties respectively, each enforceable against the Loan
Parties, as applicable, in accordance with their respective terms, subject, as
to enforceability, to the effect of any applicable bankruptcy, insolvency,
moratorium, reorganization or other similar law affecting creditors' rights
generally, and to the discretionary nature of specific performance, injunctive
relief and other equitable remedies, including the appointment of a receiver.
4.3 Financial Condition. All financial statements concerning
Borrower and its Subsidiaries which have been or will hereafter be furnished by
Borrower and its Subsidiaries to Agent or any Lender pursuant to this Agreement
have been or will be prepared in accordance with GAAP consistently applied
throughout the periods involved (except as disclosed therein) and do or will
present fairly in all material respects the financial condition of the
corporations covered thereby as at the dates thereof and the results of their
operations for the periods then ended, subject in the case of interim
statements, to normal year-end audit adjustments and the omission of footnote
disclosure. The Pro Forma was prepared by Borrower based on the unaudited
consolidated balance sheet of Borrower as of the end of the monthly accounting
period of Borrower most recently closed prior to the Closing Date. The Budgets
delivered and to be delivered have been and will be prepared by Borrower in
light of the past operations of the business of Borrower and its Subsidiaries,
and such Budgets represent and will represent the good faith estimate of
Borrower and its senior management concerning the most probable course of its
business as of the date such Budgets are prepared and delivered. There has
been no material adverse change in the business, operations, liabilities,
assets, properties, prospects, projected cash flows or condition (financial or
otherwise) of Borrower or Borrower and the Restricted Subsidiaries taken as a
whole since May 5, 1997.
4.4 Indebtedness and Liabilities. As of the Closing Date,
neither Borrower nor any of the Restricted Subsidiaries has (a) any
Indebtedness except as reflected on the Pro Forma or
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Schedule 1.1(B); or (b) any Liabilities other than as reflected on the Pro
Forma or as incurred in the ordinary course of business following the date of
the Pro Forma.
4.5 Account Warranties. Borrower represents, warrants and
covenants as to each Account that, at the time of its creation, the Account is
a valid, bona fide account, representing an undisputed indebtedness incurred by
the named account debtor for goods actually sold and delivered or for services
completely rendered; there are no setoffs, offsets or counterclaims, genuine or
otherwise, against the Account; the Account does not represent a sale to an
Affiliate or a consignment, sale or return or a xxxx and hold transaction; no
agreement exists permitting any deduction or discount (other than the discount
stated on the invoice); Borrower is the lawful owner of the Account and has the
right to assign the same to Agent, for the benefit of Agent and Lenders; the
Account is free of all security interests, liens and encumbrances other than
those in favor of Agent, on behalf of Agent and Lenders, and the Account is due
and payable in accordance with its terms.
4.6 Names. Schedule 4.6 sets forth all names, trade names,
fictitious names and business names under which Borrower currently conducts
business or has at any time during the past five years conducted business other
than those names for which written notice has been delivered to Agent pursuant
to and in accordance with subsection 5.1(L).
4.7 Locations; FEIN. Schedule 4.7 sets forth the location of
Borrower's principal place of business, the location of Borrower's books and
records, the location of all other offices of Borrower and all Collateral
locations other than those locations for which a written notice or report has
been delivered to Agent pursuant to and in accordance with subsection 5.1(M),
and such locations are Borrower's sole locations for its business and the
Collateral. Borrower's federal employer identification number is set forth on
the signature page hereof.
4.8 Title to Properties; Liens. Borrower and each of the
Restricted Subsidiaries has good, sufficient and legal title, subject to
Permitted Encumbrances, to all its respective material properties and assets.
Except for Permitted Encumbrances, all such properties and assets are free and
clear of Liens. To the knowledge of Borrower , there are no actual,
threatened or alleged defaults with respect to any leases of real property
under which Borrower or any of the Restricted Subsidiaries is lessee or lessor
which would have a Material Adverse Effect.
4.9 Litigation; Adverse Facts. Except as set forth on
Schedule 4.9, there are no judgments, injunctions or restraining orders
outstanding against any Loan Party or affecting any property of any Loan Party
or the Recapitalization or any of the other transactions contemplated herein
nor is there any action, charge, claim, demand, suit, proceeding, petition,
governmental investigation or arbitration now pending or, to the knowledge of
Borrower , threatened against any Loan Party or affecting any property of any
Loan Party or the Recapitalization or any of the other transactions
contemplated herein which could reasonably be expected to result in any
Material Adverse Effect or have a material adverse effect on the
Recapitalization or any of the other transactions contemplated herein.
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4.10 Payment of Taxes. All material tax returns and reports of
Borrower and each of the Restricted Subsidiaries required to be filed by any of
them have been timely filed, and all taxes, assessments, fees and other
governmental charges upon such Persons and upon their respective properties,
assets, income and franchises which are shown on such returns as due and
payable have been paid when due and payable. As of the Closing Date, none of
the United States income tax returns of Borrower or any of the Restricted
Subsidiaries are under audit. No tax liens have been filed and no claims
(except as otherwise permitted by Section 5.9) are being asserted with respect
to any such taxes. The charges, accruals and reserves on the books of Borrower
and each of the Restricted Subsidiaries in respect of any taxes or other
governmental charges are in accordance with GAAP.
4.11 Performance of Agreements. None of the Loan Parties and
none of their respective Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any material contractual obligation of any such Person, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default.
4.12 Employee Benefit Plans. Borrower, each of its
Subsidiaries and each ERISA Affiliate is in compliance in all material respects
with all applicable provisions of ERISA, the IRC and all other applicable laws
and the regulations and interpretations thereof with respect to all Employee
Benefit Plans. No material liability has been incurred by Borrower, any
Subsidiaries or any ERISA Affiliate which remains unsatisfied for any funding
obligation, taxes or penalties with respect to any Employee Benefit Plan.
4.13 Intellectual Property. Borrower and each of the
Restricted Subsidiaries owns, is licensed to use or otherwise has the right to
use, all material Intellectual Property used in or necessary for the conduct of
its business as currently conducted, and all such Intellectual Property is
identified on Schedule 4.13.
4.14 Broker's Fees. No broker's or finder's fee or commission
will be payable with respect to any of the transactions contemplated hereby.
4.15 Environmental Matters.
(a) Borrower and each of the Restricted Subsidiaries has
obtained all permits, licenses and other authorizations which are required
under all Environmental Laws, except to the extent failure to have any such
permit, license or authorization would not have a Material Adverse Effect.
Borrower and each of the Restricted Subsidiaries is in compliance with (i) the
terms and conditions of all such permits, licenses and authorizations, and (ii)
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except, in each case or in the aggregate, to the extent failure to
comply would not have a Material Adverse Effect.
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(b) Except as set forth in Schedule 4.15, no notice,
notification, demand, request for information, citation, summons or order has
been issued, no complaint has been filed, no penalty has been assessed and no
investigation or review is pending or, to the knowledge of Borrower,
threatened by any governmental body or authority or other Person with respect
to any alleged failure by Borrower or any Restricted Subsidiary to have any
permit, license or authorization required in connection with the conduct of its
business or with respect to any Environmental Laws, including, without
limitation, Environmental Laws relating to the generation, treatment, storage,
recycling, transportation, disposal or release of any Hazardous Materials,
except to the extent such notice, notification, demand, request for
information, citation, summons, order, complaint, penalty, investigation or
review would not have a Material Adverse Effect. Except as set forth on
Schedule 4.15, none of Borrower or any Restricted Subsidiary has been
identified as a potentially responsible party (as that term has been construed
pursuant to CERCLA, or any similar applicable Environmental Law), the effect of
which identification or anticipated or actual exposure of Borrower or any
Restricted Subsidiary is reasonably likely to result in material liability to
Borrower or any Restricted Subsidiary or otherwise have a Material Adverse
Effect.
(c) Except as set forth in Schedule 4.15, no material oral or
written notification of a release of a Hazardous Material has been filed by or
on behalf of Borrower or any Restricted Subsidiary, except to the extent such
notification would not have a Material Adverse Effect. No property now owned,
leased or used by Borrower or any Restricted Subsidiary is listed or proposed
for listing on the National Priorities List under CERCLA or on any similar
applicable foreign, federal or state list of sites requiring investigation or
clean-up, the effect of which listing or proposed listing or anticipated or
actual exposure of Borrower or any Restricted Subsidiary is reasonably likely
to result in material liability to Borrower or any Restricted Subsidiary or
otherwise have a Material Adverse Effect. To the knowledge of Borrower, no
property previously owned, leased, or used by Borrower or any Restricted
Subsidiary is listed or is proposed for listing on the National Priorities List
under CERCLA or on any similar applicable foreign, federal or state list of
sites requiring investigation or clean-up for any Hazardous Material, actually
or allegedly, generated, treated, stored, recycled, transported, disposed or
released on the property during the time of Borrower's or any Restricted
Subsidiary's ownership, lease or use, the effect of which listing or proposed
listing or anticipated or actual exposure of Borrower or any Restricted
Subsidiary is reasonably likely to result in material liability to Borrower or
any Restricted Subsidiary or otherwise have a Material Adverse Effect.
(d) Neither Borrower, any Restricted Subsidiary nor, to the
knowledge of Borrower, any previous owner, tenant, occupant or user of (1) any
property now owned, leased or used by Borrower or any Restricted Subsidiary or
(2) any property formerly owned, leased or used by Borrower or any Restricted
Subsidiary, during the time of Borrower's or any Restricted Subsidiary's
ownership, lease or use has (i) engaged in or permitted any operations or
activities upon or any use or occupancy of such property, or any portion
thereof, for the purpose of or in any way involving the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal (whether legal or illegal, accidental or intentional) of any Hazardous
Materials on, under, in or about such property, except to the extent commonly
used in day-to-day operations of such property or in the ordinary course of
business of Borrower or any Restricted Subsidiary and in such
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case, only in compliance with all Environmental Laws except to the extent
failure to comply would not have a Material Adverse Effect, or (ii) transported
any Hazardous Materials to, from or across such property except to the extent
commonly used in day-to-day operations of such property or in the ordinary
course of business of Borrower or any Restricted Subsidiary and, in such case,
in compliance with all Environmental Laws except to the extent failure to
comply would not have a Material Adverse Effect; nor, to the knowledge of
Borrower, have any Hazardous Materials migrated from other properties upon,
about or beneath such property, nor, to the knowledge of the Borrower, are any
Hazardous Materials presently constructed, deposited, stored or otherwise
located on, under, in or about such property except to the extent commonly used
in day-to-day operations of such property or in the ordinary course of business
of Borrower or any Restricted Subsidiary and, in such case, in compliance with
all Environmental Laws except to the extent failure to comply would not have a
Material Adverse Effect.
(e) There are no Liens arising under or pursuant to any
Environmental Laws on any of the real or personal property or properties now
owned, leased or used by Borrower or any Restricted Subsidiary and no
governmental actions have been taken or are in process which could subject any
of such properties to such Liens or, as a result of which Borrower or any
Restricted Subsidiary would be required to place any notice or restriction
relating to the presence of Hazardous Materials at any property owned by it in
any deed to such property, except for deed restrictions listed and described in
Schedule 4.15 and Permitted Encumbrances.
4.16 Solvency. After giving effect to the transactions
contemplated by the Loan Documents and other Transaction Documents, and as of
each of the date of this Agreement and the date of the consummation of each
Permitted Acquisition, Borrower: (a) owns and will own assets the fair salable
value of which are (i) greater than the total amount of its liabilities
(including contingent liabilities) and (ii) greater than the amount that will
be required to pay the probable liabilities of Borrower as they mature; (b) has
capital that is not unreasonably small in relation to its business as presently
conducted or any contemplated or undertaken transaction; and (c) does not
intend to incur and does not believe that it will incur debts beyond its
ability to pay such debts as they become due. There is no material fact known
to Borrower that is reasonably likely to have a Material Adverse Effect and
that has not been fully disclosed herein or in such other documents,
certificates and statements furnished to Agent or Lenders for use in connection
with the transactions contemplated hereby.
4.17 Disclosure. No representation or warranty of Borrower or
any other Loan Party contained in this Agreement, the financial statements, the
other Loan Documents, the other Transaction Documents or any other document,
certificate or written statement furnished to Agent or any Lender by or on
behalf of any such Person for use in connection with the Loan Documents
contains any untrue statement of a material fact or omitted, omits or will omit
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances in which the
same were made. The Budgets and pro forma financial information contained in
such materials are based upon good faith estimates and assumptions believed by
such Persons to be reasonable at the time made, it being recognized by Agent
and Lenders that such forecasts as to future events are not to be viewed as
facts and that actual results during the period or
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periods covered by any such or forecasts may differ from the forecasted
results. There is no material fact known to Borrower that has had or will have
a Material Adverse Effect or a material adverse effect with respect to the
Recapitalization or any of the other transactions contemplated herein and that
has not been disclosed herein or in such other documents, certificates and
statements furnished to Agent or any Lender for use in connection with the
transactions contemplated herein.
4.18 Insurance. Borrower and each of the Restricted
Subsidiaries maintains or has caused to be maintained adequate insurance
policies for public liability, property damage for its business and properties,
product liability, and business interruption, no notice of cancellation has
been received with respect to such policies and Borrower and each of the
Restricted Subsidiaries is in compliance in all material respects with all
conditions contained in such policies.
4.19 Compliance with Laws. Neither Borrower nor any of the
Restricted Subsidiaries is in violation of any law, ordinance, rule,
regulation, order, policy, guideline or other requirement of any domestic or
foreign government or any instrumentality or agency thereof, having
jurisdiction over the conduct of its business or the ownership of its
properties, including, without limitation, any violation relating to any use,
release, storage, transport or disposal of any Hazardous Material, which
violation would subject Borrower or any of the Restricted Subsidiaries, or any
of their respective officers to criminal liability or have a Material Adverse
Effect and no such violation has been alleged. The Recapitalization and the
other transactions contemplated herein have been consummated in all material
respects in accordance with all applicable laws.
4.20 Bank Accounts. Schedule 4.20 sets forth the account
numbers and locations of all bank accounts of Borrower and the Restricted
Subsidiaries other than those bank accounts for which Agent has received notice
pursuant to and in accordance with subsection 5.1(N).
4.21 Subsidiaries. Borrower has no Subsidiaries other than as
set forth on Schedule 4.21 or those permitted to be created or acquired under
Section 7.
4.22 Employee Matters. Except as set forth on Schedule 4.22,
(a) no Loan Party nor any of such Loan Party's employees is subject to any
collective bargaining agreement except those for which Agent has received
written notice thereof, (b) no petition for certification or union election is
pending with respect to the employees of any Loan Party, no union or collective
bargaining unit has sought such certification or recognition with respect to
the employees of any Loan Party, no union representation question exists with
respect to employees of any Loan Party and no union organizing activities are
taking place, in each instance, except those for which Agent has received
written notice thereof, (c) there are no labor disputes, strikes, slowdowns,
work stoppages or controversies pending or, to the knowledge of Borrower ,
threatened between any Loan Party and its respective employees, other than
employee grievances arising in the ordinary course of business which could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect and (d) no Loan Party is engaged in any unfair labor
practice and there is no unfair labor practice complaint pending or threatened
against any Loan Party before the National Labor Relations Board or other
governmental body or authority, and no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against any Loan Party or,
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to the knowledge of Borrower, threatened against any of them, in each instance,
which could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. Except as set forth on Schedule 4.22,
neither Borrower nor any of the Restricted Subsidiaries is subject to an
employment contract except those for which Agent has received written notice
thereof. The potential liability of Borrower with respect to all actual,
threatened and potential claims relating to the allegation that Borrower failed
to pay its store managers and associate store managers overtime compensation as
required by California (collectively, the "Compensation Claims") law would not,
if adversely determined to Borrower in excess of the amounts reserved therefor
by Borrower in accordance with GAAP, reasonably be expected to have a Material
Adverse Effect. None of the information and material with respect to
Compensation Claims furnished to Agent or any Lender by or on behalf of
Borrower contains any untrue statement of a material fact or omitted, omits or
will omit to state a material fact necessary in order to make the statements
therein contained not misleading in light of the circumstances in which the
same were made.
4.23 Governmental Regulation. None of the Loan Parties is, or
after giving effect to any loan will be, subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act or the Investment
Company Act of 1940 or to any federal or state statute or regulation limiting
its ability to incur indebtedness for borrowed money. No action of, or filing
with, any governmental or public body or authority (other than normal reporting
requirements or filing with respect to perfection of Liens in Collateral) is
required to authorize, or is otherwise required in connection with, the
execution, delivery or performance of any of this Agreement, the Notes, the
other Loan Documents and Transaction Documents or any of the instruments or
documents to be delivered pursuant hereto or thereto, except such as have been
made.
4.24 Capital Leases. Except as to future Capital Leases of
Borrower and the Restricted Subsidiaries permitted hereunder, Schedule 1.1(B)
contains a complete list as of the Closing Date of all Capital Leases of
Borrower and the Restricted Subsidiaries and all amendments thereto and all
other documents affecting rights and obligations thereunder, including without
limitation, assignments and subleases pursuant to which Borrower or any
Restricted Subsidiary leases equipment. The copies of the Capital Leases
heretofore delivered by Borrower to Agent are true, correct and complete copies
thereof and each of such Capital Leases is in full force and effect in
accordance with the terms thereof. None of Borrower nor any Restricted
Subsidiary nor, to the best knowledge of Borrower, the lessor, under any
Capital Lease is in default under the applicable Capital Lease or has given or
received any notice of cancellation or termination of such Capital Lease other
than the cancellation or termination of a Capital Lease by Borrower or
Restricted Subsidiary party thereto in the ordinary course of its business and
not due to or arising out of the occurrence of a default by Borrower or such
Restricted Subsidiary thereunder. Neither Borrower nor any Restricted
Subsidiary has assigned any of their interest in any of the Capital Leases, as
collateral or otherwise, or granted any license with respect thereto, except as
may be otherwise disclosed on Schedule 1.1(B).
[4.25 Co-Op Contracts. Neither Borrower nor any of its
Subsidiaries is party to any co-op advertising contracts or arrangements
requiring Borrower's performance of advertising or other marketing functions,
except as disclosed on
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Schedule 4.25; and, except as disclosed on Schedule 4.25, neither Borrower nor
any of its Subsidiaries is in default in the observance or performance of any
duties or obligations under any such contracts.]
4.26 Inactive Subsidiary. As of the Closing Date and at all
times thereafter so long as CAP Merger Sub Inc. is not a Restricted Subsidiary,
CAP Merger Sub Inc. does not own cash and other assets and properties with an
aggregate value in excess of $________________.
Borrower may, at any time and from time to time and subject to
subsection 5.13, amend any one or more of the Schedules referred in this
Section 4 and any representation or warranty contained herein which refers to
any such Schedule shall from and after the date of any such amendment refer to
such Schedule as so amended, provided, however, that in no event may the
Borrower amend any such Schedule if such amendment would reflect or evidence a
Default or Event of Default.
SECTION 5. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any of the
Commitments hereunder shall be in effect and until payment in full of all
Obligations (other than Inchoate Indemnity Obligations) and termination of all
Lender Letters of Credit, unless Requisite Lenders shall otherwise give their
prior written consent, Borrower shall perform, and shall cause each of the
Restricted Subsidiaries to perform, all covenants in this Section 5.
5.1 Financial Statements and Other Reports. Borrower will
maintain, and cause each of the Restricted Subsidiaries to maintain, a system
of accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with
GAAP. In any event and without limitation of the foregoing, each consolidated
balance sheet of Borrower and its Subsidiaries as at the end of any fiscal
quarter or Fiscal Year of Borrower required to be delivered pursuant to
subsection 5.1(B) or (C) shall classify and present those liabilities of the
type which are included within "Other accrued liabilities" and "Other
noncurrent liabilities" in the audited balance sheet of Borrower as at December
29, 1996 and the corresponding notes to the financial statements therefor in a
manner consistent with the classification and presentation of such liabilities
in such audited balance sheet and notes, including, without limitation, by
including the aggregate of such liabilities as of the relevant balance sheet
date as a line item in such balance sheet with a summary break-down of each
sub-category of liabilities (using the same categories as in the notes to such
audited financial statements, including, without limitation, "Store-closing
provision" and "Other (including legal)") included within each such line item
in notes which shall be delivered with or as part of each such balance sheet.
Borrower will deliver to Agent and each Lender (unless specified to be
delivered solely to Agent) the financial statements and other reports described
below.
(A) Monthly Financials. As soon as available and in any event
within thirty (30) days after the end of each monthly accounting period of
Borrower, Borrower will deliver the consolidated balance sheet of Borrower and
its Subsidiaries and the consolidating balance sheet of Borrower and the
Restricted Subsidiaries, in either instance, as at the end of such monthly
accounting period and the related consolidated and, with respect to Borrower
and the Restricted Subsidiaries, consolidating statements of operations,
stockholders' equity and cash flow for such monthly accounting period and for
the period from the beginning of the then current Fiscal Year to the end of
such monthly accounting period.
(B) Quarterly Financials. As soon as available and in any
event within forty-five (45) days after the end of each quarterly accounting
period of a Fiscal Year, Borrower will deliver the consolidated balance sheet
of Borrower and its Subsidiaries and the consolidating balance sheet of
Borrower and the Restricted Subsidiaries, in either instance, as at the end of
such quarterly accounting period and the related consolidated and, with respect
to Borrower and the Restricted Subsidiaries, consolidating statements of
operations, stockholders' equity and cash flow for such
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quarterly accounting period of a Fiscal Year and for the period from the
beginning of the then current Fiscal Year to the end of such quarterly
accounting period of a Fiscal Year.
(C) Year-End Financials. As soon as available and in any
event within ninety (90) days after the end of each Fiscal Year, Borrower will
deliver: (1) the consolidated balance sheet of Borrower and its Subsidiaries
as at the end of such year and the related consolidated statements of
operations, stockholders' equity and cash flow for such Fiscal Year; (2) a
schedule of the outstanding Indebtedness of Borrower and its Subsidiaries
describing in reasonable detail each such debt issue or loan outstanding and
the principal amount and amount of accrued and unpaid interest with respect to
each such debt issue or loan; (3) a report with respect to the financial
statements from a firm of independent certified public accountants selected by
Borrower and acceptable to Agent, which report shall be unqualified as to going
concern and scope of audit of Borrower and its Subsidiaries and shall state
that (a) such consolidated financial statements present fairly in all material
respects the consolidated financial position of Borrower and its Subsidiaries
as at the dates indicated and the results of their operations and cash flow for
the periods indicated in conformity with GAAP applied on a basis consistent
with prior years and (b) that the examination by such accountants in connection
with such consolidated financial statements has been made in accordance with
generally accepted auditing standards; (4) copies of the consolidating
financial statements of Borrower and its Subsidiaries, including (a)
consolidating balance sheets of Borrower and its Subsidiaries as at the end of
such Fiscal Year showing intercompany eliminations and (b) related
consolidating statements of earnings of Borrower and its Subsidiaries showing
intercompany eliminations; and (5) a schedule of the book and physical
inventory adjustments of Borrower and its Subsidiaries in reasonable detail.
(D) Accountants' Certification and Reports. Together with
each delivery of consolidated financial statements of Borrower and its
Subsidiaries pursuant to subsection 5.1(C), Borrower will deliver (1) a written
statement by its independent certified public accountants (a) stating that the
examination has included a review of the terms of this Agreement as same relate
to accounting matters and (b) stating whether, in connection with the
examination, any condition or event that constitutes a Default or an Event of
Default has come to their attention and, if such a condition or event has come
to their attention, specifying the nature and period of existence thereof and
(2) a copy of the letter sent by Borrower to its independent certified public
accountants, via certified mail return requested, in the form of Exhibit 5.1(D)
for such consolidated financial statements of Borrower and its Subsidiaries
(Borrower hereby agreeing to send such letter to its independent certified
public accountants upon each delivery to Borrower by such accountants of such
accountant's report under subsection 5.1(C)(3) with respect to the annual
financial statements of Borrower for each Fiscal Year). Concurrently with the
delivery required hereby of the financial statements involved, Borrower will
deliver copies of all management reports submitted to Borrower by independent
public accountants in connection with each annual, interim or special audit of
the financial statements of Borrower made by such accountants.
(E) Compliance Certificate. Together with the delivery of
each set of financial statements referenced in subparts (B) and (C) of this
subsection 5.1, Borrower will deliver a Compliance Certificate, together with
support in reasonable detail to determine Borrower's compliance or
noncompliance with the financial covenants set forth in Section 6.
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(F) Borrowing Base Certificates, Registers and Journals. As
soon as available and in any event within 10 days after the last day of each
monthly accounting period of Borrower, Borrower shall deliver to Agent a
Borrowing Base Certificate for the monthly accounting period of Borrower just
ended; provided that so long as Availability shall be less than or equal to
$15,000,000, Borrower shall deliver to Agent a Borrowing Base Certificate on a
weekly basis, such Borrowing Base Certificate to be delivered as soon as
available and in any event within 5 Business Days after the end of each week
for such week just ended.
(G) Reconciliation Reports, Inventory Reports and Listings and
Agings. On the Closing Date and within ten (10) days after the last day of
each monthly accounting period of Borrower (but with respect to clause (1),
only after Eligible Accounts are includable within the Borrowing Base as
provided in subsection 2.1(A)(2)(a)); and from time to time upon the request of
Agent, Borrower will deliver to Agent: (1) an aged trial balance of all then
existing Accounts; and (2) an Inventory Report as of the last day of such
monthly accounting period. As soon as available and in any event within ten
(10) days after the last day of each monthly accounting period of Borrower,
and from time to time upon the request of Agent, Borrower will deliver to
Agent: (1) a Reconciliation Report as at the last day of such monthly
accounting period; (2) an aged trial balance of all then existing accounts
payable; and (3) a detailed inventory listing and cover summary report. All
such reports shall be in form and substance reasonably satisfactory to Agent.
(H) Management Report. Together with each delivery of
financial statements of Borrower and its Subsidiaries pursuant to subdivisions
(B) and (C) of this subsection 5.1, Borrower will deliver a management
discussion and analysis report: (1) describing the operations and financial
condition of Borrower and its Subsidiaries for the quarterly accounting period
of Borrower then ended and the portion of the current Fiscal Year then elapsed
(or for the Fiscal Year then ended in the case of year-end financials); (2)
setting forth in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding figures
from the most recent Budgets for the current Fiscal Year delivered to Lenders
pursuant to 5.1(P); (3) discussing the reasons for any significant variations;
(4) [including a report on sales revenue and contribution to profits on a
regional basis (including comparisons of same store revenue activity month-to-
month)]; and (5) including a report on new stores, closed stores and relocated
stores of Borrower and its Subsidiaries in such detail as Agent may reasonably
request. The information above shall be presented in reasonable detail and
shall be certified by a Financial Officer to the effect that such information
fairly presents the results of operations and financial condition of Borrower
and its Subsidiaries as at the dates and for the periods indicated. Together
with each delivery of the financial statements of Borrower and its Subsidiaries
pursuant to subdivision (B) of this subsection 5.1, Borrower will deliver cycle
counts and shrink performance data with respect to Borrower and its
Subsidiaries in such form, scope and detail as Agent shall request.
(I) Appraisals. From time to time, upon the request of Agent,
Borrower will obtain and deliver to Agent, at Borrower's expense, appraisal
reports in form and substance and from appraisers satisfactory to Agent,
stating the then current fair market and orderly liquidation values of all or
any portion of the Collateral; provided, however, so long as no Event of
Default is
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continuing, Agent shall not request an appraisal as to any particular category
of Collateral to be performed more than once every Loan Year at Borrower's
expense.
(J) Government Notices. Borrower will deliver to Agent
promptly after receipt (but in any event within five (5) Business Days after
such receipt) copies of all notices, requests, subpoenas, inquiries or other
demands received from any governmental agency concerning any Employee Benefit
Plan, the violation or alleged violation of any Environmental Laws, the
storage, use or disposal of any Hazardous Material, the violation or alleged
violation of the Fair Labor Standards Act or Borrower's payment or non-payment
of any taxes including any tax audit.
(K) Events of Default, etc. Promptly upon any Executive
Officer or Financial Officer obtaining knowledge of any of the following events
or conditions (but in any event within five (5) Business Days after any such
officer obtains any such knowledge), Borrower shall deliver a certificate of an
Executive Officer or Financial Officer specifying the nature and period of
existence of such condition or event and what action Borrower has taken, is
taking and proposes to take with respect thereto: (1) any condition or event
that constitutes an Event of Default or Default; (2) any notice of material
default that any Person has given to Borrower or any of its Subsidiaries or any
other action taken with respect to a claimed material default; or (3) any
Material Adverse Effect or material adverse effect with respect to the
Recapitalization or any of the other transactions contemplated herein.
(L) Trade Names. Borrower and each of the Restricted
Subsidiaries will give Agent at least thirty (30) days advance written notice
of any change of name or of any new trade name or fictitious business name.
Borrower's use of any trade name or fictitious business name will be in
compliance in all material respects with all laws regarding the use of such
names.
(M) Locations. Borrower will give Agent at least thirty (30)
days advance written notice of any change in Borrower's principal place of
business or any change in the location of its books and records or any new
location for its books and records . Borrower will give Agent at least thirty
(30) days advance written notice of the opening of any new store or warehouse
or of any other new Collateral Location in which Agent's Lien on the Collateral
at such store, warehouse or other location has not been perfected by the filing
of a financing statement, and Borrower will give Agent within ten (10) Business
Days after the end of each fiscal quarter of Borrower, a report in reasonable
detail setting forth all changes in the location of the Collateral and each new
location of Collateral.
(N) Bank Accounts. Borrower will give Agent prompt notice of
any new bank accounts Borrower or any of the Restricted Subsidiaries intends to
establish prior to its opening same; provided that Borrower shall be required
to give Agent notice of any new store operating account only within ten (10)
Business Days after the end of the fiscal quarter of Borrower in which such
account was opened.
(O) Litigation. Promptly upon any Executive Officer or
Financial Officer obtaining knowledge (but in any event within five (5)
Business Days of any such officer obtaining such knowledge) of (1) any action,
suit, proceeding, governmental investigation or arbitration against
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or affecting any Loan Party, any property of any Loan Party, the
Recapitalization or any of the other transactions contemplated herein, in each
instance, not previously disclosed by Borrower to Agent or (2) any material
development in any action, suit, proceeding, governmental investigation or
arbitration at any time pending against or affecting any Loan Party, any
property of any Loan Party, the Recapitalization or any of the other
transactions contemplated herein, in each instance, which, if (i) not fully
covered by insurance (except for customary deductibles) for which the insurer
admits liability and has assumed the defense thereof and (ii) adversely
determined, could reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the Recapitalization or any of the other
transactions contemplated herein, Borrower will promptly give notice thereof to
Agent and provide such other information as may be reasonably available to them
to enable Agent and its counsel to evaluate such matter.
(P) Budgets. As soon as available and in any event no later
than thirty (30) days after the commencement of each Fiscal Year of Borrower,
Borrower will deliver a Budget for such Fiscal Year.
(Q) Senior Note Debt and Other Indebtedness Notices. Borrower
shall promptly deliver copies of all notices given or received by Borrower and
any of the Restricted Subsidiaries with respect to noncompliance with any term
or condition related to any Senior Note Debt or other Indebtedness outstanding
in the principal amount of $1,000,000 or more, and shall promptly notify
Lenders and Agent of any potential or actual event of default with respect to
any Senior Note Debt or any such other Indebtedness.
(R) SEC Filings and Press Releases. Promptly but in any event
within five (5) Business Days after their becoming available, Borrower will
deliver copies of: (1) all financial statements, reports, notices and proxy
statements sent or made available by Borrower or any of its Subsidiaries to
their security holders generally; (2) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by Borrower or any of
its Subsidiaries with any securities exchange or with the SEC or any
governmental or private regulatory authority; and (3) all press releases and
other statements made generally available by Borrower or any of its
Subsidiaries to the public concerning material developments in the business of
any such Person.
(S) Insurance. As soon as available, but in any event not
later than ten (10) Business Days prior to the end of each Fiscal Year of
Borrower, Borrower will deliver a report in form and substance reasonably
satisfactory to Agent outlining all material insurance coverage maintained as
of the date of such report by Borrower and its Subsidiaries .
(T) Other Information. With reasonable promptness, Borrower
will deliver such other information and data with respect to any Loan Party,
any Subsidiary of any Loan Party or the Collateral as Agent or any Lender may
reasonably request from time to time.
[OTHER REPORTING AND INFORMATIONAL REQUIREMENTS TO BE ADDED]
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5.2 Access to Accountants and Management. Borrower authorizes
Agent and Lenders to discuss the financial condition and financial statements
of Borrower and its Subsidiaries with Borrower's independent public accountants
upon reasonable notice to Borrower of its intention to do so, and authorizes
such accountants to respond to all of Agent's and Lenders' inquiries. Each
Lender may with the consent of Agent, which will not be unreasonably denied,
confer with Borrower's management directly regarding Borrower's and its
Subsidiaries' business, operations and financial condition.
5.3 Inspection. Upon reasonable notice from Agent (provided
that no such notice is necessary during the continuance of an Event of
Default), Borrower shall permit Agent and any authorized representatives
designated by Agent to visit and inspect any of the properties of Borrower or
any of its Subsidiaries, including its financial and accounting records, and in
conjunction with such inspection, to make copies and take extracts therefrom,
and to discuss its affairs, finances and business with its officers and
independent public accountants, at such reasonable times during normal business
hours and as often as may be reasonably requested. Borrower acknowledges that
Agent intends to make such inspections on at least a quarterly basis. Each
Lender may with the consent of Agent, which will not be unreasonably denied,
accompany Agent on any such visit or inspection. Without in any way limiting
the foregoing, Borrower will participate and will cause its key management
personnel to participate in a meeting of Agent and Lenders at least once during
each Fiscal Year to be held at such time and at such place as may be agreed to
by Borrower and Agent. In addition, Agent shall have the right (whether
through its own or third party auditors selected by Agent) to conduct periodic
audits (which, unless the Requisite Lenders otherwise approve, shall be done at
least twice each Loan Year) of the Collateral and the financial and accounting
records relating thereto; and the audit fees referred to in subsection 2.3(C)
and the reasonable out-of-pocket costs and expenses of Agent in regard to two
such audits in any Loan Year (and such other audits ordered or commenced during
the continuance of an Event of Default), including, without limitation, travel,
meals and lodging, shall be paid or reimbursed to Agent by Borrower provided
that Borrower shall not be liable for more than $25,000 in fees in respect of
any such audit.
5.4 Collateral Records. Borrower shall, and shall cause the
Restricted Subsidiaries to, keep full and accurate books and records relating
to the Collateral.
5.5 Account Covenants; Verification. Borrower shall, at its
own expense: (a) cause all invoices evidencing Accounts and all copies thereof
to bear a notice that such invoices are payable to the bank accounts
established in accordance with subsection 5.6 and (b) use its best efforts to
assure prompt payment of all amounts due or to become due under the Accounts.
No discounts, credits or allowances will be issued, granted or allowed by
Borrower to customers and no returns will be accepted outside Borrower's
ordinary course of business without Agent's prior written consent; provided,
that until Agent notifies Borrower to the contrary, Borrower may presume
consent. Borrower will immediately notify Agent in the event that a customer
alleges any dispute or claim with respect to an Account as to which the amount
due is more than $250,000 or of any other circumstances known to Borrower that
may impair the validity or collectibility of such an Account. Agent shall have
the right, at any time or times hereafter, to verify the validity, amount
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or any other matter relating to an Account, by mail, telephone or in person.
After the occurrence and during the continuance of a Default or an Event of
Default, Borrower shall not, without the prior consent of Agent, adjust, settle
or compromise the amount or payment of any Account, or release wholly or partly
any customer or obligor thereof, or allow any credit or discount thereon, other
than in the ordinary course of business (unless Agent shall otherwise direct).
5.6 Collection of Accounts and Payments. Borrower will, at
its own cost and expense, cause all payments received by or on behalf of
Borrower and the Restricted Subsidiaries on account of Accounts, Inventory and
other Collateral and all other payments received by or on behalf of Borrower or
any Restricted Subsidiary from whatever source (other than cash needed to
operate Borrower's or any such Restricted Subsidiary's stores in the ordinary
course of business consistent with past practice), whether in the form of cash,
checks, notes, drafts, bills of exchange, money orders or otherwise (referred
to herein as "Payments"), (i) to be deposited not less often than once each
business day in one or more bank accounts maintained by Borrower or such
Restricted Subsidiary and which meet criteria reasonably acceptable to Agent
and (ii) to be transferred on each business day (to the extent practicable but
in any event by no later than the immediately succeeding business day) from the
accounts referred to in clause (i) to one or more concentration accounts
designated by Borrower or such Restricted Subsidiary with a bank which meets
criteria reasonably acceptable to Agent. Each bank reasonably requested by
Agent at which an account referred to in clause (i) of the first sentence of
this subsection 5.6 is maintained and each bank at which a concentration
account referred to in clause (ii) of such sentence is maintained shall execute
and deliver to Agent such agreements, in form and substance reasonably
satisfactory to Agent, as Agent shall reasonably request with respect to such
accounts, including, without limitation, with respect to prohibitions on
Borrower or such Restricted Subsidiary, upon notice from Agent to the bank (it
being agreed that Agent may give such notice after the occurrence of a
Triggering Event), withdrawing funds from such accounts or otherwise directing
or modifying actions with respect to such accounts. Each agreement with a bank
at which a concentration account is established shall provide, among other
things, that (i) all payments made to the concentration account are pledged to
Agent, for benefit of Agent and Lenders, (ii) such bank shall have no right of
setoff against such concentration account except as agreed to by Agent and
(iii) upon notice from Agent to such bank, all funds deposited into such
account shall be transferred directly to the Agent's Account on a daily basis
(it being agreed that Agent may give such notice if a Triggering Event (as
defined below) is continuing). Agent or Agent's designee may, at any time
after the occurrence and during the continuance of a Triggering Event, notify
account debtors that Accounts and other accounts receivable of Loan Parties
have been assigned to Agent and of Agent's security interest therein, and may
collect them directly and charge the collection costs and expenses to
Borrower's loan account as a Revolving Advance. Borrower hereby agrees that
all payments received by Agent, whether by cash, check, wire transfer, ACH
transfer or any other instrument, made to such concentration accounts or
otherwise received by Agent and whether on the Accounts or as proceeds of other
Collateral or otherwise and whether or not a Triggering Event has occurred are
and will be pledged to Agent, for the benefit of Agent and Lenders. Whether
or not a Triggering Event has occurred, Borrower and any of its Affiliates,
employees, agents or other Persons acting for or in concert with Borrower or
any Restricted Subsidiary, shall, acting as trustee for Agent, receive, in
trust for Agent and Lenders, any monies, checks, notes, drafts, any other
payments relating to and/or proceeds of
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Accounts or other Collateral or any other Payments which come into the
possession or under the control of Borrower or any of Borrower's Affiliates,
employees, agents or other Persons acting for or in concert with Borrower or
any Restricted Subsidiary, and immediately upon receipt thereof, Borrower or
such Persons shall remit the same or cause the same to be remitted, in kind, to
the above bank accounts or to Agent at its address set forth in subsection 10.4
below. For purposes of this subsection 5.6, a "Triggering Event" means any of
(i) an Event of Default under any of subsections shall
have occurred and be continuing, (ii) Availability shall be less than
$15,000,000 or (iii) the Obligations shall have been declared immediately due
and payable. [NOTE: To the extent an existing bank is unwilling to provide a
bank account agreement satisfactory to Agent, ample time will be given for
Borrower to replace bank and get bank account agreement executed with new
bank.]
5.7 Endorsement. Borrower hereby constitutes and appoints,
while a Triggering Event is continuing, Agent and all Persons designated by
Agent for that purpose as Borrower's true and lawful attorney-in-fact, with
power to endorse Borrower's name to any of the items of payment or proceeds
described in subsection 5.6 above and all proceeds of Collateral that come into
Agent's possession or under Agent's control. Both the appointment of Agent as
Borrower's attorney and Agent's rights and powers are coupled with an interest
and are irrevocable until payment in full and complete performance of all of
the Obligations (other than Inchoate Indemnity Obligations) and termination of
the Revolving Loan Commitment.
5.8 Corporate Existence. Borrower will, and will cause each
of the Restricted Subsidiaries to, at all times preserve and keep in full force
and effect its corporate existence and all rights and franchises material to
its business. Borrower will promptly notify Agent of any change in its or any
Restricted Subsidiary's ownership or corporate structure.
5.9 Payment of Taxes. Borrower will, and will cause each of
the Restricted Subsidiaries to, pay all taxes, assessments and other
governmental charges imposed upon it or any of its properties or assets or with
respect to any of its franchises, business, income or property before any
penalty accrues thereon provided that no such tax need be paid if Borrower or
one of the Restricted Subsidiaries is contesting same in good faith by
appropriate proceedings promptly instituted and diligently conducted , Borrower
or such Subsidiary, as appropriate, has established appropriate reserves as
shall be required in conformity with GAAP and in Agent's judgment the failure
to pay same will not create a risk of foreclosure or sale of any property.
5.10 Maintenance of Properties; Insurance. Borrower will
maintain or cause to be maintained in good repair, working order and condition,
ordinary wear and tear excepted, all material properties used in the business
of Borrower and the Restricted Subsidiaries and will make or cause to be made
all appropriate repairs, renewals and replacements thereof. Borrower will and
will cause the Restricted Subsidiaries to (i) keep its insurable properties
adequately insured at all times by financially sound and reputable insurers
having an A.M. Best rating of "B+" or higher and being in a financial size
category of XII or larger, (ii) maintain or cause to be maintained in full
force and effect with financially sound and reputable insurers casualty
insurance, to such extent and against such risks (including fire and other
risks insured against by extended coverage), as is customary with
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companies similarly situated and in the same or similar businesses, provided,
however, that in any event such insurance shall insure the property (including,
without limitation, Inventory and books and records) of Borrower and each
Restricted Subsidiary against all risk of physical damage, including, without
limitation, loss by fire, explosion and such other casualties as may be
reasonably requested by Agent, and all individual and aggregate limits of
coverage under such insurance shall be acceptable to Agent in its sole
discretion, (iii) maintain in full force and effect with financially sound and
reputable insurers having an A.M. Best rating of "B+" or higher and being in a
financial size category of XII or larger public liability insurance against
claims for personal injury or death or property damage occurring upon, in,
about or in connection with the use of any properties owned, occupied or
controlled by Borrower or any Restricted Subsidiary, in such amount as Agent
shall reasonably deem necessary and request, but in no event shall the minimum
limit of such liability insurance be less than $1,000,000 per occurrence with
excess coverage under umbrella liability insurance policies with a minimum
limit of $1,000,000 per occurrence and $10,000,000 in the aggregate, (iv)
maintain in full force and effect with financially sound and reputable insurers
having an A.M. Best rating of "B+" or higher and being in a financial size
category of XII or larger business interruption insurance covering each of
Borrower and the Restricted Subsidiaries with policy limits that are reasonably
acceptable to Agent (and such policies shall be collaterally assigned to Agent,
for the benefit of Agent and Lenders, pursuant to one or more assignment
agreements acceptable in form and substance to Agent), (v) maintain such other
insurance as may be required by law or as may be reasonably requested by Agent
for purposes of assuring compliance with this subsection 5.10 and (vi) furnish
to each Lender, upon request, full information as to all insurance carried
(including, without limitation, full copies of all policies). All casualty
insurance, credit insurance and other insurance covering tangible personal
property subject to a Lien in favor of Agent for the benefit of Agent and the
Lenders granted pursuant to the Loan Documents shall provide that Xxxxxx, as
agent of the Lenders, is a loss payee and in the case of each separate loss the
full amount of insurance proceeds shall be payable to Agent and Borrower as
their interests may appear (which proceeds shall be applied to the Obligations
in accordance with the provisions of this Agreement) and shall further provide
for at least 30 days' prior written notice by certified mail to Agent of the
cancellation or substantial modification thereof. All liability insurance
shall provide that Agent shall be an additional insured thereunder.
Notwithstanding the foregoing, Borrower and its Subsidiaries may carry such
deductibles and self-insurance as is customary with companies similarly
situated and in the same or similar businesses.
5.11 Compliance with Laws. Borrower will, and will cause each
of the Restricted Subsidiaries to, comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority as
now in effect and which may be imposed in the future in all jurisdictions in
which Borrower or any of the Restricted Subsidiaries is now doing business or
may hereafter be doing business, other than those laws the noncompliance with
which would not have a Material Adverse Effect.
5.12 Further Assurances. Borrower shall, and shall cause each
of the Restricted Subsidiaries to, from time to time, execute such guaranties,
financing or continuation statements, documents, security agreements, reports
and other documents or deliver to Agent such instruments, certificates of title
or other documents as Agent at any time may reasonably request to evidence,
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perfect or otherwise implement the guaranties and security for repayment of the
Obligations provided for in the Loan Documents. At Agent's request, Borrower
shall cause any Restricted Subsidiaries promptly to guaranty the Obligations
pursuant to a Guaranty and to grant pursuant to a Guarantor Security Agreement
and such other security agreements in a form acceptable to Agent to Agent, on
behalf of Agent and Lenders, security interests in the personal property of
such Subsidiary of the same type granted by Borrower to Agent under subsection
2.7 to secure the Obligations.
5.13 Collateral Locations. Borrower will keep (or cause to be
kept) the Collateral at the locations specified on Schedule 4.7 or in the
notices delivered pursuant to subsection 5.1(M). With respect to any new
location, Borrower will and will cause the Restricted Subsidiaries to execute
such documents and take such actions as Agent deems necessary to perfect and
protect the security interests of the Agent, on behalf of Agent and Lenders, in
the Collateral prior to the transfer or removal of any Collateral to such new
location.
5.14 Bailees. If any Collateral is at any time in the
possession or control of any warehouseman, bailee or any of Borrower's or any
Subsidiary's agents or processors, Borrower shall, upon the request of Agent or
Lenders, notify or cause to be notified such warehouseman, bailee, agent or
processor of the security interests in favor of Agent, for the benefit of Agent
and Lenders, created hereby or by the other Loan Documents and shall instruct
such Person to hold all such Collateral for Agent's account subject to Agent's
instructions.
5.15 Use of Proceeds and Margin Security. Borrower shall use
the proceeds of all Loans for proper business purposes (as described in the
recitals to this Agreement) consistent with all applicable laws, statutes,
rules and regulations. No portion of the proceeds of any Loan shall be used by
Borrower or any of its Subsidiaries for the purpose of purchasing or carrying
margin stock within the meaning of Regulation G or Regulation U, or in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation T or Regulation X or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Exchange Act.
SECTION 6. FINANCIAL COVENANTS
Borrower covenants and agrees that so long as any of the
Commitments remain in effect and until payment in full of all Obligations
(other than Inchoate Indemnity Obligations) and termination of all Lender
Letters of Credit, unless Borrower has received the prior written consent of
Requisite Lenders, Borrower shall comply with and shall cause each of its
Subsidiaries to comply with all covenants in this Section 6.
6.1 Minimum EBITDA. Borrower shall maintain EBITDA for each
period of four consecutive fiscal quarters of Borrower ending in any of
Borrower's Fiscal Years set forth below of at least the amount set forth
opposite the Fiscal Year set forth below in which such four fiscal quarter
period ends.
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Fiscal Year Amount
----------- -----------
1997 $22,500,000
1998 22,500,000
1999 25,500,000
2000 25,500,000
2001 28,000,000
6.2 Fixed Charge Coverage. If at any time Availability shall
be less than $20,000,000 (and until such time thereafter that Availability
shall be equal to or greater than $30,000,000) Borrower shall not permit its
Fixed Charge Coverage for any period of four consecutive fiscal quarters of
Borrower to be less than 1.0/1.0 for such period.
SECTION 7. NEGATIVE COVENANTS
Borrower covenants and agrees that so long as any of the
Commitments remain in effect and until payment in full of all Obligations
(other than Inchoate Indemnity Obligations) and termination of all Lender
Letters of Credit, unless Borrower has received the prior written consent of
Requisite Lenders, Borrower shall not and will not permit any of the Restricted
Subsidiaries to:
7.1 Indebtedness and Liabilities. Directly or indirectly
create, incur, assume, guaranty, or otherwise become or remain directly or
indirectly liable, on a fixed or contingent basis, with respect to any
Indebtedness except: (a) the Obligations and Indebtedness in respect of Bank
Letters of Credit; (b) unsecured intercompany Indebtedness among Borrower and
the Restricted Subsidiaries; provided that such Indebtedness is subordinated in
right of payment to the Obligations on terms reasonably satisfactory to Agent;
(c) Indebtedness (excluding Capital Leases) not to exceed $15,000,000 in the
aggregate principal amount at any time outstanding secured by purchase money
Liens on Equipment and real estate; (d) Indebtedness under Capital Leases with
respect to Equipment and real estate not to exceed $30,000,000 outstanding at
any time in the aggregate; (e) the Senior Note Debt and any unsecured
refinancing or refunding thereof; provided that (1) the terms and conditions of
such new Indebtedness are satisfactory to the Requisite Lenders (it being
agreed that such terms and conditions shall be deemed satisfactory to the
Requisite Lenders if (A) the principal amount of such new Indebtedness is not
greater than that of the Senior Note Debt (at the time of such refinancing or
refunding) plus any premiums payable at such time on the Senior Note Debt as a
result of such refinancing or refunding as stated and as provided in the Senior
Note Documents and any customary fees and expenses required to be paid at such
time with respect to the
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new Indebtedness, (B) the terms and conditions of such new Indebtedness,
including each of the effective cash interest rate, the amortization schedule,
the covenants and the events of default, are no less favorable to Borrower or
its Subsidiaries or to the Lenders' interests under the Loan Documents, and
(C) the maturity of the new Indebtedness does not occur prior to the maturity
of the Senior Note Debt) and (2) upon the refinancing or refunding of any
Senior Note Debt, such new Indebtedness and the documents governing or
evidencing same shall be subject to the same restrictions in subsections 7.5
and 7.7 as if such new Indebtedness were Senior Note Debt; (f) [Indebtedness
under Synthetic Leases not to exceed $30,000,000 outstanding at any one time],
(g) unsecured Hedging Obligations; (h) Indebtedness existing on the Closing
Date and identified on Schedule 1.1(B) (but not any increase in any of the
amounts thereof) and any refinancing or refunding thereof; provided that in any
event (A) the principal amount of such new Indebtedness is not greater than
that of the Indebtedness being refinanced or refunded (at the time of such
refinancing or refunding) plus any premiums payable at such time on such
refinanced or refunded Indebtedness as a result of such refinancing or
refunding as stated and as provided in the documents governing same and any
customary fees and expenses required to be paid at such time with respect to
the new Indebtedness (except that with respect to the refinancing or refunding
of the Indebtedness relating to the Industrial Revenue Bonds on the Seagoville,
Texas facility, if such new Indebtedness is unsecured the principal amount
thereof shall not exceed $10,000,000), (B) the terms and conditions of such new
Indebtedness, including each of the effective cash interest rate, the
amortization schedule, the covenants and the events of default, are not less
favorable to Borrower or its Subsidiaries or to the Lenders' interests under
the Loan Documents, (C) the maturity of the new Indebtedness does not occur
prior to the maturity of the Indebtedness being refinanced or refunded, (D) to
the extent the Indebtedness being refinanced or refunded is subordinated to
other Indebtedness, the new Indebtedness is likewise subordinated to such other
Indebtedness and the terms of subordination with respect to such new
Indebtedness are no less favorable to the beneficiaries of such other
Indebtedness than were the terms of subordination under the Indebtedness being
refinanced or refunded and (E) with respect to the refinancing or refunding of
the Indebtedness relating to the Industrial Revenue Bonds on the Seagoville,
Texas facility, Agent shall have received a mortgagee waiver, in form and
substance satisfactory to Agent, with respect to the Seagoville, Texas facility
duly executed by the mortgagee , if any, of such facility; and (i) unsecured
Subordinated Debt not to exceed $[40,000,000] in principal amount at any time
outstanding. Except for Indebtedness described permitted in the preceding
sentence, Borrower will not, and will not permit any of the Restricted
Subsidiaries to, incur any Liabilities except for trade payables and normal
accruals in the ordinary course of business not yet due and payable or with
respect to which Borrower or any of the Restricted Subsidiaries is contesting
in good faith the amount or validity thereof by appropriate proceedings and
then only to the extent that Borrower or any of the Restricted Subsidiaries has
established adequate reserves therefor, if appropriate under GAAP.
7.2 Guaranties. Except for endorsements of instruments or
items of payment for collection in the ordinary course of business, except for
unsecured guarantees in the ordinary course of business of the obligations of
suppliers, customers, franchisers and licensers of Borrower and its
Subsidiaries in an aggregate amount not exceeding at any time $2,000,000 and
except for the Guaranties, guaranty, endorse or otherwise in any way become or
be responsible for any obligations of any other Person, whether directly or
indirectly by agreement to purchase the indebtedness of any
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other Person or through the purchase of goods, supplies or services, or
maintenance of working capital or other balance sheet covenants or conditions,
or by way of stock purchase, capital contribution, advance or loan for the
purpose of paying or discharging any indebtedness or obligation of such other
Person or otherwise.
7.3 Transfers, Liens and Related Matters.
(A) Transfers. Sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with respect to, any of
the Collateral or any of the other assets of any Restricted Subsidiary except
that Borrower and the Restricted Subsidiaries may (i) sell inventory in the
ordinary course of business and effect other Asset Dispositions in the ordinary
course of business to Persons who are not Affiliates of Borrower or any of its
Subsidiaries, including sales and other dispositions of owned or leased real
property and the improvements thereon and retail stores in the ordinary course
of business, provided that the consideration for sales or other dispositions of
real property, improvements thereon or retail stores shall be not less than the
fair market value thereof, (ii) sell and lease-back owned real property and
improvements thereon in sale-leaseback transactions with Persons who are not
Affiliates of Borrower or any of its Subsidiaries, provided that (1) the Net
Cash Proceeds thereof are applied as required by subsection 2.4(B) and (2) no
Default or Event of Default shall then exist or result from such disposition;
and (iii) make Asset Dispositions outside the ordinary course of business if
all of the following conditions are met: (1) the market value of assets sold
or otherwise disposed of in any single transaction or series of related
transactions does not exceed $1,000,000 and the aggregate market value of
assets sold or otherwise disposed of in any Fiscal Year does not exceed
$10,000,000; (2) the consideration received is at least equal to the fair
market value of such assets; (3) 75% of the consideration received is cash and
Cash Equivalents; (4) the Net Cash Proceeds of such Asset Disposition are
applied as required by subsection 2.4(B); (5) after giving effect to the sale
or other disposition of the assets included within the Asset Disposition and
the repayment of the Obligations with the proceeds thereof, Borrower is in
compliance on a pro forma basis with the covenants set forth in Section 6
recomputed for the most recently ended month for which information is available
and is in compliance with all other terms and conditions contained in this
Agreement; and (6) no Default or Event of Default shall then exist or result
from such sale or other disposition.
(B) Liens. Except for Permitted Encumbrances, directly or
indirectly create, incur, assume or permit to exist any Lien on or with respect
to any of the Collateral or any of the other assets of any Restricted
Subsidiary or any proceeds, income or profits therefrom.
(C) No Negative Pledges. Enter into or assume any agreement
(other than the Loan Documents , the Senior Note Documents and any documents
governing Indebtedness permitted hereunder which refinances or refunds the
Senior Note Debt) prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.
(D) No Restrictions on Subsidiary Transfers to Borrower.
Except as provided herein, directly or indirectly create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any such Subsidiary to: (1) pay
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dividends or make any other distribution on any of such Subsidiary's capital
stock owned by Borrower or any Subsidiary of Borrower; (2) subject to
subordination provisions, pay any indebtedness owed to Borrower or any other
Subsidiary; (3) make loans or advances to Borrower or any other Subsidiary; or
(4) transfer any of its property or assets to Borrower or any other Subsidiary;
except with respect to this clause (4), (i) encumbrances or restrictions
consisting of Permitted Encumbrances granted by the applicable Subsidiary of
Borrower, (ii) encumbrances or restrictions (A) consisting of customary
non-assignment provisions in leases or subleases with respect to the lease or
sublease of the property leased or subleased, (B) relating to property financed
with purchase money Indebtedness permitted by subsection 7.1 or (C) in
documentation granting a Permitted Encumbrance, restricting the transfer of
property subject to such Permitted Encumbrance, and (iii) any restriction
imposed by an agreement for the sale or other disposition of property or
securities permitted hereunder pending the closing of such sale or other
disposition.
7.4 Investments and Loans. Make or permit to exist
investments in or loans to any other Person, except: (a) Cash Equivalents; (b)
loans and advances to employees for moving, entertainment, travel and other
expenses in the ordinary course of business ; (c) investments permitted by
subsection 7.6(d); (d) investments in and loans or advances to any Restricted
Subsidiary in order to effectuate a Permitted Acquisition and additionally
after such Permitted Acquisition for such Restricted Subsidiary's working
capital needs, but only if such Restricted Subsidiary shall have executed and
delivered or caused to be executed and delivered to Agent such documentation as
is required hereunder with respect to such Restricted Subsidiary (including,
without limitation, under subsections 5.12 and 7.6); (e) investments in and
loans and advances to Subsidiaries that are not Restricted Subsidiaries and
Persons that are not Subsidiaries in an aggregate amount, net of all returns of
capital and other distributions, not exceeding $5,000,000 at any time
outstanding, provided that no Default or Event of Default shall then exist or
result therefrom; (f) extensions of trade credit in the ordinary course of
business; (g) loans to employees, officers or directors in connection with
stock option plans or other stock plans not in excess of $5,000,000 as to all
employees, officers and directors at any one time outstanding, but only so long
as no cash is transferred to any such Person as part of any such loan; and (h)
investments, loans and advances outstanding on the Closing Date and identified
on Schedule 7.4 (but not any increase in any of the amounts thereof) and all
refinancings or refundings thereof (but no increases in any of the amounts
thereof).
7.5 Restricted Junior Payments. Directly or indirectly
declare, order, pay, make or set apart any sum for any Restricted Junior
Payment, except that: (a) Restricted Subsidiaries of Borrower may make
Restricted Junior Payments to Borrower or other Restricted Subsidiaries; (b)
Borrower may make scheduled interest payments on the Senior Note Debt in
accordance with the express terms of the Senior Notes ; (c) Borrower may on the
Closing Date make Restricted Junior Payments constituting part of the
Recapitalization with the proceeds of the Senior Notes; and (d) Borrower may
repay, purchase or redeem Subordinated Debt or capital stock of Borrower out of
proceeds of a substantially concurrent sale of Subordinated Debt or common
stock of Borrower.
7.6 Restriction on Fundamental Changes. (a) Enter into any
transaction of merger or consolidation, except as permitted by subsection (d)
below or into Borrower or any Restricted
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Subsidiary; (b) liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), except the liquidation, winding-up or dissolution
of any Restricted Subsidiary, as a result of which Borrower or another
Restricted Subsidiary acquires all the assets thereof; (c) convey, sell, lease,
sublease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its business or assets, or the
capital stock of any of its Subsidiaries, whether now owned or hereafter
acquired; or (d) acquire by purchase or otherwise all or any substantial part
of the business or assets of, or stock or other evidence of beneficial
ownership of, any Person, except that Borrower may effect the purchase (each, a
"Permitted Acquisition") of (x) assets of any Person which constitute an
operating unit or business of such Person or (y) the capital stock or other
beneficial ownership interests in another Person, so long as (A) no Default or
Event of Default shall have occurred and be continuing on the date of any such
Permitted Acquisition or would occur after giving effect thereto, (B)
immediately after giving effect thereto, Availability (as modified as provided
below) shall be greater than or equal to $20,000,000, (C) Borrower shall have
notified Agent thereof not less than 10 days prior to the proposed closing date
for any such acquisition, (D) the business to be acquired by such Permitted
Acquisition shall be substantially similar to a business of Borrower permitted
by subsection 7.10, (E) Borrower shall cause such assets, capital stock or
other ownership interests to be purchased by, or concurrently with the purchase
of such assets, capital stock or other ownership interests shall cause such
assets, capital stock or other ownership interests to be transferred to,
Borrower or any Restricted Subsidiary, (F) the terms of such Permitted
Acquisition involving consideration (other than common stock of Borrower) in
excess of $10,000,000 shall be reasonably acceptable to Agent, and (G) Borrower
shall take or cause to be taken such actions as Agent shall reasonably request
in order that Agent be granted a first priority perfected security interest
(free and clear of any and all other Liens) in all assets of the type granted
by Borrower to Agent under subsection 2.7 of any Person whose stock or other
ownership interest is acquired through the Permitted Acquisition, and a
Guaranty of the Obligations shall be issued by any new Subsidiary (it being
understood and agreed, notwithstanding the foregoing, that the inclusion of
any assets of a new Restricted Subsidiary in the Borrowing Base shall be
subject in all respects to the last sentence of subsection 2.1(C)). For
purposes of this subsection 7.6, clause (z) of the defined term "Availability"
shall be modified to be the sum of (i) the amount of those payables of Borrower
and its Subsidiaries (after giving effect to the consummation of the Permitted
Acquisition) which shall, immediately after giving effect to the consummation
of the Permitted Acquisition, remain unpaid beyond customary terms therefor and
(ii) all accrued interest owing on the Senior Notes (and, if any of the Senior
Notes are refinanced or refunded with new Indebtedness permitted hereunder,
such new Indebtedness) and all payments made by Borrower or any of its
Subsidiaries with respect to any Compensation Claims.
7.7 Changes Relating to Senior Note Debt. Change or amend the
terms of the Senior Note Debt or any Senior Note Documents if the effect of
such amendment is to: (a) increase the interest rate on such Indebtedness; (b)
change the dates upon which payments of principal or interest are due on such
Indebtedness; (c) change any event of default or add any covenant with respect
to such Indebtedness; (d) change the payment provisions of such Indebtedness;
or (e) change or amend any other term if such change or amendment would
materially increase the obligations of the obligor or confer additional
material rights on the holder of such Indebtedness in a manner adverse to
Borrower, any of its Subsidiaries, Agent or any Lender.
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7.8 Transactions with Affiliates. Directly or indirectly,
enter into or permit to exist any transaction (including the purchase, sale or
exchange of property or the rendering of any service) with any Affiliate or
with any officer, director or employee of any Loan Party, except for
transactions in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Restricted Subsidiary's business and upon
fair and reasonable terms which are fully disclosed to Agent and Lenders and
which are no less favorable to Borrower or the relevant Restricted Subsidiary,
as appropriate, than it would obtain in a comparable arm's length transaction
with an unaffiliated Person; provided that nothing set forth in this subsection
7.8 shall prohibit (i) (A) the purchase of any capital stock of Borrower or any
Subordinated Debt by any Affiliate of Borrower that controls Borrower or (B)
any Restricted Junior Payment permitted by subsection 7.5(d), (ii) the payment
of reasonable compensation or fees to officers or directors of Borrower and its
Subsidiaries, (iii) loans to employees, officers or directors in connection
with stock option plans or other stock plans not in excess of $5,000,000 as to
all employees, officers and directors at any one time outstanding so long as no
cash is transferred to any such Person as part of any such loan, (iv) loans and
advances to employees for moving, entertainment, travel and other expenses in
the ordinary course of business, (v) indemnification of officers and directors
to the full extent permitted by applicable law or (vi) any transaction between
Borrower and any of its Restricted Subsidiaries or between Restricted
Subsidiaries which is permitted by other sections of this Agreement.
7.9 Environmental Liabilities. (a) Violate any applicable
Environmental Law, except to the extent the same is not reasonably likely to
result in a material liability to Borrower or any of its Subsidiaries; (b)
dispose of any Hazardous Materials (except in accordance with applicable law)
into or onto or from, any real property owned, leased or operated by any Loan
Party, except to the extent the same is not reasonably likely to result in a
material liability to Borrower or any of its Subsidiaries; or (c) permit any
Lien imposed pursuant to any Environmental Law to be imposed or to remain on
any real property owned, leased or operated by any Loan Party.
7.10 Conduct of Business. From and after the Closing Date,
engage in any business other than businesses of the type engaged in by Borrower
on the Closing Date or related or incidental thereto, including oil change,
lubrication, brake repair and similar businesses relating to the maintenance or
repair of cars, trucks and other vehicles.
7.11 Compliance with ERISA. Establish any new Employee Benefit
Plan or amend any existing Employee Benefit Plan if the liability or increased
liability resulting from such establishment or amendment is reasonably likely
to have a Material Adverse Effect. Neither Borrower nor any Subsidiary shall
fail to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the IRC and
all other applicable laws and the regulations and interpretations thereof.
7.12 Tax Consolidations. File or consent to the filing of any
consolidated income tax return with any Person other than Borrower or any of
its Subsidiaries.
7.13 Subsidiaries. Establish, create or acquire any new
Subsidiaries, except as permitted under subsection 7.6(d).
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7.14 Fiscal Year. Change its Fiscal Year.
7.15 Press Release; Public Offering Materials. Disclose the
name of Agent or any Lender in any press release or in any prospectus, proxy
statement or other materials filed with any governmental entity relating to a
public offering of the capital stock of any Loan Party except as may be
required by law or with the prior written consent of Agent or such Lender, as
applicable.
7.16 Certain Bank Accounts. Establish , amend or terminate any
blocked account or concentration account or lockbox agreement without Agent's
prior written consent, which consent shall not be unreasonably withheld so long
as subsection 5.6 shall be complied with.
SECTION 8. DEFAULT, RIGHTS AND REMEDIES
8.1 Event of Default. "Event of Default" shall mean the
occurrence or existence of any one or more of the following:
(A) Payment. Failure to make payment of any of the
Obligations when due and , in the case of any payment (other than on account of
principal on any Loan or reimbursement with respect to any Lender Letter of
Credit), such failure shall not be cured within five (5) days of the applicable
due date; or
(B) Default in Other Agreements. (1) Failure of Borrower, any
of the Restricted Subsidiaries or any other Loan Party to pay when due any
principal or interest on any Indebtedness (other than the Obligations) or (2)
breach or default of Borrower, any of the Restricted Subsidiaries or any other
Loan Party with respect to any Indebtedness (other than the Obligations); if
such failure to pay, breach or default entitles the holder or holders (or
trustee or agent on behalf of such holder or holders) to cause such
Indebtedness having an individual or aggregate principal amount in excess of
$1,000,000 to become or be declared due prior to its stated maturity; or
(C) Breach of Certain Provisions. Failure of Borrower to
perform or comply with any term or condition contained in subsections 5.1 (B)
and (C), 5.3, 5.5 or 5.6 or contained in Section 6 or Section 7; or
(D) Breach of Warranty. Any representation, warranty,
certification or other statement made by any Loan Party in any Loan Document or
other Transaction Document or in any statement or certificate at any time given
by such Person in writing pursuant or in connection with any Loan Document or
other Transaction Document is false in any material respect on the date made;
or
(E) Other Defaults Under Loan Documents. Borrower or any
other Loan Party defaults in the performance of or compliance with any term
contained in this Agreement or the other Loan Documents and such default is not
remedied or waived within twenty (20) days after the earlier of (x) Borrower or
any other Loan Party obtaining knowledge of such default or (y) receipt by
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Borrower of notice from Agent or Requisite Lenders of such default (other than
occurrences described in other provisions of this subsection 8.1 for which a
different grace or cure period is specified or which constitute immediate
Events of Default); or
(F) Change in Control. A Change of Control shall occur; or
(G) Involuntary Bankruptcy; Appointment of Receiver, etc. (1)
A court enters a decree or order for relief with respect Borrower, any of the
Restricted Subsidiaries or any other Loan Party in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, which decree or order is not stayed or other similar relief is not
granted under any applicable federal or state law; or (2) the continuance of
any of the following events for sixty (60) days unless dismissed, bonded or
discharged: (a) an involuntary case is commenced against Borrower, any of the
Restricted Subsidiaries or any other Loan Party under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect; or (b)
a decree or order of a court for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Borrower, any of the Restricted Subsidiaries or any other Loan Party or over
all or a substantial part of their respective property is entered; or (c) an
interim receiver, trustee or other custodian is appointed without the consent
of Borrower, any of the Restricted Subsidiaries or any other Loan Party for all
or a substantial part of the property of Borrower, any such Subsidiary or any
other Loan Party; or
(H) Voluntary Bankruptcy; Appointment of Receiver, etc. (1)
An order for relief is entered with respect to Borrower, any of the Restricted
Subsidiaries or any other Loan Party or Borrower, any of the Restricted
Subsidiaries or any other Loan Party commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consents to the entry of an order for relief in an involuntary case
or to the conversion of an involuntary case to a voluntary case under any such
law or consents to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or
(2) Borrower, any of the Restricted Subsidiaries or any other Loan Party makes
any assignment for the benefit of creditors; or (3) the board of directors of
Borrower, any of the Restricted Subsidiaries or any other Loan Party adopts any
resolution or otherwise authorizes action to approve any of the actions
referred to in this subsection 8.1(H); or
(I) Liens. Any lien, levy or assessment is filed or recorded
with respect to or otherwise imposed upon all or any part of the Collateral or
the assets of Borrower, any of the Restricted Subsidiaries or any other Loan
Party by the United States or any department or instrumentality thereof or by
any state, county, municipality or other governmental agency (other than
Permitted Encumbrances) and such lien, levy or assessment is not stayed,
vacated, paid or discharged within thirty (30) days; or
(J) Judgment and Attachments. (x) Any money judgment, writ or
warrant of attachment, or similar process involving (1) an amount in any
individual case in excess of $2,500,000 or (2) an amount in the aggregate at
any time in excess of $5,000,000 (in either case not adequately covered by
insurance as to which the insurance company has acknowledged coverage)
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is entered or filed against Borrower, any of the Restricted Subsidiaries or any
other Loan Party or any of their respective assets and remains undischarged,
unvacated, unbonded , unstayed or unpaid for a period of thirty (30) days or in
any event later than five (5) days prior to the date of any proposed sale
thereunder; or (y) the aggregate amount of payments (whether relating to
judgments, settlements or otherwise) made by Borrower and its Subsidiaries with
respect to Compensation Claims (including, without limitation, any claims which
may be raised after the Closing Date) shall exceed the aggregate amount of
reserves established therefor by Borrower in accordance with GAAP.
(K) Dissolution. Any order, judgment or decree is entered
against Borrower, any of the Restricted Subsidiaries or any other Loan Party
decreeing the dissolution or split up of Borrower, that Subsidiary or any other
Loan Party and such order remains undischarged or unstayed for a period in
excess of twenty (20) days; or
(L) Solvency. Borrower ceases to be solvent (as represented
by Borrower in subsection 4.17) or admits in writing its present or prospective
inability to pay its debts as they become due; or
(M) Injunction. Borrower, any of the Restricted Subsidiaries
or any other Loan Party is enjoined, restrained or in any way prevented by the
order of any court or any administrative or regulatory agency from conducting
all or any material part of its business and such order continues for more than
thirty (30) days; or
(N) Invalidity of Loan Documents. Any of the Loan Documents
for any reason, other than a partial or full release in accordance with the
terms thereof, ceases to be in full force and effect or is declared to be null
and void, or any Loan Party denies that it has any further liability under any
Loan Documents to which it is party, or gives notice to such effect; or
(O) Failure of Security. Agent, on behalf of Agent and
Lenders, does not have or ceases to have a valid and perfected first priority
security interest in the Collateral (subject to Permitted Encumbrances), in
each case, for any reason other than the failure of Agent or any Lender to take
any action within its control; or
(P) Damage, Strike, Casualty. Any material damage to, or
loss, theft or destruction of, any Collateral, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or public
enemy, or other casualty which causes, for more than fifteen (15) consecutive
days, the cessation or substantial curtailment of revenue producing activities
at any facility of Borrower, any of the Restricted Subsidiaries or any other
Loan Party if any such event or circumstance could reasonably be expected to
have a Material Adverse Effect.
(Q) Licenses and Permits. The loss, suspension or revocation
of, or failure to renew, any license or permit now held or hereafter acquired
by Borrower, any of the Restricted Subsidiaries or any other Loan Party, if
such loss, suspension, revocation or failure to renew could reasonably be
expected to have a Material Adverse Effect.
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(R) Forfeiture. There is filed against Borrower, any
Restricted Subsidiary or any other Loan Party any criminal action, suit or
proceeding under any federal or state racketeering statute (including, without
limitation, the Racketeer Influenced and Corrupt Organization Act of 1970),
which action, suit or proceeding (1) is not dismissed within one hundred twenty
(120) days; and (2) could result in the confiscation or forfeiture of any
material portion of the Collateral.
8.2 Suspension of Commitments. Upon the occurrence of any
Default or Event of Default, notwithstanding any grace period or right to cure,
Agent and/or Swingline Lender may or upon demand by Requisite Lenders shall,
without notice or demand, immediately cease making additional Loans and the
Commitments shall be suspended; provided that, in the case of a Default, if the
subject condition or event is waived or cured within any applicable grace or
cure period, the Commitments shall be reinstated.
8.3 Acceleration. Upon the occurrence of any Event of Default
described in the foregoing subsections 8.1(G) or 8.1(H), all Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Borrower, and the Commitments shall thereupon terminate. Upon the
occurrence and during the continuance of any other Event of Default, Agent may,
and upon demand by Requisite Lenders shall, by written notice to Borrower, (a)
declare all or any portion of the Obligations to be, and the same shall
forthwith become, immediately due and payable and the Commitments shall
thereupon terminate and (b) demand that Borrower immediately deposit with Agent
an amount equal to one hundred five percent (105%) of the Letter of Credit
Reserve to enable Agent and Lenders to make payments under the Lender Letters
of Credit when required and such amount shall become immediately due and
payable.
8.4 Remedies. If any Event of Default shall have occurred and
be continuing, in addition to and not in limitation of any other rights or
remedies available to Agent and Lenders at law or in equity, Agent may and
shall upon the request of Requisite Lenders exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the UCC (whether or not the UCC applies to the affected
Collateral) and may also (a) notify any or all obligors on the Accounts to make
all payments directly to Agent; (b) require Borrower to, and Borrower hereby
agrees that it will, at its expense and upon request of Agent forthwith,
assemble all or part of the Collateral as directed by Agent and make it
available to Agent at a place to be designated by Agent which is reasonably
convenient to both parties; (c) withdraw all cash in the local bank accounts
and concentration accounts referred to in subsection 5.6 and apply such monies
in payment of the Obligations in the manner provided in subsection 8.7; (d)
without notice or demand or legal process, enter upon any premises of Borrower
and take possession of the Collateral; and (e) without notice except as
specified below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of the Agent's offices or elsewhere, at such
time or times, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as are commercially reasonable. Borrower
agrees that, to the extent notice of sale shall be required by law, at least
ten (10) days notice to Borrower of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. At any sale of the Collateral, if
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permitted by law, Agent or any Lender may bid (which bid may be, in whole or in
part, in the form of cancellation of indebtedness) for the purchase of the
Collateral or any portion thereof for the account of Agent or such Lender.
Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. Borrower shall remain liable for any
deficiency. Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. To
the extent permitted by law, Borrower hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter enacted. Agent shall not be required to proceed against
any Collateral but may proceed against Borrower directly.
8.5 Appointment of Attorney-in-Fact. Borrower hereby
constitutes and appoints Agent as Borrower's attorney-in-fact with full
authority in the place and stead of Borrower and in the name of Borrower, Agent
or otherwise, from time to time in Agent's discretion while an Event of Default
is continuing to take any action and to execute any instrument that Agent may
deem necessary or advisable to accomplish the purposes of this Agreement,
including: (a) to ask, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral; (b) to adjust, settle or compromise the
amount or payment of any Account, or release wholly or partly any customer or
obligor thereunder or allow any credit or discount thereon; (c) to receive,
endorse, and collect any drafts or other instruments, documents and chattel
paper, in connection with clause (a) above; (d) to file any claims or take any
action or institute any proceedings that Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the rights
of Agent and Lenders with respect to any of the Collateral; and (e) to sign and
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, assignments, verifications and notices in connection with
Accounts and other documents relating to the Collateral. The appointment of
Agent as Borrower's attorney and Agent's rights and powers are coupled with an
interest and are irrevocable until payment in full and complete performance of
all of the Obligations and termination of the Revolving Loan Commitment.
8.6 Limitation on Duty of Agent with Respect to Collateral.
Beyond the safe custody thereof, Agent and each Lender shall have no duty with
respect to any Collateral in its possession or control (or in the possession or
control of any agent or bailee) or with respect to any income thereon or the
preservation of rights against prior parties or any other rights pertaining
thereto. Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which Agent accords its own
property. Neither Agent nor any Lender shall be liable or responsible for any
loss or damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee or other agent or bailee selected by Agent in good
faith.
8.7 Application of Proceeds. Upon the occurrence and during
the continuance of an Event of Default, (a) Borrower irrevocably waives the
right to direct the application of any and all payments at any time or times
thereafter received by Agent from or on behalf of Borrower, and
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Borrower hereby irrevocably agrees that Agent shall have the continuing
exclusive right to apply and to reapply any and all payments received at any
time or times after the occurrence and during the continuance of an Event of
Default against the Obligations in such manner as Agent may deem advisable
notwithstanding any previous entry by Agent upon any books and records and (b)
the proceeds of any sale of, or other realization upon, all or any part of the
Collateral shall be applied: first, to all fees, costs and expenses incurred by
Agent or any Lender with respect to this Agreement, the other Loan Documents or
the Collateral; second, to all fees due and owing to Agent and Lenders; third,
to accrued and unpaid interest on the Obligations; fourth, to the principal
amounts of the Obligations outstanding; and fifth, to any other Obligations
owing to Agent or any Lender.
8.8 License of Intellectual Property. Borrower hereby
assigns, transfers and conveys to Agent, for the benefit of Agent and Lenders,
effective both (i) upon the occurrence and during the continuance of any Event
of Default hereunder or (ii) after the acceleration of the Obligations, the
non-exclusive right and license to use all Intellectual Property owned or used
by Borrower together with any goodwill associated therewith, all to the extent
necessary to enable Agent to realize on the Collateral and any successor or
assign to enjoy the benefits of the Collateral. This right and license shall
inure to the benefit of all successors, assigns and transferees of Agent and
its successors, assigns and transferees, whether by voluntary conveyance,
operation of law, assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. Such right and license is granted free of charge,
without requirement that any monetary payment whatsoever be made to Borrower by
Agent.
8.9 Waivers, Non-Exclusive Remedies. No failure on the part
of Agent or any Lender to exercise, and no delay in exercising and no course of
dealing with respect to, any right, power or privilege under this Agreement or
the other Loan Documents shall operate as a waiver thereof; nor shall any
single or partial exercise by Agent or any Lender of any right, power or
privilege under this Agreement or any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights, powers and privileges in this Agreement and the other
Loan Documents are cumulative and are not exclusive of any other remedies
provided by law.
SECTION 9. ASSIGNMENT AND PARTICIPATION
9.1 Assignments and Participations in Loans.
(A) Any Lender may, with the written consent of Agent , assign
and delegate to one or more assignees (each an "Assignee") (provided that no
written consent of Agent shall be required in connection with any assignment
and delegation by a Lender to an Affiliate of such Lender) that, in the case
of an Assignee which is not an Affiliate of the assigning Lender, is an
Eligible Institution all, or any ratable part of all, of its share of the
Revolving Loan, the Revolving Loan Commitment and the other rights and
obligations of such Lender hereunder related thereto, in a minimum amount of
$5,000,000 or if less the entire amount of such Lender's share of the Revolving
Loan and Revolving Loan Commitment; provided, however, that Borrower and the
Agent
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may continue to deal solely and directly with such Lender in connection with
the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to Borrower and
Agent by such Lender and the Assignee; (ii) such Lender and its Assignee shall
have delivered to Borrower and Agent an Assignment and Acceptance substantially
in the form of Exhibit D ("Assignment and Acceptance") together with any Note
or Notes subject to such assignment and (iii) the assignor Lender or Assignee
has paid to Agent a processing fee in the amount of $3,500.
(B) From and after the date that Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and payment
of the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Swingline Advances and Lender
Letters of Credit, have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease
to be a party hereto; provided, that such Lender shall continue to be entitled
to the benefits of subsections 2.8, 2.9 and 10.1).
(C) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (1) other than
as provided in such Assignment and Acceptance, such 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 the other Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Document; (2) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of Borrower or any of its Subsidiaries or the performance or observance by
Borrower or any of its Subsidiaries of any of its obligations under this
Agreement or any other Loan Document; (3) such Assignee confirms that it has
received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (4) such Assignee will,
independently and without reliance upon Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents; (5) 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 Loan
Documents as are delegated to Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; (6) such Assignee agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender and (7)
such Assignee (unless an Affiliate of the assigning Lender) represents and
warrants that it is an Eligible Institution.
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(D) Within five Business Days after its receipt of notice by
Agent that it has received an executed Assignment and Acceptance and payment of
the processing fee, Borrower shall execute and deliver to Agent a new Revolving
Note evidencing such Assignee's assigned Loans and Revolving Loan Commitment
and, if the assigning Lender has retained a portion of the Revolving Loan and
its Revolving Commitment, a replacement Revolving Note in the principal amount
of the portion of the Revolving Loan Commitment retained by the assignor Lender
(such Notes to be in exchange for, but not in payment of, the Notes held by
such Lender). Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Revolving Loan Commitment allocated to each Assignee
shall reduce the Revolving Loan Commitment of the assigning Lender pro tanto.
(E) Any Lender may at any time, without consent of Agent or
Borrower, sell to one or more commercial banks, financial institutions or
other Persons not Affiliates of the Borrower (a "Participant") participating
interests in any Loans, the Commitments of that Lender and the other interests
of that Lender (the "originating Lender") hereunder and under the other Loan
Documents; provided, however, that (i) the originating Lender's obligations
under this Agreement shall remain unchanged, provided, that the Participant
shall be treated as a Lender for the purposes of subsections 2.8, 2.9, 9.4 and
10.2, (ii) the originating Lender shall remain solely responsible for the
performance of such obligations, (iii) Borrower and the Agent shall continue to
deal solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) such participation shall be in a minimum principal amount
of $5,000,000 and (v) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document which amendment, consent or waiver requires the consent of all
Lenders, other than Defaulting Lenders, and all amounts payable by Borrower
hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.
(F) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Notes held
by it in favor of any Federal Reserve Bank in accordance with Regulation A of
the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
(G) Agent, acting for this purpose as an agent of Borrower,
shall maintain at one of its offices in The City of New York a copy of each
Assignment and Acceptance delivered to Agent and a register for the recordation
of the names and addresses of the Lenders, and the Commitments of, and
principal amount of the portions of the Loans owing to, each Lender pursuant to
the terms hereof from time to time (the "Register"). The entries in the
Register shall be conclusive and Borrower, Agent and Lenders may treat each
person whose name is recorded in the Register pursuant
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to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by Borrower and each Lender at any reasonable time and from time to
time upon reasonable prior notice to Agent.
(H) Any Lender or originating Lender may, in connection with
any assignment or participation or proposed assignment or participation
pursuant to this subsection 9.1, disclose to the Assignee or Participant or
proposed Assignee or proposed Participant any information relating to Borrower
and its Subsidiaries furnished to such Lender or originating Lender by or on
behalf of Borrower; provided, that, prior to any such disclosure of information
designated by Borrower as confidential, each such Assignee or Participant or
proposed Assignee or proposed Participant shall execute an agreement whereby
such Assignee or Participant or proposed Assignee or proposed Participant shall
agree (subject to customary exceptions) to preserve the confidentiality of such
confidential information on terms no less restrictive than those applicable to
the Lenders under subsection 10.21.
(I) Borrower will assist Agent and Xxxxxx in effectuating any
such assignments, sales or participations by Xxxxxx in whatever manner Xxxxxx
deems reasonably necessary, including, but not limited to, the preparation of
offering memoranda and the participation of members of Borrower's management in
meetings with prospective assignees and participants.
9.2 Agent.
(A) Appointment. Each Lender hereby designates and appoints
Xxxxxx as its agent under this Agreement and the other Loan Documents, and each
Lender hereby irrevocably authorizes Agent to take such action or to refrain
from taking such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers as are set forth
herein or therein, together with such other powers as are reasonably incidental
thereto. Agent is authorized and empowered to amend, modify, or waive any
provisions of this Agreement or the other Loan Documents on behalf of Lenders
subject to the requirement that certain of Lenders' consent be obtained in
certain instances as provided in this Agreement (including, without limitation,
subsection 10.3). Agent agrees to act as such on the express conditions
contained in this subsection 9.2. The provisions of this subsection 9.2 are
solely for the benefit of Agent and Lenders and neither Borrower nor any other
Loan Party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this
Agreement, Agent shall act solely as an administrative representative of
Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for Lenders,
Borrower or any other Loan Party. Agent may perform any of its duties
hereunder or under the other Loan Documents, by or through its agents or
employees.
(B) Nature of Duties. Agent shall have no duties, obligations
or responsibilities except those expressly set forth in this Agreement or in
the other Loan Documents. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of this
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Agreement a fiduciary relationship in respect of any Lender. Each Lender shall
make its own independent investigation of the financial condition and affairs
of Borrower and its Subsidiaries in connection with the extension of credit
hereunder and shall make its own appraisal of the credit worthiness of Borrower
and its Subsidiaries, and Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the Closing Date or at any time or times thereafter. If Agent seeks the
consent or approval of any Lenders to the taking or refraining from taking any
action hereunder, then Agent shall send notice thereof to each Lender. Agent
shall promptly notify each Lender any time that the applicable percentage of
Lenders have instructed Agent to act or refrain from acting pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to any Lender for any
action taken or omitted by them hereunder or under any of the other Loan
Documents, or in connection herewith or therewith, except that Agent shall be
obligated on the terms set forth herein for performance of its express
obligations hereunder, and except that Agent shall be liable with respect to
its own gross negligence or willful misconduct. Agent shall not be liable for
any apportionment or distribution of payments made by it in good faith and if
any such apportionment or distribution is subsequently determined to have been
made in error the sole recourse of any Lender to whom payment was due but not
made, shall be to recover from other Lenders any payment in excess of the
amount to which they are determined to be entitled (and such other Lenders
hereby agree to return to such Lender any such erroneous payments received by
them). In performing its functions and duties hereunder, Agent shall exercise
the same care which it would in dealing with loans for its own account, but
Agent shall not be responsible to any Lender for any recitals, statements,
representations or warranties herein or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, or sufficiency of this
Agreement or any of the other Loan Documents or the transactions contemplated
thereby, or for the financial condition of any Loan Party. Agent shall not be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or any of the
other Loan Documents or the financial condition of any Loan Party, or the
existence or possible existence of any Default or Event of Default. Agent may
at any time request instructions from Lenders with respect to any actions or
approvals which by the terms of this Agreement or of any of the other Loan
Documents Agent is permitted or required to take or to grant, and Agent shall
be absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the other
Loan Documents until it shall have received such instructions from the
applicable percentage of the Lenders. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of the applicable percentage
of the Lenders and notwithstanding the instructions of Lenders, Agent shall
have no obligation to take any action if it, in good faith believes that such
action exposes Agent to any liability.
(D) Reliance. Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message or other communication (including any writing, telex,
telecopy or telegram) believed by it in good faith to be genuine and correct
and
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to have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the other Loan Documents and its
duties hereunder or thereunder, upon advice of counsel selected by it. Agent
shall be entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by Agent in its sole discretion.
(E) Indemnification. Each Lender, severally, agrees to
reimburse and indemnify Agent for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by, or asserted against Agent in any way relating to or
arising out of this Agreement or any of the other Loan Documents or any action
taken or omitted by Agent under this Agreement or any of the other Loan
Documents, in proportion to each Lender's Pro Rata Share; provided, however,
that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements resulting from Agent's gross negligence or
willful misconduct. The obligations of Lenders under this subsection 9.2(E)
shall survive the payment in full of the Obligations and the termination of
this Agreement.
(F) Xxxxxx Individually. With respect to its Commitments and
the Loans made by it, and the Notes issued to it, Xxxxxx shall have and may
exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Lender. The terms "Lenders" or "Requisite Lenders" or any similar terms shall,
unless the context clearly otherwise indicates, include Xxxxxx in its
individual capacity as a Lender or one of the Requisite Lenders. Xxxxxx may
lend money to, and generally engage in any kind of banking, trust or other
business with any Loan Party as if it were not acting as Agent pursuant hereto.
(G) Successor Agent.
(1) Resignation. Agent may resign from the performance
of all its functions and duties hereunder at any time by giving at least thirty
(30) Business Days' prior written notice to Borrower and the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (2) below or as otherwise provided below.
(2) Appointment of Successor. Upon any such notice of
resignation pursuant to clause (G)(1) above, Requisite Lenders shall, upon
receipt of Borrower's prior consent which shall not unreasonably be withheld,
appoint a successor Agent. If a successor Agent shall not have been so
appointed within said thirty (30) Business Day period, the retiring Agent, upon
notice to Borrower, shall then appoint a successor Agent from among the Lenders
(or if no Lenders shall accept such appointment, such successor Agent may be
any other Person appointed by the retiring Agent) who shall serve as Agent
until such time, as Requisite Lenders, upon receipt of Borrower's prior written
consent which shall not be unreasonably withheld, appoint a successor Agent as
provided above.
(3) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to
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and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents. After any retiring Agent's resignation
as Agent under the Loan Documents, the provisions of this subsection 9.2 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under the Loan Documents.
(H) Collateral Matters.
(1) Release of Collateral. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any property covered by this Agreement or the
Loan Documents (i) upon termination of the Commitments and in connection
therewith, the termination of all Lender Letters of Credit (or the provision of
cash collateral in regard thereto, if required by subsection 2.4(C)) and the
full payment and satisfaction of all Obligations; (ii) constituting property
being sold or disposed of if Borrower certifies to Agent that the sale or
disposition is made in compliance with the provisions of this Agreement (and
Agent may rely in good faith conclusively on any such certificate, without
further inquiry); or (iii) constituting property leased to Borrower under a
lease which has expired or been terminated in a transaction permitted under
this Agreement or is about to expire and which has not been, and is not
intended by Borrower to be, renewed or extended. In addition, Agent may
release Collateral as to which the applicable percentage of Lenders have
consented to or otherwise authorized the release of the Lien of Agent in such
property pursuant to subsection 10.3(A).
(2) Confirmation of Authority; Execution of Releases.
Without in any manner limiting Agent's authority to act without any specific or
further authorization or consent by Lenders (as set forth in subsection
9.2(H)(1)), each Lender agrees to confirm in writing, upon request by Borrower,
the authority to release any property covered by this Agreement or the other
Loan Documents conferred upon Agent under subsection 9.2(H)(1). So long as no
Event of Default is then continuing, upon receipt by Agent of confirmation from
the requisite percentage of Lenders, of its authority to release any particular
item or types of property covered by this Agreement or the other Loan
Documents, and upon at least five (5) Business Days prior written request by
Borrower, Agent shall (and is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary to evidence the release of the Liens
granted to Agent for the benefit of Agent and Lenders herein or pursuant hereto
upon such Collateral; provided, however, 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 obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens upon (or obligations of any Loan Party, in respect of), all interests
retained by any Loan Party, including, without limitation, the proceeds of any
sale, all of which shall continue to constitute part of the property covered by
this Agreement or the Loan Documents.
(3) Absence of Duty. Agent shall have no obligation
whatsoever to any Lender or any other Person to assure that the property
covered by this Agreement or the other Loan Documents exists or is owned by
Borrower or any other Loan Party or is cared for, protected or insured or has
been encumbered or that the Liens granted to Agent on behalf of Agent and
Lenders
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herein or pursuant hereto 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 and powers granted or available to Agent in this subsection 9.2(H)
or in any of the other Loan Documents, it being understood and agreed that in
respect of the property covered by this Agreement or the other Loan Documents
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 property
covered by this Agreement or the other Loan Documents as one of the Lenders and
that Agent shall have no duty or liability whatsoever to any of the other
Lenders; provided, that Agent shall exercise the same care which it would in
dealing with loans for its own account.
(I) Agency for Perfection. Each Lender hereby appoints each
other Lender as agent for the purpose of perfecting Lenders' security interest
in Collateral which, in accordance with Article 9 of the Uniform Commercial
Code in any applicable jurisdiction, can be perfected only by possession.
Should any Lender (other than Agent) obtain possession of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor, shall deliver such Collateral to Agent or in accordance with Agent's
instructions.
(J) Exercise of Remedies. Each Lender agrees that it will not
have any right individually to enforce or seek to enforce this Agreement or any
other Loan Document or to realize upon any collateral security for the Loans,
it being understood and agreed that such rights and remedies may be exercised
only by Agent.
9.3 Consents.
(A) In the event Agent requests the consent of a Lender and
does not receive a written denial thereof within five (5) Business Days after
such Lender's receipt of such request, then such Lender will be deemed to have
given such consent.
(B) In the event Agent requests the consent of a Lender and
such consent is denied, then Agent may, at its option, require such Lender to
assign its interest in the Loans to another Lender willing to accept such
assignment for a price equal to the then outstanding principal amount thereof
plus accrued and unpaid interest and fees due such Lender, which interest and
fees will be paid when collected from Borrower. In the event that Agent elects
to require any Lender to assign its interest to such other Lender, Agent will
so notify such Lender in writing within forty-five (45) days following such
Lender's denial, and such Lender will assign its interest to such other Lender
no later than five (5) days following receipt of such notice.
9.4 Set Off and Sharing of Payments. In addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of any Event of Default, each Lender is hereby authorized by Borrower at any
time or from time to time, with reasonably prompt subsequent notice to Borrower
or to any other Person (any prior or contemporaneous notice being hereby
expressly waived) to set off and to appropriate and to apply any and all (A)
balances held by such Lender or such holder at any of its
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offices for the account of Borrower or any of its Subsidiaries (regardless of
whether such balances are then due to Borrower or its Subsidiaries), and (B)
other property at any time held or owing by such Lender or such holder to or
for the credit or for the account of Borrower or any of its Subsidiaries,
against and on account of any of the Obligations which are not paid when due;
except that no Lender or any such holder shall exercise any such right without
the prior written consent of Agent. Any Lender which has exercised its right
to set off shall, to the extent the amount of any such set off exceeds its Pro
Rata Share of the Obligations, purchase for cash (and the other Lenders or
holders shall sell) participations in each such other Lender's or holder's Pro
Rata Share of the Obligations as would be necessary to cause such Lender to
share such excess with each other Lender or holder in accordance with their
respective Pro Rata Shares. Borrower agrees, to the fullest extent permitted
by law, that (a) any Lender or holder may exercise its right to set off with
respect to amounts in excess of its Pro Rata Share of the Obligations and may
sell participations in such excess to other Lenders and holders, and (b) any
Lender or holder so purchasing a participation in the Loans made or other
Obligations held by other Lenders or holders may exercise all rights of set-
off, bankers' Lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender or holder were a direct holder of
Loans and other Obligations in the amount of such participation.
9.5 Dissemination of Information. Agent will provide Lenders
with any information received by Agent from Borrower which is required to be
provided to a Lender hereunder; provided, however, that Agent shall not be
liable to Lenders for any failure to do so, except to the extent that such
failure is attributable to Agent's gross negligence or willful misconduct.
9.6 Return of Payments.
(1) If Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will be
received by Agent from Borrower and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender
without set-off, counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount received
by Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any solvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
repay to Agent on demand any portion of such amount that Agent has distributed
to such Lender, together with interest at such rate, if any, as Agent is
required to pay to Borrower or such other Person, without set-off, counterclaim
or deduction of any kind.
9.7 Discretionary Advances. Agent may, in its sole
discretion, make Revolving Advances on behalf of Lenders in an aggregate amount
of not more than $________ in excess of the limitations set forth in subsection
2.1 (A)(1)(b) (but not in excess of the limitations set forth in subsection
2.1(A)(1)(a)) for the purpose of preserving, protecting, collecting or
enforcing the Collateral (including, without limitation, the preservation of
the perfection and priority of the Agent's Lien therein) and/or rights and
remedies of Agent and Lenders under the Loan Documents
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or applicable law (any advances described in this subsection 9.7 being herein
referred to as "Agent Advances"). The Agent Advances shall be repayable on
demand and secured by the Collateral, shall constitute Revolving Advances and
Obligations hereunder, and shall bear interest at the rate applicable to the
Revolving Advances from time to time. Agent shall require settlement by
Lenders of Agent Advances upon demand by Agent. Notwithstanding the foregoing,
not more than one (1) Business Day after demand is made by Agent (whether
before or after the occurrence of a Default or an Event of Default), each other
Lender shall irrevocably and unconditionally purchase and receive from Agent,
without recourse or warranty, an undivided interest and participation in such
Agent Advance to the extent of such Lender's Pro Rata Share thereof by paying
to Agent, in same day funds, an amount equal to such Lender's Pro Rata Share of
such Agent Advance. From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Agent Advance as
provided above, Agent shall promptly distribute to such Lender such Lender's
Pro Rata Share of all payments of principal and interest and all proceeds of
Collateral received by Agent in respect of such Agent Advance.
SECTION 10. MISCELLANEOUS
10.1 Expenses and Attorneys' Fees. Whether or not the
transactions contemplated hereby shall be consummated, Borrower agrees to
promptly pay all reasonable fees, costs and expenses incurred by Agent (and
Lenders to the extent herein provided) in connection with any matters
contemplated by or arising out of this Agreement or the other Loan Documents
including the following, and all such fees, costs and expenses shall be part of
the Obligations, payable on demand and secured by the Collateral: (a)
reasonable fees, costs and expenses (including reasonable attorneys' fees,
allocated costs of internal counsel and fees of accountants, auditors and
other professionals retained by Agent) incurred by Agent in connection with the
examination, review, due diligence investigation, documentation and closing of
the financing arrangements evidenced by the Loan Documents; (b) reasonable
fees, costs and expenses (including reasonable attorneys' fees, allocated costs
of internal counsel and fees of accountants, auditors and other professionals
retained by Agent) incurred by Agent in connection with the review,
negotiation, preparation, documentation, execution, syndication and
administration of the Loan Documents, the Loans, and any amendments, waivers,
consents, forbearances and other modifications relating thereto or any
subordination or intercreditor agreements; (c) reasonable fees, costs and
expenses incurred by Agent in creating, perfecting and maintaining perfection
of Liens in favor of Agent, on behalf of Agent and Lenders; (d) reasonable
fees, costs and expenses incurred by Agent in connection with forwarding to
Borrower the proceeds of Loans including Agent's or any Lenders' standard wire
transfer fee; (e) reasonable fees, costs, expenses and bank charges, including
bank charges for returned checks, incurred by Agent or any Lender in
establishing, maintaining and handling lock box accounts, blocked accounts or
other accounts for collection of the Collateral; (f) reasonable fees, costs,
expenses (including reasonable attorneys' fees and allocated costs of internal
counsel) of Agent or any Lender and costs of settlement incurred in collecting
upon or enforcing rights against the Collateral or incurred in any action to
enforce this Agreement or the other Loan Documents or to collect any payments
due from Borrower or any other Loan Party under this Agreement or any other
Loan Document or incurred in connection with any refinancing or restructuring
of the credit
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arrangements provided under this Agreement, whether in the nature of a
"workout" or in connection with any insolvency or bankruptcy proceedings or
otherwise.
10.2 Indemnity. In addition to the payment of expenses
pursuant to subsection 10.1, whether or not the transactions contemplated
hereby shall be consummated, Borrower agrees to indemnify, pay and hold Agent
and each Lender and any holder of any Notes and the officers, directors,
employees, agents, consultants, accountants, auditors, persons engaged by Agent
or any Lender or holder of any Note to evaluate or monitor the Collateral,
affiliates and attorneys of Agent, Lender and such holders (collectively called
the "Indemnitees") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including
the reasonable fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may be imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this Agreement or the
other Loan Documents, the consummation of the Recapitalization or the other
transactions contemplated by this Agreement, the statements contained in the
commitment letters, if any, delivered by Agent or any Lender, Agent's and each
Lender's agreement to make the Loans hereunder, the use or intended use of the
proceeds of any of the Loans or the exercise of any right or remedy hereunder
or under the other Loan Documents (the "Indemnified Liabilities"); provided
that Borrower shall have no obligation to an Indemnitee hereunder with respect
to Indemnified Liabilities arising from the gross negligence or willful
misconduct of that Indemnitee as determined by a court of competent
jurisdiction.
10.3 Amendments and Waivers.
(A) Except as otherwise provided herein, no amendment,
modification, termination or waiver of any provision of this Agreement or any
other Loan Document, or consent to any departure by any Loan Party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by Requisite Lenders or Agent, as applicable; provided, that no amendment,
modification, termination or waiver shall, unless in writing and signed by all
Lenders, do any of the following: (i) increase the Commitment of any Lender;
(ii) reduce the principal of, rate of interest on or fees payable with respect
to any Loan or Lender Letter of Credit; (iii) extend the scheduled due date of
all or any portion of principal of the Loans; (iv) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Loans, or the
percentage of Lenders which shall be required for Lenders or any of them to
take any action hereunder; (v) amend or waive this subsection 10.3 or the
definitions of the terms used in this subsection 10.3 insofar as the
definitions affect the substance of this subsection 10.3; (vi) consent to the
assignment or other transfer by any Loan Party of any of its rights and
obligations under any Loan Document; (vii) increase the percentages contained
in the definition of Borrowing Base (viii) change the definition of Maximum
Revolving Loan Amount or (ix) release all or substantially all of the
Collateral or all or substantially all of the Guaranties, provided, further,
that no amendment, modification, termination or waiver affecting the rights or
duties of Agent under any Loan Document shall in any event be effective, unless
in writing and signed by Agent, in addition to the Lenders required herein
above to take such action, and provided, even further, that no amendment,
modification, termination or waiver of
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subsections 2.1(B), 2.1(F) (with respect to the Swingline Note), any provision
expressly relating to application of payments to the Swingline Loan or the
definition of Swingline Loan Commitment shall in any event be effective unless
in writing and signed by Swingline Lender.
(B) Each amendment, modification, termination or waiver shall
be effective only in the specific instance and for the specific purpose for
which it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
(C) No amendment, modification or waiver of any provision of
any Lender Letter of Credit shall be applicable without the written concurrence
of the issuer of such Lender Letter of Credit. No notice to or demand on
Borrower or any other Loan Party in any case shall entitle Borrower or any
other Loan Party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.3 shall be binding upon each
Lender, and, if signed by a Loan Party, on such Loan Party.
10.4 Notices. Unless otherwise specifically provided herein,
all notices shall be in writing addressed to the respective party as set forth
below and may be personally served, telecopied or sent by overnight courier
service or United States mail and shall be deemed to have been given: (a) if
delivered in person, when delivered; (b) if delivered by telecopy, on the date
of transmission if transmitted on a Business Day before 4:00 p.m. Central time
or, if not, on the next succeeding Business Day; (c) if delivered by overnight
courier, two (2) days after delivery to such courier properly addressed; or (d)
if by U.S. Mail, four (4) Business Days after depositing in the United States
mail, with postage prepaid and properly addressed.
If to Borrower: CHIEF AUTO PARTS INC. One Lincoln
Centre, Suite 200 5400 LBJ Freeway Dallas, Texas
75240-6223 Attn: Chief Financial Officer Telecopy
No.: (000) 000-0000
With a copy to: Xxxxxx, Xxxxx & Xxxxxxxx LLP 0000
Xxxx Xx., Xxxxx 0000 Xxxxxx, Xxxxx 00000 Attn:
Xxxxx X. Xxxxxxxxx, III Telecopy No.: (214)
698-3400
If to Agent or to Xxxxxx: XXXXXX FINANCIAL, INC.
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx, 00000
Attn: HBC Portfolio Manager
Telecopy No.: (___) ___-____
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With a copy to: XXXXXX FINANCIAL, INC.
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Legal Department/HBC
Telecopy No.: (___) ___-____
If to any Lender: Its address indicated on the signature page hereto, in an
Assignment and Acceptance or in a notice to Agent and Borrower or to such other
address as the party addressed shall have previously designated by written
notice to the serving party, given in accordance with this subsection 10.4.
10.5 Survival of Warranties and Certain Agreements. All
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement and the making of the Loans hereunder.
Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of Borrower set forth in subsections 10.1 and 10.2 shall survive
the payment of the Loans and the termination of this Agreement.
10.6 Indulgence Not Waiver. No failure or delay on the part of
Agent, any Lender or any holder of any Note in the exercise of any power, right
or privilege hereunder or under Note shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.
10.7 Marshaling; Payments Set Aside. Neither Agent nor any
Lender shall be under any obligation to marshal any assets in favor of any Loan
Party or any other party or against or in payment of any or all of the
Obligations. To the extent that any Loan Party makes a payment or payments to
Agent and/or any Lender or Agent and/or any Lender enforces its security
interests or exercise its rights of setoff, and such payment or payments or the
proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such recovery, the Obligations or part thereof originally
intended to be satisfied, and all Liens, rights and remedies therefor, shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
10.8 Entire Agreement. This Agreement, the Notes and the other
Loan Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties hereto.
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10.9 Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
10.10 Severability. The invalidity, illegality or
unenforceability in any jurisdiction of any provision in or obligation under
this Agreement or the other Loan Documents shall not affect or impair the
validity, legality or enforceability of the remaining provisions or obligations
under this Agreement or the other Loan Documents or of such provision or
obligation in any other jurisdiction.
10.11 Lenders' Obligations Several; Independent Nature of
Lenders' Rights. The obligation of each Lender hereunder is several and not
joint and neither Agent nor any Lender shall be responsible for the obligation
or commitment of any other Lender hereunder. In the event that any Lender at
any time should fail to make a Loan as herein provided, the Lenders, or any of
them, at their sole option, may make the Loan that was to have been made by the
Lender so failing to make such Loan. Nothing contained in any Loan Document
and no action taken by Agent or any Lender pursuant hereto or thereto shall be
deemed to constitute 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, provided Agent
fails or refuses to exercise any remedies against Borrower after receiving the
direction of the Requisite Lenders, 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.
10.12 Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
10.13 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.14 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns except that Borrower may not assign its rights or
obligations hereunder without the written consent of Lenders.
10.15 No Fiduciary Relationship; Limitation of Liabilities.
(A) No provision in this Agreement or in any of the other Loan
Documents and no course of dealing between the parties shall be deemed to
create any fiduciary duty by Agent or any Lender to Borrower.
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(B) Neither Agent nor any Lender, nor any affiliate, officer,
director, shareholder, employee, attorney, or agent of Agent or any Lender
shall have any liability with respect to, and Borrower hereby waives, releases,
and agrees not to xxx any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by Borrower in
connection with, arising out of, or in any way related to, this Agreement or
any of the other Loan Documents, or any of the transactions contemplated by
this Agreement or any of the other Loan Documents. Borrower hereby waives,
releases, and agrees not to xxx Agent or any Lender or any of Agent's or any
Lender's affiliates, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or
any of the transactions contemplated by this Agreement or any of the
transactions contemplated hereby.
10.16 CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH
COURTS. BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT,
THE NOTES, THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS.
10.17 WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH LENDER
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTES OR THE OTHER LOAN
DOCUMENTS. BORROWER, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS
ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, THE NOTES AND THE
OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR
RELATED FUTURE DEALINGS. BORROWER, AGENT AND EACH LENDER FURTHER WARRANT AND
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.
10.18 Construction. Borrower, Agent and each Lender each
acknowledge that it has had the benefit of legal counsel of its own choice and
has been afforded an opportunity to review this Agreement and the other Loan
Documents with its legal counsel and that this Agreement and the other Loan
Documents shall be construed as if jointly drafted by Borrower, Agent and each
Lender.
10.19 Counterparts; Effectiveness. This Agreement and any
amendments, waivers, consents, or supplements may be executed in any number of
counterparts and by different parties
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hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all of which counterparts together shall
constitute but one and the same instrument. This Agreement shall become
effective upon the execution of a counterpart hereof by each of the parties
hereto. Delivery of an executed counterpart of a signature page to this
Agreement, any amendments, waivers, consents or supplements, or to any other
Loan Document by telecopier shall be as effective as delivery of a manually
executed counterpart thereof.
10.20 No Duty. All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by Agent or any Lender
shall have the right to act exclusively in the interest of Agent or such Lender
and shall have no duty of disclosure, duty of loyalty, duty of care, or other
duty or obligation of any type or nature whatsoever to Borrower or any of
Borrower's shareholders or any other Person.
10.21 Confidentiality. Agent and Lenders shall hold all
nonpublic information obtained in connection herewith in accordance with such
Person's customary procedures for handling confidential information of this
nature and in accordance with safe and sound business practices and in any
event may make disclosure to such of its respective Affiliates, officers,
directors, employees, agents and representatives as need to know such
information in connection with the Loans. If any Lender is otherwise a
creditor of a Borrower, such Lender may use the information in connection with
its other credits. Agent and Lenders may also make disclosure reasonably
required by a bona fide offeree or assignee (or participation), or as required
or requested by any Governmental Authority or representative thereof, or
pursuant to legal process, or to its accountants, lawyers and other advisors,
and shall require any such offeree or assignee (or participant) to agree (and
require any of its offerees, assignees or participants to agree) to comply with
this Section 10.21. In no event shall Agent or any Lender be obligated or
required to return any materials furnished by Borrower;
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provided, however, each Offeree shall be required to agree that if it does not
become a assignee (or participant) it shall return all materials furnished to
it by Borrower in connection herewith.
Witness the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written above.
"BORROWER"
CHIEF AUTO PARTS INC.
By:
------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
FEIN:
-----------------------------------------------
"LENDERS"
XXXXXX FINANCIAL, INC.
By:
------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
Revolving Loan Commitment:
$
------------------------------------------------
Swing Loan Commitment
$
------------------------------------------------
[Add other Lenders]
Address:
"AGENT"
XXXXXX FINANCIAL, INC., as Agent
By:
-------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
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EXHIBIT 5.1(D)
[TO BE RETYPED ON THE LETTERHEAD OF BORROWER]
, 199 [200 ]
----------------- -- -
[Name and Address of
Borrower's Accountant]
----------------------------
----------------------------
Dear :
-----------------------
Reference is made to the Loan and Security Agreement dated as of
May __, 1997 (as the same may hereafter be amended, supplemented or otherwise
modified, the "Loan Agreement") among the undersigned ("Borrower"), the lenders
party thereto from time to time (the "Lenders") and Xxxxxx Financial, Inc., as
agent for the Lenders (in such capacity, the "Agent"). In connection with the
Loan Agreement and other credit facilities which may from time to time be
extended by Agent or any Lender to Borrower, Borrower hereby authorizes and
directs you (i) to communicate directly with Agent and each Lender with respect
to all matters pertaining to the financial condition, business and affairs of
Borrower or any of its subsidiaries, if any, and (ii) to release to Agent and
each Lender all management letters and internal control reports and, where the
same are given orally, to advise Agent and each Lender of the substance
thereof.
Furthermore, Borrower acknowledges and hereby notifies you that
(i) a primary intent of Borrower is for your professional services, in
preparing the audit report for Borrower's financial statements, to benefit and
influence Agent and each Lender and its successors and assigns, and (ii) Agent
and each Lender has relied on past financial statements, and will rely on
future financial statements, of Borrower and its subsidiaries, and your audit
report thereon, in making the loans and other credit accommodations under the
Loan Agreement.
Very truly yours,
CHIEF AUTO PARTS INC.
By
------------------------------
Its
-----------------------------
cc: Xxxxxx Financial, Inc.
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