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2001 AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
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FLEET RETAIL FINANCE INC.
ADMINISTRATIVE AGENT
AND
COLLATERAL AGENT
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REVOLVING CREDIT LENDERS
NAMED HEREIN
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BACK BAY CAPITAL FUNDING LLC
THE TERM LENDER
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THE CIT GROUP/ BUSINESS CREDIT, INC.
DOCUMENTATION AGENT
FOOTHILL CAPITAL CORPORATION
SYNDICATION AGENT
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HOMEBASE, INC.
THE LEAD BORROWER
FOR:
HOMEBASE, INC.
HOMECLUB INC. OF TEXAS
HOMECLUB, INC.
THE BORROWERS
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Fleet Securities Inc.
THE SYNDICATOR
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May 10, 2001
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TABLE OF CONTENTS
ARTICLE 1: - DEFINITIONS:
ARTICLE 2: - THE REVOLVING CREDIT:
2-1. Establishment of Revolving Credit..........................40
2-2. Designation of Eligible Real Estate.........................41
2-3. Initial Reserves. Changes to Reserves.......................41
2-4. OverLoans...................................................42
2-5. Risks of Value of Collateral................................42
2-6. Commitment to Make Revolving Credit Loans and
Support Letters of Credit.................................43
2-7. Revolving Credit Loan Requests..............................43
2-8 Making of Revolving Credit Loans............................44
2-9. SwingLine Loans.............................................45
2-10. The Loan Account............................................45
2-11. The Revolving Credit Notes..................................46
2-12. Payment of The Loan Account.................................46
2-13. Interest on Revolving Credit Loans. ........................47
2-14. Revolving Credit Commitment Fee.............................48
2-15. Administrative Agent's Fee..................................48
2-16. Unused Line Fee.............................................48
2-17. Early Termination Fee.......................................49
2-18. Concerning Fees.............................................49
2-19. Agents' and Lenders' Discretion.............................49
2-20. Procedures For Issuance of L/C's............................50
2-21. Fees For L/C's..............................................51
2-22. Concerning L/C's............................................52
2-23. Changed Circumstances.......................................53
2-24. Designation of Lead Borrower as Borrowers' Agent...........54
2-25. Revolving Credit Lenders' Commitments.......................55
ARTICLE 3: - THE TERM LOAN:
3-1. Commitment To Make Term Loan................................56
3-2. The Term Note...............................................56
3-3. Payment of Principal of the Term Loan. ....................57
3-4 Interest On The Term Loan. .................................57
3-5. Term Loan Anniversary Fees..................................58
3-6. Payments On Account of Term Loan............................58
ARTICLE 4: - CONDITIONS PRECEDENT:
4-1. Corporate Due Diligence.....................................59
4-2.. Opinion.....................................................59
4-3. Additional Documents........................................59
4-4. Officers' Certificates......................................59
4-5. Representations and Warranties..............................59
4-6. Minimum Day One Availability................................60
4-7. All Fees and Expenses Paid..................................60
4-8. Certain Conditions Satisfied................................60
4-9. No Adverse Change...........................................60
4-10. Benefit of Conditions Precedent.............................60
ARTICLE 5: - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
5-1. Payment and Performance of Liabilities......................61
5-2. Due Organization. Authorization. No Conflicts...............61
5-3. Trade Names.................................................62
5-4. Infrastructure..............................................63
5-5. Locations...................................................63
5-6. Stores......................................................64
5-7. Title to Assets.............................................65
5-8. Indebtedness................................................65
5-9. Insurance...................................................65
5-10. Licenses....................................................66
5-11. Leases......................................................66
5-12. Requirements of Law.........................................67
5-13. Labor Relations.............................................67
5-14. Maintenance and Disposition of Collateral...................68
5-15. Real Estate Transactions....................................68
5-16. Taxes.......................................................69
5-17. No Margin Stock.............................................70
5-18. ERISA.......................................................70
5-19. Hazardous Materials.........................................71
5-20. Litigation..................................................71
5-21. Dividends. Investments. Corporate Action....................71
5-22. Loans.......................................................72
5-23. Protection of Assets........................................72
5-24. Line of Business............................................73
5-25. Affiliate Transactions......................................73
5-26. Further Assurances..........................................73
5-27. Adequacy of Disclosure......................................74
5-28. No Restrictions on Liabilities..............................74
5-29. Other Covenants.............................................75
ARTICLE 6: FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
6-1. Maintain Records............................................75
6-2. Access to Records...........................................75
6-3. Notice to Administrative Agent..............................76
6-4. Borrowing Base Certificate..................................77
6-5. Monthly Reports.............................................77
6-6. Quarterly Reports...........................................78
6-7. Annual Reports..............................................78
6-8. Officers' Certificates......................................78
6-9. Inventories, Appraisals, and Audits.........................79
6-10. Additional Financial Information............................80
6-11. Financial Performance Covenants.............................81
ARTICLE 7: - USE OF COLLATERAL:
7-1. Use of Inventory Collateral.................................82
7-2. Inventory Quality...........................................82
7-3. Adjustments and Allowances..................................82
7-4. Validity of Accounts........................................82
7-5. Notification to Account Debtors.............................83
ARTICLE 8: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
8-1 Implementation of Cash Concentration System.................83
8-2. The Concentration and Operating Accounts....................83
8-3. Termination of Cash Concentration System....................84
8-4. Payment of Liabilities......................................84
8-5. The Operating Account.......................................85
ARTICLE 9: - GRANT OF SECURITY INTEREST:
9-1. Grant of Security Interest..................................86
9-2. Extent and Duration of Security Interest....................86
ARTICLE 10: - AGENTS AS BORROWER'S ATTORNEY-IN-FACT:
10-1. Appointment as Attorney-In-Fact.............................87
10-2. No Obligation to Act........................................88
ARTICLE 11: - EVENTS OF DEFAULT:
11-1. Failure to Pay Principal or Interest........................88
11-2. Failure To Make Other Payments..............................88
11-3. Failure to Perform Covenant or Liability (No Grace Period)..89
11-4. Financial Reporting Requirements............................89
11-5. Failure to Perform Covenant or Liability (Grace Period).....89
11-6. Mandatory Acceleration......................................89
11-7. Misrepresentation...........................................90
11-8. Acceleration of Other Debt. Breach of Lease.................90
11-9. Default Under Other Agreements..............................90
11-10. Uninsured Loss..............................................90
11-11. Attachment. Judgment. Restraint of Business.................90
11-12. Business Failure............................................91
11-13. Bankruptcy..................................................91
11-14. Default by Guarantor or Affiliate...........................91
11-15. Indictment - Forfeiture.....................................91
11-16. Termination of Guaranty.....................................92
11-17. Challenge to Loan Documents.................................92
11-18. Change in Control...........................................92
ARTICLE 12: - RIGHTS AND REMEDIES UPON DEFAULT:
12-1 Acceleration................................................92
12-2. Rights of Enforcement.......................................92
12-3. Sale of Collateral..........................................93
12-4. Occupation of Business Location.............................94
12-5. Grant of Nonexclusive License...............................94
12-6. Assembly of Collateral......................................94
12-7. Rights and Remedies.........................................94
ARTICLE 13: - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
13-1. Revolving Credit Funding Procedures.........................95
13-2. SwingLine Loans.............................................95
13-3. Administrative Agent's Covering of Fundings:................96
13-4. Ordinary Course Distributions: Revolving Credit.............98
13-5. Ordinary Course Distributions : Term Loan...................99
ARTICLE 14: - ACCELERATION AND LIQUIDATION:
14-1. Acceleration Notices.......................................100
14-2. Mandatory Acceleration Right of Term Lender:...............100
14-3. Acceleration...............................................101
14-4. Initiation of Liquidation..................................101
14-5. Actions At and Following Initiation of Liquidation........101
14-6. Collateral Agent's Conduct of Liquidation..................102
14-7. Distribution of Liquidation Proceeds:......................102
14-8. Relative Priorities To Proceeds of Liquidation ............103
ARTICLE 15: - THE AGENTS:
15-1. Appointment of The Agent ................................105
15-2. Responsibilities of Agents ................................105
15-3. Concerning Distributions By the Agents ....................106
15-4. Dispute Resolution:........................................107
15-5. Distributions of Notices and of Documents..................107
15-6. Confidential Information...................................108
15-7. Reliance by Agents ........................................108
15-8. Non-Reliance on Agents and Other Lenders...................108
15-9. Indemnification............................................109
15-10. Resignation of Agent.......................................109
ARTICLE 16: - ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:
16-1. Administration of Credit Facilities........................110
16-2. Actions Requiring or On Direction of Majority Lenders......111
16-3. Actions Requiring or On Direction of SuperMajority Lenders.111
16-4. Action Requiring Certain Consent ..........................112
16-5. Actions Requiring or Directed By Unanimous Consent.........113
16-6. Actions Requiring SwingLine Lender Consent.................115
16-7. Actions Requiring Term Lender Consent......................115
16-8. Actions Requiring Agents' Consent..........................115
16-9. Miscellaneous Actions......................................116
16-10. Actions Requiring Lead Borrower's Consent..................116
16-11. NonConsenting Revolving Credit Lender......................117
16-12. Replacement of Delinquent Revolving Credit Lender..........118
16-13. The BuyOut:................................................120
ARTICLE 17: - ASSIGNMENTS BY LENDERS:
17-1. Assignments and Assumptions By Revolving Credit Lenders....121
17-2. Assignment Procedures......................................121
17-3. Effect of Assignment.......................................122
17-4. Assignment By Term Lender..................................123
ARTICLE 18: - NOTICES:
18-1. Notice Addresses...........................................123
18-2. Notice Given...............................................124
18-3. Wire Instructions Notice Given.............................124
ARTICLE 19: - TERM:
19-1. Termination of Revolving Credit............................125
19-2. Actions On Termination.....................................125
ARTICLE 20: - GENERAL:
20-1. Protection of Collateral...................................126
20-2. Publicity..................................................126
20-3. Successors and Assigns.....................................126
20-4. Severability...............................................126
20-5. Amendments. Course of Dealing.............................126
20-6. Power of Attorney..........................................127
20-7. Application of Proceeds....................................127
20-8. Increased Costs............................................128
20-9. Costs and Expenses of the Agents and Term Lender...........128
20-10. Copies and Facsimiles......................................129
20-11. Massachusetts Law..........................................129
20-12. Consent to Jurisdiction....................................129
20-13. Indemnification............................................130
20-14. Rules of Construction......................................130
20-15. Intent.....................................................132
20-16. Participations:............................................132
20-17. Right of Set-Off...........................................133
20-18. Pledges To Federal Reserve Banks: .........................133
20-19. Maximum Interest Rate......................................133
20-20. Waivers. ..................................................133
EXHIBITS
2:2-13. :........Pricing Grid
2:2-25 :........Revolving Credit Lenders' Commitments
3:3-2 :........Term Note
5:5-2 :........Corporate Information
5:5-3 :........Trade Names
5:5-5 :........Locations, Leases, and Landlords
5:5-7 :........Encumbrances
5:5-7(c) :........Equipment Usage Agreement
5:5-8 :........Indebtedness
5:5-9 :........Insurance Policies
5:5-11 :........Capital Leases
5:5-16 :........Taxes
5:5-20 :........Litigation
6:6-4 :........Borrowing Base Certificate
6:6-5 :........Monthly Financial Reporting Requirements
6:6-11 :........Financial Performance Covenants
17:17-2 :........Assignment / Assumption
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2001 AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT Fleet Retail Finance Inc.
ADMINISTRATIVE AND COLLATERAL AGENT
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May 10, 2001
THIS AGREEMENT is made amongst
Fleet Retail Finance Inc. (in such capacity, the
"Administrative Agent"), a Delaware corporation with offices at 00
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, as Administrative Agent for
the benefit of the (i) the Collateral Agent, (ii) the "Revolving Credit
Lenders", who are, at present, those financial institutions identified
on the signature pages of this Agreement and any Person who becomes a
"Revolving Credit Lender" in accordance with the provisions of Article
17:17-1 of this Agreement and (iii) the Term Lender;
and
Fleet Retail Finance Inc. (in such capacity, the "Collateral
Agent"), a Delaware corporation with offices at 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, as Collateral Agent for the benefit of the
Administrative Agent, the Revolving Credit Lenders, and the Term
Lender;
and
The Revolving Credit Lenders;
and
Back Bay Capital Funding LLC (the "Term Lender"), a Delaware
Limited Liability Company with offices at 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000
and
HomeBase, Inc. (in such capacity, the "Lead Borrower"), a
Delaware corporation with its principal executive offices at 0000
Xxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000 as agent for the following
(individually, a "Borrower" and collectively, the "Borrowers"):
HomeBase, Inc.;
HomeClub, Inc. of Texas, a Delaware corporation with
its principal executive offices at 0000 Xxxxxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxx 00000; and
HomeClub, Inc., a Nevada corporation with its
principal executive offices at 0000 Xxxxxxxxx Xxxxx,
Xxxxxx, Xxxxxxxxxx 00000,
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom, and with the intention that this Agreement constitute an
amendment and restatement of the 2001 Loan Agreement (as hereinafter defined),
WITNESSETH:
ARTICLE 1: - DEFINITIONS:
As used herein, the following terms have the following meanings or are
defined in the section of this Agreement so indicated:
"1997 Subordinated Notes": The 5.25% Convertible Subordinated Notes
due 2004 issued by the Borrower on or about November 10, 1997
in the aggregate principal amount of up to $100,000,000.
"1999 Loan Agreement": The December 3, 1999 Loan and Security
Agreement (as amended to date) between (among others) the
Agent (then known as "BankBoston Retail Finance Inc.") and the
Revolving Credit Lenders referred to therein, on the one hand,
and the Lead Borrower and the Borrowers on the other, of which
the 2001 Loan Agreement is an amendment and restatement.
"2001 Loan Agreement": The February 23, 2001 Loan and Security
Agreement (as amended to date) between (among others) the
Agent and the Revolving Credit Lenders referred to therein, on
the one hand, and the Lead Borrower and the Borrowers on the
other, of which this Agreement is an amendment and
restatement.
"Acceleration": The making of demand or declaration that any
Indebtedness, not otherwise due and payable, is due and
payable. Derivations of the word "Acceleration" (such as
"Accelerate") are used with like meaning in this Agreement.
"Acceleration Notice": Written notice as follows:
(a) From the Administrative Agent to the Collateral
Agent and the Revolving Credit Lenders, as provided in Section
14:14-1(a).
(b) From the SuperMajority Lenders to the
Administrative Agent, as provided in Section 14:14-1(b).
(c) From the Term Lender to the Administrative Agent,
as provided in Section 14:14-1(c).
"Account Debtor": Has the meaning given that term in the UCC.
"Accounts" and "Accounts Receivable" include, without limitation,
"accounts" as defined in the UCC, and also all: accounts,
accounts receivable, receivables, and rights to payment
(whether or not earned by performance) for: property that has
been or is to be sold, leased, licensed, assigned, or
otherwise disposed of; services rendered or to be rendered; a
policy of insurance issued or to be issued; a secondary
obligation incurred or to be incurred; energy provided or to
be provided; for the use or hire of a vessel; arising out of
the use of a credit or charge card or information contained on
or used with that card; winnings in a lottery or other game of
chance; and also all Inventory which gave rise thereto, and
all rights associated with such Inventory, including the right
of stoppage in transit; all reclaimed, returned, rejected or
repossessed Inventory (if any) the sale of which gave rise to
any Account.
"ACH": Automated clearing house.
"Adjusted Excess Availability": The aggregate of (a) Availability plus
(b) book cash balances.
"Administrative Agent": Defined in the Preamble.
"Administrative Agent's Cover": Defined in Section 13:13-3(c)(i).
"Administrative Agent's Fee": Is defined in Section 2:2-15.
"Affiliate": (a) Each Subsidiary.
(b) With respect to any two Persons, a relationship
in which (i) one holds, directly or indirectly, not less than
Twenty Five Percent (25%) of the capital stock, beneficial
interests, partnership interests, or other equity interests of
the other; or (ii) one has, directly or indirectly, the right,
under ordinary circumstances, to vote for the election of a
majority of the directors (or other body or Person who has
those powers customarily vested in a board of directors of a
corporation); or (iii) not less than Twenty Five Percent (25%)
of their respective ownership is directly or indirectly held
by the same third Person.
(c) Any corporation, limited liability company,
trust, partnership, joint venture, or other enterprise which:
is a parent, brother-sister, subsidiary, or affiliate, of a
Borrower; could have such enterprise's tax returns or
financial statements consolidated with that Borrower's; could
be a member of the same controlled group of corporations
(within the meaning of Section 1563(a)(1), (2) and (3) of the
Internal Revenue Code of 1986, as amended from time to time)
of which any Borrower is a member; controls or is controlled
by any Borrower.
"Agent": When not preceded by "Administrative" or "Collateral",
the term "Agent" refers collectively and individually to the
Administrative Agent and the Collateral Agent.
"Agents' Rights and Remedies": Is defined in Section 12:12-7.
"Applicable Law": As to any Person:(i) All statutes, rules,
regulations, orders, or other requirements having the force of
law and (ii) all court orders and injunctions, arbitrator's
decisions, and/or similar rulings, in each instance ((i) and
(ii)) of or by any federal, state, municipal, and other
governmental authority, or court, tribunal, panel, or other
body which has or claims jurisdiction over such Person, or any
property of such Person, or of any other Person for whose
conduct such Person would be responsible.
"Appraised Inventory Liquidation Value": The net recovery, as
reflected on an Inventory Appraisal, as recoverable on the Borrowers'
Inventory in the event of the conduct of a liquidation of the
Borrowers' Inventory pursuant to an in-Store liquidation.
"Appraised Inventory Percentage": 85%.
"Assigning Revolving Credit Lender": Defined in Section 17:17-1(a).
"Assignment and Acceptance": Defined in Section 17:17-2.
"Availability": Unless and until all Term Loan Obligations have been
paid in full: The least of (a),(b), or (c), and thereafter, the
lesser of (a) or (b), where:
(a) is the result of
(i) The Revolving Credit Ceiling
Minus
(ii) The aggregate unpaid balance of the
Loan Account
Minus
(iii) The aggregate undrawn Stated Amount of
all then outstanding L/C's.
Minus
(iv) The aggregate of the Availability
Reserves.
(b) is the result of
(i) The Revolving Credit Borrowing Base
Minus
(ii) The aggregate unpaid balance of the
Loan Account
Minus
(iii) The aggregate undrawn Stated Amount of
all then outstanding L/C's.
Minus
(iv) The aggregate of the Availability
Reserves.
(c) is the result of
(i) The Term Loan Borrowing Base
Minus
(ii) The aggregate unpaid balance of the
Loan Account
Minus
(iii) The aggregate undrawn Stated Amount
of all then outstanding L/C's.
Minus
(iv) The then unpaid principal balance of
the Term Loan and all accrued
but unpaid interest thereon.
Minus
(v) The aggregate of the Availability
Reserves.
"Availability Reserves": Such reserves as the Administrative Agent
from time to time determines in the Administrative Agent's
discretion as being appropriate to reflect the impediments to
the Collateral Agent's ability to realize upon the Collateral.
"Availability Trigger Event" : Excess Availability is less than
$45 Million for five (5) consecutive Business Days.
"Average Excess Availability": (a) For any Test Month on whose last day
there is an unpaid principal balance reflected in the Loan
Account on account of loans under the Revolving Credit: The
average of Excess Availability based on Excess Availability on
each day of that Test Month.
(b) For any Test Month not described in (a) of this
Definition: The aggregate of (i) the average of Excess
Availability based on Excess Availability on each day of that
Test Month plus (ii) the Borrowers' book cash balances on the
last day of that Test Month.
"Back Bay Capital": Back Bay Capital Funding LLC, a Delaware limited
liability company.
"Bankruptcy Code": Title 11, U.S.C., as amended from time to time.
"Base": The Base Rate announced from time to time by Fleet National
Bank (or any successor in interest to Fleet National Bank). In
the event that said bank (or any such successor) ceases to
announce such a rate, "Base" shall refer to that rate or index
announced or published from time to time as the Administrative
Agent, in good faith, designates as the functional equivalent
to said Base Rate. Any change in "Base" shall be effective,
for purposes of the calculation of interest due hereunder,
when such change is made effective generally by the bank on
whose rate or index "Base" is being set.
"Base Margin Loan": Each Revolving Credit Loan while bearing interest
at the Base Margin Rate.
"Base Margin": The then applicable Base Margin as determined from the
applicable Pricing Grid.
"Base Margin Rate": The aggregate of Base plus the then applicable Base
Margin.
"Blocked Account": Any DDA into which the contents of any other DDA is
transferred.
"Blocked Account Agreement": The Agreement, styled "Restricted Account
Agreement," dated January 10, 2000, amongst Xxxxx Fargo Bank,
N.A., the Lead Borrower, and BankBoston Retail Finance Inc.,
as Agent and any other agreement, in form satisfactory to the
Administrative Agent, with the Lock Box Bank, which agreement
recognizes the Collateral Agent's security interest in the
Collateral and provides that, on notice from the Agent, the
Lock Box Bank will forward directly to the Administrative
Agent proceeds of all Receivables Collateral from time to time
received by the Lock Box Bank.
"Borrower" and "Borrowers": Is defined in the Preamble.
"Borrowing Base Certificate": Is defined in Section 6:6-4.
"Boston Concentration Account": Is defined in Section 8:8-2.
"Business Day": Any day other than (a) a Saturday or Sunday; (b) any
day on which banks in Boston, Massachusetts or in Los Angeles,
California, generally are not open to the general public for
the purpose of conducting commercial banking business; or (c)
a day on which the principal office of the Administrative
Agent is not open to the general public to conduct business.
"Business Plan": The Borrowers' business plan provided to the
Administrative Agent on or about March 19, 2001, and any
revision, amendment, or update of such business plan to which
the Administrative Agent has provided its written sign-off.
"BuyOut": The consummation of a transaction described in Section
16:16-13.
"Capital Expenditures": The expenditure of funds or the incurrence
of liabilities which may be capitalized in accordance
with GAAP.
"Capital Lease": Any lease which may be capitalized in accordance with
GAAP.
"Change in Control": The occurrence of any of the following:
(a) The failure of the Parent to own, beneficially
and of record, 100% of the capital stock of all other
Borrowers.
(b) The acquisition, by any group of persons (within
the meaning of the Securities Exchange Act of 1934, as
amended) or by any Person, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange
Commission) of 40% or more of the issued and outstanding
capital stock of the Parent having the right, under ordinary
circumstances, to vote for the election of directors of the
Parent.
(c) More than half of the persons who were directors
of the Parent on the first day of any period consisting of
Twelve (12) consecutive calendar months (the first of which
Twelve (12) month periods commencing with the first day of the
month during which this Agreement was executed), cease, for
any reason other than death or disability, to be directors of
the Parent and are not replaced by Directors approved by vote
of not less than two thirds of the Directors who are then in
office and who either were Directors on the date on which this
Agreement was executed or whose election to the Parent's Board
was likewise so approved.
"Chattel Paper": Has the meaning given that term in the UCC.
"Collateral": Is defined in Section 9:9-1.
"Collateral Agent": Is defined in the Preamble.
"Collateral Interest": Any interest in property to secure an
obligation, including, without limitation, a security
interest, mortgage, and deed of trust.
"Collateral Interest Restrictions":Any restriction to the creation of a
Collateral Interest to the extent that such restriction is not
made ineffective by UCC9'99 Sections 9-401, 9-406(d), 9-407,
9-408, or 9-409.
"Consent": Actual consent given by the Lender from whom such consent is
sought; or the passage of Seven (7) Business Days from receipt
of written notice to a Lender from an Agent of a proposed
course of action to be followed by an Agent without such
Lender's giving that Agent written notice of that Lender's
objection to such course of action, provided that all Agents
may rely on such passage of time as consent by a Lender only
if such written notice states that consent will be deemed
effective if no objection is received within such time period.
"Consolidated": When used to modify a financial term, test, statement,
or report, refers to the application or preparation of such
term, test, statement or report (as applicable) based upon the
consolidation, in accordance with GAAP, of the financial
condition or operating results of the Borrowers.
"Cost": The lower of (a) or (b), where:
(a) is the calculated cost of purchases, based upon
the Borrowers' accounting practices, known to the
Administrative Agent, which practices are in effect on the
date on which this Agreement was executed as such calculated
cost is determined from: invoices received by the Borrowers;
the Borrowers' purchase journal; or the Borrowers' stock
ledger.
(b) is the cost equivalent of the lowest ticketed or
promoted price at which the subject Inventory is offered to
the public, after all xxxx-xxxxx (whether or not such price is
then reflected on the Borrowers' accounting system), which
cost equivalent is determined in accordance with the retail
method of accounting, reflecting the Borrowers' historic
business practices.
("Cost" does not include inventory capitalization
costs or other non-purchase price charges (such as freight)
used in the Borrowers' calculation of cost of goods sold).
"Costs of Collection": Includes, without limitation, all attorneys'
reasonable fees and reasonable out-of-pocket expenses incurred
by any Agent's or the Term Lender's attorneys, and all
reasonable out-of-pocket costs incurred by any Agent or the
Term Lender in the administration of the Liabilities and/or
the Loan Documents, including, without limitation, reasonable
costs and expenses associated with travel on behalf of any
Agent or the Term Lender, where such costs and expenses are
directly or indirectly related to or in respect of any Agent's
or the Term Lender's: administration and management of the
Liabilities; negotiation, documentation, and amendment of any
Loan Document; or efforts to preserve, protect, collect, or
enforce the Collateral, the Liabilities, and/or the Agents'
Rights and Remedies and/or any of the rights and remedies of
any Agent against or in respect of any guarantor or other
person liable in respect of the Liabilities (whether or not
suit is instituted in connection with such efforts). "Costs of
Collection" also includes the reasonable fees and expenses of
Lenders' Special Counsel. The Costs of Collection are
Liabilities, and at the Administrative Agent's option may bear
interest at the then effective Base Margin Rate.
"Credit Card Advance Rate": 85%
"Current Pay Interest": Is defined in Section 3:3-4(a)(i)
"Customer Credit Liability": Gift certificates, customer deposits,
merchandise credits, layaway obligations, frequent shopping
programs, and similar liabilities of any Borrower to its
retail customers and prospective customers.
"DDA": Any checking or other demand daily depository account
maintained by any Borrower.
"Delinquent Revolving Credit Lender": Defined in Section 13:13-3(c).
"Deposit Account": Has the meaning given that term in the UCC.
"Discontinued Store": A Store which has been permanently closed (as
distinguished from its being converted from the HomeBase to
the House2Home format).
"Documents": Has the meaning given that term in the UCC.
"Documents of Title": Has the meaning given that term in the UCC.
"EligibleAssignee": A bank, insurance company, or company engaged in
the business of making commercial loans having a combined
capital and surplus in excess of $300 Million or any Affiliate
of any Revolving Credit Lender, or any Person to whom a
Revolving Credit Lender assigns its rights and obligations
under this Agreement as part of a programmed assignment and
transfer of such Revolving Credit Lender's rights in and to a
material portion of such Revolving Credit Lender's portfolio
of asset based credit facilities.
"Eligible Credit Card Receivables":Accounts which are then payable
within not more than six (6) business days on a non-recourse
basis from major credit card processors (which, if due on
account of a private label credit card program, are deemed in
the discretion of the Administrative Agent to be eligible).
"Eligible Inventory": The following:
(a) Such of a Borrower's Inventory (without
duplication of Eligible L/C Inventory ), as to which the
Collateral Agent has a perfected security interest which is
prior and superior to all security interests, claims, and all
Encumbrances other than any Permitted Encumbrances which is
not a Special Permitted Encumbrance (i.e. Inventory which is
subject to any Special Permitted Encumbrance does not
constitute "Eligible Inventory"). "Eligible Inventory" does
not include: any non-merchandise inventory (such as labels,
bags, and packaging materials); damaged goods; return to
vendor merchandise; packaways; consigned inventory; and other
similar categories of Goods.
(b) Eligible L/C Inventory.
"Eligible L/C Inventory": Inventory (without duplication of Eligible
Inventory), the purchase of which is
supported by a documentary L/C then having
an initial expiry of Sixty (60) or less
days (as determined either empirically or
through a commercially reasonable
estimation process), provided that the
Agent has received a customs brokers
agreement in form reasonably satisfactory
to the Agent.
"Eligible Lease": A real estate leasehold interest as to which all of
the Eligible Leasehold Parameters are satisfied.
"Eligible Leasehold Parameters": The following:
(a) The subject leasehold interest is created by a
written lease in which a Borrower is the lessee (a true copy
of which, with all amendments, has been delivered to the
Administrative Agent).
(b) The real estate on which the relevant leasehold
has been created is not owned by the Lead Borrower (or any
Subsidiary of the Lead Borrower).
(c) The lease which creates such leasehold interest
satisfies each of the following conditions as determined by
the Administrative Agent (acting on instruction of the Term
Lender):
(i) Such lease does not include any of the
following:
(A) Any prohibition to its being
the subject of a leasehold mortgage.
(B) Any requirement for the consent
of the lessor or the lessor's mortgagee for
the subject lessee's execution of a
leasehold mortgage.
(C) Any requirement for the consent
of such lessor or the lessor=s mortgagee to
the enforcement or the foreclosure on such
leasehold mortgage.
(ii) Such lease does not include any
provision, the effect of which would be to prohibit
the assignment of the leasehold interest created
by such lease in the event of the foreclosure of
such leasehold mortgage or which would condition
such assignment on the consent of the lessor
or the lessor's mortgagee.
(iii) Such lease does not include any
provision which permits the lessor to recapture the
demised premises or to terminate such lease pursuant
to a "go-dark" or similar provision on account of the
subject lessee's having closed the subject premises
for the conduct of a retail business for a period of
less than 360 days.
(d) Such leasehold has been appraised by a third
party appraiser acceptable to the Administrative Agent and the
Term Lender and title insurance, environmental studies, and
other real estate requirements, as reasonably determined by
the Agent and the Term Lender, have been delivered or
otherwise satisfied, including, but not limited to, those
items which would be required if any Agent or the Term Lender
were subject to compliance with the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (commonly
referred to as "FIRREA").
(e) The Leasehold FLV of such lease, on the day on
which reference is being made to such Leasehold FLV, is not
less than $350,000.00.
(f) A leasehold mortgage has been filed with respect
to such lease, such that the Collateral Agent has a perfected
first-priority lien in such lease, subject only to Permitted
Encumbrances (if any) but not subject to any Special Permitted
Encumbrance (i.e. such leasehold mortgage is not subject to
any Special Permitted Encumbrances).
(g) A Borrower then operates a Store on the relevant
demised premise, which Store is in operation (or has been
temporarily closed solely to convert that Store from the
HomeBase format to the House2Home format).
(h) The Borrower which is the lessee of the relevant
lease is in compliance with the representations, warranties
and covenants set forth in the relevant leasehold mortgage.
(i) The Borrower has not received any notice of the
initiation, pendency, or completion of the foreclosure of the
relevant lessor's interest in the demised premises.
"Eligible Real Estate": Such of the Lead Borrower's real estate,
designated from time to time by the Lead Borrower as Eligible
Real Estate, as to which the Eligible Real Estate Parameters
are satisfied.
"Eligible Real Estate Parameters":
(a) The subject real estate is owned
by (but not leased to) the Lead Borrower (or a Subsidiary of
the Lead Borrower) in fee simple title.
(b) Such parcel of Real Estate has been appraised by
a third party appraiser acceptable to the Administrative Agent
and the Term Lender and title insurance, environmental
studies, and other real estate requirements, as reasonably
determined by the Agent and the Term Lender, have been
satisfied, including, but not limited to, those items which
would be required if any Agent or the Term Lender were subject
to compliance with the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (commonly referred to as
"FIRREA").
(c) A mortgage in form reasonably satisfactory to the
Collateral Agent has been filed with respect to such real
estate and the Collateral Agent's mortgage and security
interests in such parcel of real estate have been perfected
such that Agent has a perfected first-priority lien in such
real estate, subject only to Permitted Encumbrances (if any)
but not subject to any Special Permitted Encumbrance (i.e.
such mortgage (or its functional equivalent) is not subject to
any Special Permitted Encumbrances).
(d) The Lead Borrower (or the Subsidiary which owns
the subject real estate) is in compliance with the
representations, warranties and covenants set forth in the
mortgage (or its functional equivalent ) relating to such
parcel of real estate.
"Employee Benefit Plan": As defined in ERISA.
"Encumbrance": Each of the following:
(a) A Collateral Interest or agreement to create or
grant a Collateral Interest; the interest of a lessor under a
Capital Lease; conditional sale or other title retention
agreement; sale of accounts receivable or chattel paper; or
other arrangement pursuant to which any Person is entitled to
any preference or priority with respect to the property or
assets of another Person or the income or profits of such
other Person; each of the foregoing whether consensual or
non-consensual and whether arising by way of agreement,
operation of law, legal process or otherwise.
(b) The filing of any financing statement under the
UCC or comparable law of any jurisdiction, which filing has
been authorized by a Borrower.
"End Date": The date upon which both (a) all Liabilities have been
paid in full and (b) all obligations of any Lender to make
loans and advances and to provide other financial
accommodations to the Borrowers hereunder shall have been
irrevocably terminated.
"Environmental Laws": All of the following:
(a) Applicable Law which regulates or relates to, or
imposes any standard of conduct or liability on account of or
in respect to environmental protection matters, including,
without limitation, Hazardous Materials, as are now or
hereafter in effect.
(b) The common law relating to damage to Persons or
property from Hazardous Materials.
"Equipment": Includes, without limitation, "equipment" as defined in
the UCC, and also all furniture, store fixtures, motor
vehicles, rolling stock, machinery, office equipment, plant
equipment, tools, dies, molds, and other goods, property, and
assets which are used and/or were purchased for use in the
operation or furtherance of a Borrower's business, and any and
all accessions or additions thereto, and substitutions
therefor.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate": Any Person which is under common control with a
Borrower within the meaning of Section 4001 of ERISA or is
part of a group which includes any Borrower and which would be
treated as a single employer under Section 414 of the Internal
Revenue Code of 1986, as amended.
"Eurodollar Business Day": Any day which is both a Business Day and a
day on which the principal market in Eurodollars in which
Fleet National Bank participates is open for dealings in
United States Dollar deposits.
"Eurodollar Loan": Any Revolving Credit Loan which bears interest at a
Eurodollar Rate.
"Eurodollar Margin": The then applicable Eurodollar Margin as
determined from the Pricing Grid.
"Eurodollar Offer Rate": That rate of interest (rounded upwards, if
necessary, to the next 1/100 of 1%) determined by the
Administrative Agent to be the highest prevailing rate per
annum at which deposits on U.S. Dollars are offered to Fleet
National Bank, by first-class banks in the Eurodollar market
in which Fleet National Bank participates at or about 10:00AM
(Boston Time) Two (2) Eurodollar Business Days before the
first day of the Interest Period for the subject Eurodollar
Loan, for a deposit approximately in the amount of the subject
loan for a period of time approximately equal to such Interest
Period.
"Eurodollar Rate": That per annum rate (calculated based on a 360 day
year and actual days elapsed) which is the aggregate of the
Eurodollar Offer Rate plus the Eurodollar Margin except that,
in the event that the Administrative Agent determines that any
Revolving Credit Lender may be subject to the Reserve
Percentage, the "Eurodollar Rate" shall mean, as to such
Revolving Credit Lender, with respect to any Eurodollar Loans
then outstanding (from the date on which that Reserve
Percentage first became applicable to such loans), and with
respect to all Eurodollar Loans thereafter made, an interest
rate per annum equal the sum of (a) plus (b), where:
(a) is the decimal equivalent of the following fraction:
Eurodollar Offer Rate
--------------------------
1 minus Reserve Percentage
(b) is the applicable Eurodollar Margin.
"Events of Default": Is defined in Article 11:.
"Excess Availability": The result of Availability minus: (a) all then
held checks (if any); (b) accounts payable which are not being
disputed in good faith and which are beyond credit terms then
accorded the Borrowers; (c) overdrafts; and (d) any then
unpaid charges to the Loan Account.
"Exempt DDA": A depository account maintained by any Borrower, the
only contents of which may be transfers from the Operating
Account and actually used solely (i) for xxxxx cash purposes;
or (ii) for payroll.
"Farm Products": Has the meaning given that term in the UCC.
"Fee Letter": That letter dated on or about December 1, 2000 and
styled "Fee Letter" between the Lead Borrower and the Agent,
as such letter may from time to time be amended.
"Fiscal": When followed by "month" or "quarter", the relevant fiscal
period based on the Borrowers' fiscal year and accounting
conventions (e.g. reference to the Borrowers' "Fiscal June,
2002" is to the Borrowers= fiscal month of June in the
calendar year 2002). When followed by reference to a specific
year, the fiscal year which ends in a month of the year to
which reference is being made (e.g. if the Borrowers' fiscal
year ends in January 2001 reference to that year would be to
the Borrowers' "Fiscal 2001").
"Fixtures": Has the meaning given that term in the UCC.
"FRFI": Fleet Retail Finance Inc.
"GAAP": Principles which are consistent with those promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors (or successors) in effect and applicable to that
accounting period in respect of which reference to GAAP is
being made, provided, however, in the event of a Material
Accounting Change, then unless otherwise specifically agreed
to by the Administrative Agent, (a) the Borrowers' compliance
with the financial performance covenants imposed pursuant to
Section 6:6-11 shall be determined as if such Material
Accounting Change had not taken place and (b) the Lead
Borrower shall include, with its monthly, quarterly, and
annual financial statements a schedule, certified by the Lead
Borrower's chief financial officer, on which the effect of
such Material Accounting Change on that statement shall be
described.
"General Intangibles": Includes, without limitation, "general
intangibles" as defined in the UCC; and also all: rights to
payment for credit extended; deposits; amounts due to any
Borrower; credit memoranda in favor of any Borrower; warranty
claims; tax refunds and abatements; insurance refunds and
premium rebates; all means and vehicles of investment or
hedging, including, without limitation, options, warrants, and
futures contracts; records; customer lists; telephone numbers;
goodwill; causes of action; judgments; payments under any
settlement or other agreement; literary rights; rights to
performance; royalties; license and/or franchise fees; rights
of admission; licenses; franchises; license agreements,
including all rights of any Borrower to enforce same; permits,
certificates of convenience and necessity, and similar rights
granted by any governmental authority; patents, patent
applications, patents pending, and other intellectual
property; internet addresses and domain names; developmental
ideas and concepts; proprietary processes; blueprints,
drawings, designs, diagrams, plans, reports, and charts;
catalogs; manuals; technical data; computer software programs
(including the source and object codes therefor), computer
records, computer software, rights of access to computer
record service bureaus, service bureau computer contracts, and
computer data; tapes, disks, semi-conductors chips and
printouts; trade secrets rights, copyrights, mask work rights
and interests, and derivative works and interests; user,
technical reference, and other manuals and materials; trade
names, trademarks, service marks, and all goodwill relating
thereto; applications for registration of the foregoing; and
all other general intangible property of any Borrower in the
nature of intellectual property; proposals; cost estimates,
and reproductions on paper, or otherwise, of any and all
concepts or ideas, and any matter related to, or connected
with, the design, development, manufacture, sale, marketing,
leasing, or use of any or all property produced, sold, or
leased, by any Borrower or credit extended or services
performed, by any Borrower, whether intended for an individual
customer or the general business of any Borrower, or used or
useful in connection with research by any Borrower.
"Goods": Has the meaning given that term in the UCC, and also includes
all things movable when a security interest therein attaches
and also all computer programs embedded in goods and any
supporting information provided in connection with a
transaction relating to the program if (i) the program is
associated with the goods in such manner that it customarily
is considered part of the goods or (ii) by becoming the owner
of the goods, a Person acquires a right to use the program in
connection with the goods.
"Hazardous Materials": Any (a) substance which is defined or
regulated as a hazardous material in or under any
Environmental Law and (b) oil in any physical state.
"House2Home Conversion": The conversion of the Borrowers" principal
line of business from that it which it had been engaged at the
execution of the 1999 Loan Agreement to the "House2Home - The
Incredible Decorating Store" concept as outlined in the
Business Plan.
"Indebtedness": All indebtedness and obligations of or assumed by any
Person on account of or in respect to any of the following:
(a) In respect of money borrowed (including any
indebtedness which is non-recourse to the credit of such
Person but which is secured by an Encumbrance on any asset of
such Person) whether or not evidenced by a promissory note,
bond, debenture or other written obligation to pay money.
(b) In connection with any letter of credit or
acceptance transaction (including, without limitation, the
face amount of all letters of credit and acceptances issued
for the account of such Person or reimbursement on account of
which such Person would be obligated).
(c) In connection with the sale or discount of
accounts receivable or chattel paper of such Person.
(d) On account of deposits or advances which create
an obligation, on the part of a Borrower, to repay or credit
such deposit or advance.
(e) As lessee under Capital Leases.
(f) In connection with any sale and leaseback
transaction which results in a Capital Lease on which any
Borrower is obligated.
"Indebtedness" also includes:
(x) Indebtedness of others secured
by an Encumbrance on any asset of such
Person, whether or not such Indebtedness is
assumed by such Person.
(y) Any guaranty, endorsement,
suretyship or other undertaking pursuant to
which that Person may be liable on account
of any obligation of any third party.
(z) The Indebtedness of a
partnership or joint venture for which such
Person is liable as a general partner or
joint venturer.
"InDefault": Any occurrence, circumstance, or state of facts with
respect to a Borrower which (a) is an Event of Default; or (b)
would become an Event of Default if any requisite notice were
given and/or any requisite period of time were to run and such
occurrence, circumstance, or state of facts were not
absolutely cured within any applicable grace period.
"Indemnified Person": Is defined in Section 20:20-13.
"Instruments": Has the meaning given that term in the UCC.
"Interest Payment Date": With reference to:
Each Eurodollar Loan: The last day of the Interest
Period relating thereto (and on the last day of month three
for any such loan which has a six month Interest Period); the
Termination Date; and the End Date.
Each Base Margin Loan: The first day of each month;
the Termination Date; and the End Date.
"Interest Period": The following:
(a) With respect to each Eurodollar Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of, or conversion to, the subject
Eurodollar Loan and ending one, two, three, or six months
thereafter, as the Lead Borrower may elect by notice (pursuant
to Section 2:2-7) to the Administrative Agent.
(b) With respect to each Base Margin Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of or conversion to such Base
Margin Loan and ending on that date (i) as of which the
subject Base Margin Loan is converted to a Eurodollar Loan, as
the Lead Borrower may elect by notice (pursuant to Section
2:2-7) to the Administrative Agent, or (ii) on which the
subject Base Margin Loan is paid by the Borrowers.
(c) The setting of Interest Periods is in all
instances subject to the following:
(i) Any Interest Period for a Base Margin
Loan which would otherwise end on a day which is not
a Business Day shall be extended to the next
succeeding Business Day.
(ii) Any Interest Period for a Eurodollar
Loan which would otherwise end on a day that is not a
Eurodollar Business Day shall be extended to the next
succeeding Eurodollar Business Day, unless that
succeeding Eurodollar Business Day is in the next
calendar month, in which event such Interest Period
shall end on the last Eurodollar Business Day of the
month during which the Interest Period ends.
(iii) Subject to Subsection (iv), below, any
Interest Period applicable to a Eurodollar Loan,
which Interest Period begins on a day for which there
is no numerically corresponding day in the calendar
month during which such Interest Period ends, shall
end on the last Eurodollar Business Day of the month
during which that Interest Period ends.
(iv) Any Interest Period which would
otherwise end after the Termination Date shall end on
the Termination Date.
(v) The number of Interest Periods in effect
at any one time is subject to Section 2:2-13(d)
hereof.
"Inventory": Includes, without limitation, "inventory" as defined in
the UCC and also all: (a) Goods which are leased by a Person
as lessor; are held by a Person for sale or lease or to be
furnished under a contract of service; are furnished by a
Person under a contract of service; or consist of raw
materials, work in process, or materials used or consumed in a
business; (b) Goods of said description in transit; (c) Goods
of said description which are returned, repossessed and
rejected; (d) packaging, advertising, and shipping materials
related to any of the foregoing; (e) all names, marks, and
General Intangibles affixed or to be affixed or associated
thereto; and (f) Documents and Documents of Title which
represent any of the foregoing.
"Inventory Advance Rate": 70%.
"Inventory Appraisal": An appraisal of the Borrowers' Inventory
undertaken at the request of the Agent, by a Nationally
Recognized Inventory Appraiser acceptable to the
Administrative Agent, using a methodology comparable to that
employed by Xxxxxx Xxxxxxxx in the preparation of its
appraisal of the Borrowers' Inventory dated on or about
October 25, 2000.
"Inventory Reserves": Such Reserves as may be established from
time to time by the Administrative Agent in the Administrative
Agent's discretion with respect to the determination of the
saleability, at retail, of the Eligible Inventory or which
reflect such other factors as affect the market value of the
Eligible Inventory.
"Investment Property": Has the meaning given that term in the UCC.
"Issuer": The issuer of any L/C.
"L/C": Any letter of credit, the issuance of which is procured by the
Administrative Agent for the account of any Borrower and any
acceptance made on account of such letter of credit.
"L/C Landing Costs": To the extent not included in the Stated
Amount of an L/C, customs, duty, freight, and other
out-of-pocket costs and expenses which will be expended to
"land" the Inventory, the purchase of which is supported by
such L/C.
"Lead Borrower": Is referred to in the Preamble.
"Lease": Any lease or other agreement, no matter how styled or
structured, pursuant to which a Borrower is entitled to the
use or occupancy of any space.
"Leasehold FLV": The forced liquidation appraised value of
Eligible Leases, as determined from time to time by a real
estate lease appraiser reasonably satisfactory to the
Administrative Agent and the Term Lender and using a
methodology which is reasonably satisfactory to the
Administrative Agent and the Term Lender.
"Lender": Collectively and each individually, each Revolving Credit
Lender and the Term Lender.
"Lenders'Special Counsel": Collectively, a single counsel, selected by
Revolving Credit Lenders holding more than 51% of the Loan
Commitments (other than any Loan Commitments held by
Delinquent Revolving Credit Lenders) following the occurrence
of an Event of Default and a single counsel, selected by the
Term Lender following the occurrence of an Event of Default
respectively to represent the respective interests of the
Revolving Credit Lenders and the Term Lenders in connection
with the enforcement, attempted enforcement, or preservation
of any rights and remedies under this, or any other Loan
Document, as well as in connection with any "workout",
forbearance, or restructuring of the credit facility
contemplated hereby.
"Letter-of-Credit Right": Has the meaning given that term in UCC 9'99
and also refers to any right to payment or performance under
an L/C, whether or not the beneficiary has demanded or is at
the time entitled to demand payment or performance.
"Liabilities": Includes, without limitation, the following:
(a) All and each of the following, whether now existing or
hereafter arising under this Agreement or under any of the other Loan
Documents:
(i) Any and all direct and indirect liabilities,
debts, and obligations of each Borrower to any Agent or any
Lender, each of every kind, nature, and description.
(ii) Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft, or amount now or
hereafter owing by any Borrower to any Agent or any Lender
(including all future advances whether or not made pursuant to
a commitment by any Agent or any Lender), whether or not any
of such are liquidated, unliquidated, primary, secondary,
secured, unsecured, direct, indirect, absolute, contingent, or
of any other type, nature, or description, or by reason of any
cause of action which any Agent or any Lender may hold against
any Borrower.
(iii) All notes and other obligations of each
Borrower now or hereafter assigned to or held by any Agent or
any Lender, each of every kind, nature, and description.
(iv) All interest, fees, and charges and other
amounts which may be charged by any Agent or any Lender to any
Borrower and/or which may be due from any Borrower to any
Agent or any Lender from time to time, including, without
limitation, any interest accruing after the filing of a
petition by or against any Borrower under the Bankruptcy Code,
regardless of whether such interest is an allowed claim under
the Bankruptcy Code).
(v) All costs and expenses incurred or paid by any
Agent or any Lender in respect of any agreement between any
Borrower and any Agent or any Lender or instrument furnished
by any Borrower to any Agent or any Lender (including, without
limitation, Costs of Collection, attorneys' reasonable fees,
and all court and litigation costs and expenses).
(vi) Any and all covenants of each Borrower to or
with any Agent or any Lender and any and all obligations of
each Borrower to act or to refrain from acting in accordance
with any agreement between that Borrower and any Agent or any
Lender or instrument furnished by that Borrower to any Agent
or any Lender.
(vii) Each of the foregoing as if each reference to
the " any Agent or any Lender" were to each Affiliate of the
Administrative Agent.
(b) Any and all direct or indirect liabilities, debts, and
obligations of each Borrower to any Agent or any Affiliate of any
Agent, each of every kind, nature, and description owing on account of
any service or accommodation provided to, or for the account of any
Borrower pursuant to this or any other Loan Document, including cash
management services and the issuances of L/C's.
"Liquidation": The exercise, by the Collateral Agent, of those rights
accorded to the Collateral Agent under the Loan Documents as a
creditor of the Borrowers following and on account of the
occurrence of an Event of Default looking towards the
realization on the Collateral. Derivations of the word
"Liquidation" (such as "Liquidate") are used with like meaning
in this Agreement.
"Loan Account": Is defined in Section 2:2-10.
"Loan Commitment": With respect to each Revolving Credit Lender,
that respective Revolving Credit Lender's Revolving Credit
Dollar Commitment, except that following the termination of
any affirmative obligation on the part of the Revolving Credit
Lenders to provide loans and financial accommodations under
the Revolving Credit, the term shall refer, with respect to
each Revolving Credit Lender, to the aggregate of that
Revolving Credit Lender's pro rata share of the Loan Account
and its obligation to cover any honoring of any L/C's then
outstanding.
With respect to the Term Lender, the then
unpaid principal balance of the Term Loan, it being understood
that the Term Lender is not under any obligation, after its
making of the Term Loan, to make any further loans or advances
to the Borrowers.
"Loan Documents": This Agreement, each instrument and document
executed and/or delivered pursuant to the 2001 Loan Agreement,
the 1999 Loan Agreement, or as contemplated by Article 4:,
below, and each other instrument or document from time to time
executed and/or delivered in connection with the arrangements
contemplated hereby.
"Lock Box Bank": That bank to which the Borrowers concentrate
proceeds of the Borrowers= sales, which, at the execution of
this Agreement, is Xxxxx Fargo Bank, N.A.
"Majority Lenders": Lenders (other than Delinquent Revolving Credit
Lenders) holding 51% or more of the Loan Commitments
(other than any Loan Commitments held by Delinquent Revolving
Credit Lenders).
"Material Accounting Change": Any change in GAAP applicable to
accounting periods subsequent to the Borrowers' fiscal year
most recently completed prior to the execution of this
Agreement, which change has a material effect on the
Borrowers' Consolidated financial condition or operating
results, as reflected on financial statements and reports
prepared by or for the Borrowers, when compared with such
condition or results as if such change had not taken place or
where preparation of the Borrowers' statements and reports in
compliance with such change results in the breach of a
financial performance covenant imposed pursuant to Section
6:6-11 where such a breach would not have occurred if such
change had not taken place or visa versa.
"Material Adverse Change": Subject to the proviso at the foot of this
Definition, any event, fact, circumstance, change in, or
effect on, the business of, any Borrower which, individually
or in the aggregate or on a cumulative basis with any other
circumstances, changes in, or effects on, the Borrowers or the
Collateral taken as a whole:
(a) Is, or would reasonably be expected to be,
materially adverse to the business, operations, assets or
liabilities (including, without limitation, contingent
liabilities), results of operations or the financial condition
of the Borrowers, when taken as a whole; or
(b) Would reasonably be expected to materially
adversely affect the ability of the Borrowers taken as a whole
to operate or conduct business in all material respects in the
manner in which they are currently operated or conducted by
the Borrowers taken as a whole (after giving effect to the
House2Home Conversion as reflected in the Business Plan) or to
perform their obligations under the Loan Documents; or
(c) Would reasonably be expected to have a material
adverse effect or result in a material adverse change in the
value, enforceability, collectibility or the nature of the
Collateral. Provided, however, (x) no adverse effect of the
House2Home Conversion which is reflected in the Business Plan
(but not otherwise) shall be considered in the determination
of whether a "Material Adverse Change" has taken place and (y)
the closing down of the retail operations of HomeClub Inc., of
Texas in accordance with the Business Plan shall not
constitute a "Material Adverse Change".
"Material Adverse Effect": A result, consequence, or outcome with
respect to the Borrowers which constitutes a Material Adverse
Change.
"Maturity Date": November 30, 2004.
"Minimum Excess Availability Breach": Excess Availability is less than
$25 Million.
"Nationally Recognized Inventory Appraiser:" An inventory appraiser
which engages in a national practice of the appraisal of
retail inventory.
"Nationally Recognized Inventory Liquidator": An inventory liquidator
which engages in a national practice of the liquidation of
retail inventory.
"New Store": A Store which, on the Second Restatement Date, was not
operated by any Borrower under either the HomeBase or the
House2Home concept and was not then dark on account of its
undergoing conversion from the HomeBase to the House2Home
concept.
"Nominee": A business entity (such as a corporation or limited
partnership) formed by the Collateral Agent to own or manage
any Post Foreclosure Asset.
"Operating Account": Is defined in Section 8:8-2.
"OverLoan": A loan, advance, or providing of credit support (such as
the issuance of any L/C) to the extent that, immediately after
its having been made, Availability is less than zero.
"Parent": HomeBase, Inc.
"Participant": Is defined in Section 20:20-16, hereof.
"Payment Intangible": Has the meaning given that term in UCC 9'99
and also refers to any general intangible under which the
Account Debtor's primary obligation is a monetary obligation.
"Permitted Affiliate Transactions":Each of the following:
(a) The sale of goods and services for a price and
on terms which are
(i) competitive and fully deductible as an
"ordinary and necessary business expense" and/or fully
depreciable under the Internal Revenue Code of 1986 and the
Treasury Regulations, each as amended; and
(ii) no less favorable to that selling
Borrower than those which would have been charged and imposed
in an arms length transaction.
(b) A transaction in which there is no Consolidated
gain or loss to any party to such transaction.
(c) Loans to Affiliates which are permitted by
Section 5:5-22.
"Permitted Encumbrances": The following:
(a) Encumbrances in favor of the Collateral Agent.
(b) Those Encumbrances (if any) listed on Exhibit 4:4-7
annexed to the 2001 Loan Agreement and which, for ease of reference,
is annexed hereto as EXHIBIT 5:5-7.
(c) Liens securing the payment of taxes, either not yet
overdue or the validity of which are being contested as permitted by
Section 5:5-16(b) of this Agreement.
(d) Non-consensual statutory liens (other than liens securing
the payment of taxes) arising in the ordinary course of a Borrowers'
business to the extent: such liens secure obligations which are not
overdue or such liens secure obligations relating to claims
liabilities which are fully insured and being defended at the sole
cost and expense and at the sole risk of the insurer or are being
contested in good faith by appropriate proceedings diligently
pursued and available to a Borrower, in each instance prior to the
commencement of foreclosure or other similar proceedings and with
respect to which adequate reserves have been set aside on the
Borrowers' books.
(e) Encumbrances on properties consisting of easements, rights
of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto,
landlord's or lessor's liens under leases to which a Borrower is a
party, and other minor liens or encumbrances none of which interferes
materially with the use of the property affected in the ordinary
conduct of the business of that Borrower.
(f) Deposits under workmen's compensation, unemployment
insurance and social security laws, or to secure the performance of
bids, tenders, contracts (other than for the repayment of borrowed
money) or leases, or to secure statutory obligations or surety or
appeal bonds, or to secure indemnity, performance or other similar
bonds arising in the ordinary course of business.
(g) Landlord's liens by operation of law where waivers have
not been obtained.
(h) Purchase money security interests (as defined in the UCC)
in Equipment permitted by Section 5:5-7(c).
(i) Interests of lessors under Capital Leases.
(j) Liens arising on account of the transfer of an interest in
Accounts or notes receivable, which transfer qualifies as a sale under
GAAP.
(k) Liens consisting of security deposits made by a Borrower.
(l) Encumbrances on Inventory which, when aggregated with the
Cost of Inventory consigned to any Borrower, do not exceed four
percent(4%) of the Cost of all of the Borrowers' Inventory at any
time.
(m) The Special Permitted Encumbrances.
The inclusion of any of the foregoing as a "Permitted
Encumbrance" shall not affect its relative priority vis a vis any
Collateral Interest created by a Borrower in favor of the Collateral
Agent.
"Permitted Indebtedness": The following:
(a) Indebtedness under this Agreement.
(b) Indebtedness described on EXHIBIT 5:5-8, annexed
hereto.
(c) Indebtedness on account of a Permitted Real
Estate Transaction.
(d) Indebtedness secured solely by a Permitted
Encumbrance.
(e) Indebtedness on account of the termination of the
Borrower's private label credit card program to take effect
on or about July 15, 2001, provided that the discount in
connection with such termination does not exceed five percent
(5%) of the aggregate balance then owed by cardholders in
that program.
(f) Contingent obligations on account of endorsements
of instruments for deposit or collection in the ordinary
course.
(g) Contingent obligations consisting of unsecured
guaranties, and other arrangements which have the functional
effect of a guaranty, of another Borrower or of any Subsidiary
of any Borrower.
(h) Permitted SubDebt.
(i) Indebtedness to any Affiliate.
(j) Capitalized Lease obligations, not to exceed $30
Million outstanding at any one time.
"Permitted Intercompany Loans": Loans (not to exceed $500,000.00
outstanding at any one time) in cash by a Borrower to a
Permitted Subsidiary, the proceeds of which may be used solely
for on going working capital purposes of such Permitted
Subsidiary.
"Permitted Investments": Each of the following, provided that it is
held by the Parent; is subject to the prior perfected security
interest of the Collateral Agent; and is denominated in United
States Dollars:
(a) Short-term obligations of, or fully guaranteed
by, the United States of America; or its agencies.
(b) Commercial paper rated A-2 or better by Standard
and Poor's Corporation or P-2 or better by Xxxxx'x Investors
Service, Inc. and securities commonly known as "short-term
bank notes" issued by any Revolving Credit Lender denominated
in United States dollars which at the time of purchase have
been rated and the ratings for which are not less than P-2 if
rated by Xxxxx'x Investors Services, Inc., and not less than
A-2 if rated by Standard and Poor's Corporation.
(c) Demand deposit accounts maintained in the
ordinary course of business.
(d) Certificates of deposit issued by and time
deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000.
(e) Municipal securities rated "A" or better
as rated by Standard and Poor's Corporation or Xxxxx'x
Investors Service, Inc. and municipal securities mutual funds
which have a weighted average life of less than two (2) years.
(f) Corporate debt securities rated "A" or better as
rated by Standard and Poor's Corporation or Xxxxx'x Investors
Service, Inc. which mature within two (2) years from the date
the Investment is made by the Borrower or any of its
Subsidiaries.
(g) Asset or mortgage backed securities rated "A" or
better as rated by Standard and Poor's Corporation or Xxxxx'x
Investors Service, Inc. with an average life less than two (2)
years; provided that after giving effect to any such
Investment, the aggregate cost of all such Investments does
not exceed $25,000,000.
(h) Auction rate securities rated "A" or better as
rated by Standard and Poor's Corporation or Xxxxx'x Investors
Service, Inc.; provided that after giving effect to any such
Investment, the aggregate cost of all such Investments does
not exceed $25,000,000.
(i) Repurchase agreements relating to a security
which is rated "A" or better as rated by Standard and Poor's
Corporation or Xxxxx'x Investors Service, Inc. that mature
within two (2) years from the date the Investment is made by
the Borrower or any of its Subsidiaries; provided that after
giving effect to any such Investment, the aggregate cost of
all such Investments does not exceed $25,000,000.
(j) Municipal securities rated "SP2" or better by
Standard and Poor's Corporation or "MIG2" or better by Xxxxx'x
Investors Service, Inc. with an average life of less than two
(2) years; provided, that after giving effect to any such
Investment, the aggregate cost of all such Investments does
not exceed $25,000,000.
(k) Money market mutual funds regulated by SEC rule
2a-7 (17 CFR 270.2a-7) under the Investment Company Act of
1940.
(l) Insurance company guaranteed investment contracts
or funding agreements with insurers rated A-2 or better by
Standard and Poor's Corporation.
(m) Bond mutual funds investing in securities rated
"A" or better by Standard and Poor's Corporation which have a
weighted average life of two (2) years or less.
"Permitted Merger": Each of the following:
(a) A merger or consolidation of one Borrower into
another, not less than thirty (30) days prior written notice
of which (with reasonable particularity as to the facts and
circumstances thereof) has been provided to the Administrative
Agent where, immediately following the consummation of such
merger or consolidation, the resultant corporation remains a
"Borrower" and is in compliance with all provisions of this
Agreement.
(b) A merger of the Special Subsidiary into the
Parent solely in connection with the consummation of a
Permitted Name Change.
"Permitted Name Change": A change to the Parent's name to House2Home,
Inc. where each of the following conditions is satisfied:
(a) Not less than twenty one (21) days prior written
notice of such change is given to the Administrative Agent.
(b) Not less than five (5) business days prior to the
effectiveness of such change,
(i) Each Borrower shall have executed and
delivered to the Administrative Agent, all such
instruments, documents, and papers as the
Administrative Agent may request in order to protect
and maintain the perfection of the Collateral
Interests of the Collateral Agent in the Collateral.
(ii) Counsel to the Borrowers, shall have
delivered to the Administrative Agent its opinion (in
form reasonably satisfactory to the Administrative
Agent) which concludes that, provided that the
Administrative Agent causes those instruments,
documents, and papers which are described in Section
(b)(i) of this Definition and those additional
instruments (if any) described in such opinion (with
specimens thereof annexed to such opinion) to be
filed with those filing offices specified in such
opinion within four (4) months after such effective
date the Collateral Agent=s Collateral Interests in
the Collateral shall remain perfected to the extent
that perfection can be accomplished by the filing of
a financing statement with the appropriate filing
office(s).
"Permitted Protective OverAdvance": Defined in Section 16:16-3(a).
"Permitted Real Estate Transaction": A transaction which is described
in (a) and (b) of this Definition.
(a) The sale, mortgaging (or its functional
equivalent), or sale and leaseback of any real estate owned by
a Borrower (or a Permitted Subsidiary), where each of the
following conditions is satisfied:
(i) On the date on which the relevant
Borrower (or such Permitted Subsidiary, if applicable)
becomes contractually obligated to consummate the
subject transaction, no Borrower is in Default and
no Borrower will become In Default as a result of such
transaction.
(ii) On the date on which the subject
transaction is consummated, (i) such real estate is
not then designated by the Lead Borrower as Eligible
Real Estate and (ii) no OverLoan will result on
account of the consummation of such transaction.
(iii) If the subject transaction is a sale
of the fee interest in any real estate, the
requirements of Section 5:5-15(b) have been met. (b)
The assignment or subletting of the lease for a
Discontinued Store where the net proceeds of any such
assignment or subletting are treated as Receipts and where
a Collateral Interest is granted to the Collateral
Agent (pursuant to documentation which is
reasonably satisfactory to the Collateral Agent) in
any payment obligation which arises out of the
subject transaction.
"Permitted Repurchase:" Either of the following ((a) or (b)) which
occurs after May 31, 2002:
(a) A purchase or repurchase, by the Parent of its
capital stock with proceeds received from the issuance of new
shares of the Parent's capital stock.
(b) Any of the following, provided that each of the
Permitted Repurchase Conditions is satisfied:
(i) A purchase or repurchase, by the Parent,
of any of its capital stock other than as described
in (a) of this Definition.
(ii) A purchase, repurchase, retirement, or
repayment of principal, of any of the 1997
Subordinated Notes,
(ii) A repurchase of stock options issued by
the Parent pursuant to a program adopted by the
Parent's Directors.
"Permitted Repurchase Conditions": Refers to (a) If the Term Loan
Retirement has not taken place and to (b) at all times
thereafter.
(a) The furnishing to the Administrative Agent of not
less than seven (7) nor more than ten (10) days prior written
notice (with reasonable particularity) of the subject event,
which written notice is accompanied by
(i) Certification that there was Threshold
Excess Availability for each of the thirty (30) days
prior to the date on which such notice is given.
(ii) A pro forma forecast of Availability
for the twelve (12) Fiscal months (commencing with
the first day of the Fiscal month during which such
notice is given) which reflects that Threshold Excess
Availability will be achieved at all times during
such twelve (12) month period, which pro forma
forecast shall have been prepared using a methodology
which is reasonably satisfactory to the Agent.
(b) The following:
(i) The furnishing to the Administrative
Agent of written notice on the date on which the
subject event took place.
(ii) Excess Availability, immediately after
such event was not less than Threshold Excess
Availability.
"Permitted Subsidiary": A wholly owned subsidiary of the Parent (other
than a "Borrower" at the execution of this Agreement) where
(a), (b), or (c) of this Definition is satisfied:
(a) The assets of such subsidiary, when aggregated
with all other subsidiaries other than those governed by (b)
of this Definition, are less than $1,000,000.00.
(b) Such subsidiary has become a "Borrower" or a
guarantor of the Liabilities and has granted to the Collateral
Agent, for the benefit of the Lenders perfected first-priority
Collateral Interests in all of its assets (subject only to any
applicable Collateral Interest Restrictions and Permitted
Encumbrances) to secure its obligations so undertaken, all by
its execution and delivery to the Administrative Agent of such
documentation as is reasonably satisfactory to the
Administrative Agent.
(c) Such subsidiary is the Special Subsidiary.
"Permitted SubDebt": The following Indebtedness:
(a) Indebtedness evidenced by the 1997 Subordinated
Notes.
(b) Indebtedness subordinated to the Liabilities
pursuant to written agreement satisfactory to the
Administrative Agent.
"Person": Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other
enterprise or entity.
"PIK Interest": Defined in Section 3:3-4(a)(ii).
"Post Foreclosure Asset": All or any part of the Collateral, ownership
of which is acquired by the Collateral Agent or a Nominee on
account of the "bidding in" at a disposition as part of a
Liquidation or by reason of a "deed in lieu" type of
transaction.
"Pricing Grid": Set out in EXHIBIT 2:2-13.
"Proceeds": Includes, without limitation, "Proceeds" as defined in the
UCC and each type of property described in Section 9:9-1
hereof.
"Protective OverAdvances": Revolving Credit Loans which are OverLoans,
but as to which each of the following conditions is satisfied:
(a) the Revolving Credit Ceiling is not exceeded; and (b) when
aggregated with all other Protective OverAdvances, such
Revolving Credit Loans do not aggregate more than 5% of the
aggregate of the Revolving Credit Borrowing Base; and (c) such
Revolving Credit Loans are made or undertaken in the Agents'
discretion to protect and preserve the interests of the
Lenders.
"Real Estate Advance Rate": 50%.
"Real Estate FLV": The forced liquidation appraised value of real
estate, as determined by a real estate appraiser reasonably
satisfactory to the Administrative Agent and using a
methodology which is reasonably satisfactory to the
Administrative Agent.
"Real Estate Lending Value": The aggregate Real Estate FLV of all
then Eligible Real Estate, which aggregate shall be reduced on
the first day of each month, beginning with March 1, 2003, by
one-sixtieth of the aggregate as of March 1, 2003, except
that:
(a) The Real Estate FLV of any Eligible Real Estate
which is acquired after February 1, 2003, shall be reduced by
one-sixtieth of such forced liquidation appraised value
commencing on the first day of the second month after the
month during which such Eligible Real Estate had been
acquired.
(b) On the date on which any Eligible Real Estate
ceases to be Eligible Real Estate, its then value, as
determined by Section (a) of this Definition, shall be
deducted from Real Estate Lending Value.
"Receipts": All cash, cash equivalents, money, checks, credit card
slips, receipts and other Proceeds from any sale of the
Collateral or from any Permitted Real Estate Transaction.
"Receivables Collateral": That portion of the Collateral which
consists of Accounts, Accounts Receivable, General Intangibles,
Chattel Paper, Instruments, Documents of Title, Documents,
Investment Property, Payment Intangibles, Letter-of-Credit
Rights, bankers' acceptances, and all other rights to payment.
"Register": Is defined in Section 17:17-2(c).
"Requirements of Law": As to any Person:
(a) Applicable Law.
(b) That Person's organizational documents.
(c) That Person's by-laws and/or other instruments
which deal with corporate or similar governance, as
applicable.
"Reserve Percentage": The decimal equivalent of that rate applicable to
a Lender under regulations issued from time to time by the
Board of Governors of the Federal Reserve System for
determining the maximum reserve requirement of Lender with
respect to "Eurocurrency liabilities" as defined in such
regulations. The Reserve Percentage applicable to a particular
Eurodollar Loan shall be based upon that in effect during the
subject Interest Period, with changes in the Reserve
Percentage which take effect during such Interest Period to
take effect (and to consequently change any interest rate
determined with reference to the Reserve Percentage) if and
when such change is applicable to such loans.
"Reserves": The following: Availability Reserves and Inventory Reserves
"Revolving Credit": Is defined in Section 2:2-1.
"Revolving Credit Borrowing Base": The aggregate of the following:
(a) Advances against Eligible Inventory:
(i) Until the conditions of Subsection (ii) are
satisfied:
The Inventory Advance Rate of the Cost of Eligible
Inventory (Net of Inventory Reserves)
(ii) The earlier of (A) January 31, 2002 or (B)
that date on which Excess Availability is
less than $60 Million, the lesser of:
(A) The Inventory Advance Rate of the Cost
of Eligible Inventory (Net of Inventory Reserves)
Or
(B) The Appraised Inventory
Percentage of the Appraised Inventory
Liquidation Value.
Plus
(b) Advances Against Eligible Credit Card Receivables:
The Credit Card Advance Rate of the face amount of
Eligible Credit Card Receivables.
Plus
(c) Advances Against Eligible Real Estate:
The least of
(i) $40 Million.
(ii)That amount which, when added to the amounts
determined pursuant to (a) and (b) of this
Definition, does not exceed 20% of the
resulting sum.
(iii) The Real Estate Advance Rate of the Real Estate
Lending Value.
"Revolving Credit Ceiling": $250,000,000.00.
"Revolving Credit Commitment Fee": Is defined in Section 2:2-14.
"Revolving Credit Debt": At any time, the lesser of (a) or (b), where
(a) is $275,000,000.00.
(b) is Indebtedness of the Borrowers on account of
loans and advances under the Revolving Credit which
Indebtedness, when incurred or when Acceleration takes place,
is within amounts available to be borrowed under the Revolving
Credit or constitutes Protective OverAdvances, as reflected on
the Borrowing Base Certificate (if any) in reliance on which
the subject loan or advance was made, it being understood
that, (i) in the absence of manifest computational error by
the Lead Borrower, the Administrative Agent may rely on, and
Term Lender shall be bound by, the determination of such
availability as reflected on such Borrowing Base Certificate,
and (ii) the status of indebtedness as "Revolving Credit Debt"
is determined without regard to any subsequent declination in
the appraised value of the Inventory or other assets on which
such availability had been so determined, and (iii) the
occurrence of a Term Loan Availability Breach, in and of
itself, shall not affect the status of indebtedness as
"Revolving Credit Debt". (For purposes of the determination of
whether a loan or advance to cover the honoring of a L/C
constitutes "Revolving Credit Debt", the date of issuance of
the subject L/C shall constitute the date on which the subject
indebtedness was incurred).
"Revolving Credit Dollar Commitment": As set forth on EXHIBIT 2:2-25,
annexed hereto (as such amounts may change in accordance with
the provisions of this Agreement).
"Revolving Credit Early Termination Fee": Is defined in Section 2:2-17.
"Revolving Credit Fees": The Unused Line Fee, Revolving Credit
Commitment Fee, Revolving Credit Early Termination Fee, fees
for L/C's which are specifically for the account of the
Revolving Credit Lenders and all other fees (such as a fee (if
any) on account of the execution of an amendment of a Loan
Document) payable by any Borrower in respect of the Revolving
Credit other than any amount payable to an Agent as
reimbursement for any cost or expense incurred by that Agent
on account of the discharge of that Agent's duties under the
Loan Documents.
"Revolving Credit Lenders": Each Revolving Credit Lender to which
reference is made in the Preamble of this Agreement and any other
Person who becomes a "Revolving Credit Lender" in accordance with
the provisions of this Agreement.
"Revolving Credit Loans": Loans made under the Revolving Credit, except
that where the term "Revolving Credit Loan" is used with
reference to available interest rates applicable to the loans
under the Revolving Credit, it refers to so much of the unpaid
principal balance of the Loan Account as bears the same rate
of interest for the same Interest Period. (See Section
2:2-13(c)).
"Revolving Credit Note": Is defined in Section 2:2-11.
"Revolving Credit Obligations": The aggregate of the Borrowers'
liabilities, obligations, and indebtedness of any character on
account of or in respect to the Revolving Credit.
"Revolving Credit Percentage Commitment": As set forth on EXHIBIT
2:2-25, annexed hereto (as such amounts may change in accordance
with the provisions of this Agreement).
"SEC": The Securities and Exchange Commission.
"Second Restatement Date": The date of the Amendment and Restatement of
the 2001 Loan Agreement.
"Senior Officer": President, Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, Treasurer, and any other
Person or officer reasonably so designated by the
Administrative Agent, written notice of which designation is
provided by the Administrative Agent to the Lead Borrower.
"Special Permitted Encumbrances": The following:
(a) Liens granted by one Borrower to another Borrower.
(b) Liens not otherwise described in this Definition or
in the Definition of "Encumbrances" which secure up to $5 Million
in the aggregate at any one time outstanding.
(c) Liens arising out of Permitted Real Estate Transactions.
"Special Subsidiary": A wholly owned subsidiary of the Parent which is
formed for the sole purpose of being party to the Permitted
Name Change.
"Standstill Period": A period of 15 consecutive days, initiated by
written notice by the Term Lender to the Administrative Agent in
accordance with Section 14:14-2(a).
"Stated Amount": The maximum amount for which an L/C may be honored.
"Store": A place at which a Borrower offers its Inventory for sale to
the public.
"Subsidiary": Any Person (a) not less than 50% of whose stock or other
divisible ownership interests having ordinary voting power,
are owned or controlled, directly or indirectly by another
Person or (b) of which another Person is the general partner
or managing partner or the like.
"SuperMajority Lenders": Lenders (other than Delinquent Revolving
Credit Lenders) holding 66-2/3% or more the Loan Commitments
(other than Loan Commitments held by a Delinquent Revolving
Credit Lender).
"Supporting Obligations": Has the meaning given that term in UCC 9'99
and also refers to a Letter-of-Credit Right or secondary
obligation which supports the payment or performance of an
Account, Chattel Paper, a Document, a General Intangible, an
Instrument, or Investment Property.
"SwingLine": The facility pursuant to which the SwingLine Lender may
advance Revolving Credit Loans aggregating up to the SwingLine
Loan Ceiling.
"SwingLine Lender": FRFI.
"SwingLine Loan Ceiling": $25,000,000.00 (subject to increase as
provided in Section 16:16-4(b)).
"SwingLine Loans": Defined in Section 2:2-9.
"Term Lender": Defined in the Preamble.
"Term Loan": Defined in Section 3:3-1.
"Term Loan Action Event": The occurrence of any of the following: a
Term Loan Availability Breach, a Minimum Excess Availability
Breach, or a Term Loan Payment Breach.
"Term Loan Anniversary Fee": The "Anniversary Fee" as defined in the
Term Loan Fee Letter.
"Term Loan Availability Breach": The aggregate of the following is
equal to or less than zero:
(a) The Term Loan Borrowing Base
Plus
(b) Permitted Protective OverAdvances
Minus
(c) The aggregate unpaid balance of the Loan Account
Minus
(d) The aggregate undrawn Stated Amount of all then
outstanding L/C's.
Minus
(e) The then unpaid principal balance of the Term Loan and
all accrued but unpaid interest thereon.
Minus
(f) The aggregate of the Availability Reserves.
"Term Loan Borrowing Base": The aggregate of the following:
(a) The lesser of
(i) 74% of the Cost of Eligible Inventory
(net of Inventory Reserves)
or
(ii) 90% of the Appraised Inventory Liquidation Value
of Eligible Inventory
Plus
(b) The Credit Card Advance Rate of the face amount of
Eligible Credit Card Receivables.
Plus
(c) The lesser of
(i) 72% of the Real Estate FLV
or
(ii) $65,000,000.00
Plus
(d) The lesser of
(i) 35% of the Leasehold FLV
or
(ii) $7,000,000.00
"Term Loan Early Termination Fee": The 'Early Termination Fee"
described in the Term Loan Fee Letter.
"Term Loan Fee Letter": That letter dated on or about March 26, 2001
and styled "Tranche B Fee Letter" amongst the Borrowers, on
the one hand, and the Term Lender, on the other, as such
letter may from time to time be amended.
"Term Loan Fees": The Term Loan Anniversary Fee, the Term Loan Early
Termination Fee, and all other fees (such as a fee (if any) on
account of the execution of an amendment of any Loan Document)
payable by any Borrower in respect of the Term Loan other than
any amount payable to an Agent as reimbursement for any cost
or expense incurred by that Agent on account of the discharge
of that Agent's duties under the Loan Documents.
"Term Loan Interest Payment Date": Defined in Section 3:3-4(a)(i).
"Term Loan Interest Rate": Defined in Section 3:3-4(a).
"Term Loan Obligations": The aggregate of the Borrowers' liabilities,
obligations, and indebtedness of any character to Term Lender
under the Loan Documents.
"Term Loan Payment Breach": The failure by the Borrowers to have made
any payment on account of the Term Loan Obligations prior to
expiry of any grace period applicable to such payment.
"Term Loan Priority Collateral": The respective Borrower's
respective real estate leasehold interests which are subject
to a Collateral Interest in favor of the Collateral Agent.
"Term Loan Retirement": The payment in full of all Term Loan
Obligations and of all costs and expenses payable to the Term
Lender or its permitted successors and assigns or to all
Persons whose fees, costs, expenses, and disbursements are
payable or reimbursable by the Borrowers solely in respect of
the Term Lender or its permitted successors or assigns.
"Term Note": Defined in Section 3:3-2.
"Termination Date": The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section 11:11-13, below;
or (c) the Administrative Agent's notice to the Lead Borrower
setting the Termination Date on account of the occurrence of
any Event of Default other than as described in Section
11:11-13, below; or (d) that date, sixty (60) days irrevocable
written notice of which is provided by the Lead Borrower to
the Administrative Agent.
"Test Month": The Fiscal month on whose last day the Borrowers=
compliance with its trade support financial performance
covenant is being tested.
"Threshold Excess Availability": Forty Million Dollars
($40,000,000.00).
"Trade Support Ratio": The decimal equivalent of a fraction in which
(a) The numerator is the sum of the Borrowers'
accounts payable on (i) the last day of the Test Month plus
(ii) the last day of the month prior to the Test Month.
(b) The denominator is the sum of the Borrowers' Cost
Inventory on the same last days of the same two months.
"Transfer": Wire transfer pursuant to the wire transfer system
maintained by the Board of Governors of the Federal Reserve
Board, or as otherwise may be agreed to from time to time by
the Administrative Agent making such Transfer and the subject
Revolving Credit Lender. Wire instructions may be changed in
the same manner that Notice Addresses may be changed (Section
18:18-1), except that no change of the wire instructions for
Transfers to any Revolving Credit Lender shall be effective
without the consent of the Administrative Agent.
"UCC": The Uniform Commercial Code as in effect from time to time
in Massachusetts.
"UCC9'99": The Uniform Commercial Code, Article 9, 1999 Official Text,
except that following the effectiveness, in Massachusetts, of
the revision of Article 9 of the Uniform Commercial Code
contemplated by UCC9'99 (with such nonuniform variations as
may be adopted as part of the enactment of that revision),
each reference to "UCC9'99" shall be to the UCC.
"Unanimous Consent": Consent of Lenders (other than Delinquent
Revolving Credit Lenders) holding 100% of the Loan Commitments
(other than Loan Commitments held by a Delinquent Revolving
Credit Lender).
"Unused Line Fee": Is defined in Section 2:2-16.
"Usage": The aggregate, on the day on which Usage is being determined,
of (a) the then principal balance of the Loan Account plus
(ii) the then Stated Amount of all L/C's.
"Usage Percentage": The decimal equivalent of a fraction, determined
with respect to a fiscal month, in which (a) the numerator is
the aggregate of (i) the average unpaid principal balance of
the Loan Account plus (ii) the average Stated Amount of all
L/C's and Acceptances, and (b) the denominator is
$250,000,000.00.
ARTICLE 2: - THE REVOLVING CREDIT:
2-1. ESTABLISHMENT OF REVOLVING CREDIT
(a) The Revolving Credit Lenders hereby establish a revolving
line of credit (the "Revolving Credit") in the Borrowers'
favor pursuant to which each Revolving Credit Lender, subject
to, and in accordance with, this Agreement, acting through
the Administrative Agent, shall make loans and advances and
otherwise provide financial accommodations to and for the
account of the Borrowers as provided herein.
(b) Loans, advances, and financial accommodations under the
Revolving Credit shall be made with reference to the Revolving
Credit Borrowing Base and shall be subject to Availability. The
Revolving Credit Borrowing Base and Availability shall be
determined by the Administrative Agent by reference to
Borrowing Base Certificates furnished as provided in Section
6:6-4, below, and shall be subject to the following:
(i) Such determination shall take into account those
Reserves as the Administrative Agent may determine as being
applicable thereto.
(ii) The Cost of Eligible Inventory shall be based on
the Borrowers' stock ledger inventory.
(c) The commitment of each Revolving Credit Lender to provide
such loans, advances, and financial accommodations is subject to
Section 2:2-25.
(d) The proceeds of borrowings under the Revolving Credit
shall be used solely for the following purposes:
(i) To provide on-going working capital requirements
and general corporate requirements of the Borrowers,
it being recognized that such working capital and general
corporate requirements do not include the use of such
proceeds to fund any purchase or repurchase, by the
Parent, of any of its capital stock and a purchase,
repurchase, retirement, or repayment of principal, of any
of the 1997 Subordinated Notes,
(ii) For Permitted Repurchases.
(iii) For Permitted Intercompany Loans.
2-2. DESIGNATION OF ELIGIBLE REAL ESTATE
(a) The Lead Borrower may designate one or more parcels of the
real estate as Eligible Real Estate upon written notice to the
Administrative Agent, provided that the Eligible Real Estate
Parameters have been satisfied with respect to such parcel on
the date on which such designation is made.
(b) The Lead Borrower may remove one or more parcels of real
estate, from time to time as Eligible Real Estate by written
notice to the Administrative Agent, provided that:
(i) An OverLoan does not result from such
removal.
(ii) No Borrower is InDefault immediately prior
to such removal nor after such removal.
2-3. INITIAL RESERVES. CHANGES TO RESERVES.
(a) At the execution of the amendment and restatement of this
Agreement, the only Reserves are as follows:
(i) Those in effect, immediately prior to such
amendment and restatement.
(ii) A reserve for the cost of leasehold cures
equal to the aggregate of one months rent for each Eligible
Lease.
(b) The Administrative Agent shall provide not less than seven
(7) days prior notice to the Lead Borrower of the establishment
of any Reserve (other than those established at the execution of
this Agreement) except that the following may be undertaken
without such prior notice:
(i) a change to the amount of a then existing
Reserve (as distinguished from a change by which such
Reserve is measured or determined), which change reflects
changed circumstances (e.g. the amount of the Reserve
for Customer Credit Liability will change based on the
aggregate of Customer Credit Liability at any one time); and
(ii) the creation of, or a change to an existing
Reserve on account of circumstances which the Administrative
Agent determines as having a Material Adverse Change on the
maintenance of loan to collateral values.
2-4. OVERLOANS.
(a) No Revolving Credit Lender has any obligation to make any
loan or advance, or otherwise to provide any credit to or for the
benefit of the Borrowers where the result of such loan, advance,
or credit is an OverLoan.
(b) The Revolving Credit Lenders' obligations, among
themselves, are subject to Section 13:13-3(a) (which relates to
each Revolving Credit Lender's making amounts available to the
Administrative Agent) and to Section 16:16-3(a) (which relates
to Protective OverAdvances).
(c) The Revolving Credit Lenders' providing of an OverLoan on
any one occasion does not affect the obligations of each
Borrower hereunder (including each Borrower's obligation to
immediately repay any amount which otherwise constitutes an
OverLoan) nor obligate the Revolving Credit Lenders to do so on
any other occasion.
2-5. RISKS OF VALUE OF COLLATERAL. The Administrative Agent's reference
to a given asset in connection with the making of loans,
credits, and advances and the providing of financial
accommodations under the Revolving Credit and/or the monitoring
of compliance with the provisions hereof shall not be deemed a
determination by the Administrative Agent or any Revolving
Credit Lender relative to the actual value of the asset in
question. All risks concerning the value of the Collateral
are and remain upon the Borrowers. All Collateral secures
the prompt, punctual, and faithful performance of the
Liabilities whether or not relied upon by the Administrative
Agent in connection with the making of loans, credits, and
advances and the providing of financial accommodations under
the Revolving Credit.
2-6. COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS OF
CREDIT.
Subject to the provisions of this Agreement, the Revolving
Credit Lenders shall make a loan or advance under the
Revolving Credit and the Administrative Agent shall endeavor to
have an L/C issued for the account of the Lead Borrower, in
each instance if duly and timely requested by the Lead
Borrower as provided herein provided that:
(a) No OverLoan is then outstanding and none will result
therefrom.
(b) The Revolving Credit has not been suspended
(as to which, see in Section 2:2-7(g)).
2-7. REVOLVING CREDIT LOAN REQUESTS.
(a) Requests for loans and advances under the Revolving Credit
or for the continuance or conversion of an interest rate
applicable to a Revolving Credit Loan may be requested by the
Lead Borrower in such manner as may from time to time be
acceptable to the Administrative Agent.
(b) Subject to the provisions of this Agreement, the Lead
Borrower may request a Revolving Credit Loan and elect an
interest rate and Interest Period to be applicable to that
Revolving Credit Loan by giving notice to the Administrative
Agent by no later than the following:
(i) If such Revolving Credit Loan is to be or is to
be converted to a Base Margin Loan: By 2:30PM on the
Business Day on which the subject Revolving Credit Loan is
to be made or is to be so converted. Base Margin Loans
requested by the Lead Borrower, other than those resulting
from the conversion of a Eurodollar Loan, shall not be
less than $500,000.00..
(ii) If such Revolving Credit Loan is to be, or is to
be continued as, or converted to, a Eurodollar Loan: By
1:00PM Three (3) Eurodollar Business Days before the
commencement of any new Interest Period or the end of the
then applicable Interest Period. Eurodollar Loans and
conversions to Eurodollar Loans shall each be not less than
$1,000,000.00 and in increments of $500,000.00 in excess of
such minimum.
(iii) Any Eurodollar Loan which matures while any
Borrower is InDefault shall be converted, at the
option of the Administrative Agent, to a Base Margin Loan
notwithstanding any notice from the Lead Borrower that
such Loan is to be continued as a Eurodollar Loan.
(c) Any request for a Revolving Credit Loan or for the
continuance or conversion of an interest rate applicable to a
Revolving Credit Loan which is made after the applicable
deadline therefor, as set forth above, shall be deemed to have
been made at the opening of business on the then next Business
Day or Eurodollar Business Day, as applicable.
(d) The Lead Borrower may request that the Administrative
Agent cause the issuance by the Issuer of L/C's for the account
of the Borrowers as provided in Section 2:2-20.
(e) The Administrative Agent may rely on any request for a
loan or advance, or other financial accommodation under the
Revolving Credit which the Administrative Agent, in good faith,
believes to have been made by a Person duly authorized to act on
behalf of the Lead Borrower and may decline to make any such
requested loan or advance, or issuance, or to provide any such
financial accommodation pending the Administrative Agent's being
furnished with such documentation concerning that Person's
authority to act as may be satisfactory to the
Administrative Agent.
(f) A request by the Lead Borrower for loan or advance, or
other financial accommodation under the Revolving Credit shall
be irrevocable and shall constitute certification by each
Borrower that as of the date of such request, each of the
following is true and correct:
(i) There has been no material adverse change in the
Borrowers' financial condition from the most recent
financial information furnished Administrative Agent or any
Lender pursuant to this Agreement.
(ii) Each representation which is made herein or in
any of the Loan Documents is then true and complete as of
and as if made on the date of such request (other than any
representation which is made only as of a specific date),
it being understood that any representation which is made by
reference to an EXHIBIT hereto shall be deemed a
representation as of the date of this Agreement).
(iii) No Borrower is In Default or if a Borrower
is In Default, the facts and circumstances thereof and the
steps (if any) being taken to remedy such condition.
(g) If, at any time or from time to time, any Borrower is
In Default:
(i) The Administrative Agent may suspend
the Revolving Credit immediately, in which event, neither the
Administrative Agent nor any Revolving Credit Lender shall be
obligated, during such suspension, to make any loans or
advance, or to provide any financial accommodation hereunder
or to seek the issuance of any L/C.
(ii) The Administrative Agent may suspend the right
of the Lead Borrower to request any Eurodollar Loan or to
convert any Base Margin Loan to a Eurodollar Loan.
2-8. MAKING OF REVOLVING CREDIT LOANS.
(a) A loan or advance under the Revolving Credit shall be made
by the transfer of the proceeds of such loan or advance to the
Operating Account or as otherwise instructed by the Lead
Borrower.
(b) A loan or advance shall be deemed to have been made under
the Revolving Credit (and the Borrowers shall be indebted to the
Administrative Agent and the Revolving Credit Lenders for the
amount thereof immediately) at the following:
(i) The Administrative Agent's initiation of the
transfer of the proceeds of such loan or advance in accordance
with the Lead Borrower's instructions (if such loan or
advance is of funds requested by the Lead Borrower).
(ii) The charging of the amount of such loan to the
Loan Account (in all other circumstances).
(c) There shall not be any recourse to or liability of the
Administrative Agent or any Revolving Credit Lender, on account
of any delay in the receipt, and/or any loss, of funds which
constitute a loan or advance under the Revolving Credit, the
wire transfer of which was properly initiated by the
Administrative Agent in accordance with wire instructions
provided to the Administrative Agent by the Lead Borrower.
2-9. SWINGLINE LOANS.
(a) For ease of administration, Base Margin Loans may be made
by the SwingLine Lender (in the aggregate,
the "SwingLine Loans") in accordance with the procedures set
forth in this Agreement for the making of loans and
advances under the Revolving Credit. The unpaid principal
balance of the SwingLine Loans shall not at any one time be in
excess of the SwingLine Loan Ceiling.
(b) The aggregate unpaid principal balance of SwingLine Loans
shall bear interest at the rate applicable to Base Margin
Loans and shall be repayable as a loan under the Revolving
Credit.
(c) The Borrowers' obligation to repay SwingLine Loans shall
be evidenced by the SwingLine Note (the "SwingLine Note")
which had been executed and delivered at the execution of the
2001 Loan Agreement. Neither the original nor a copy of that
Note shall be required, however, to establish or prove any
Liability. The Borrowers shall execute a replacement of any
SwingLine Note which has been lost, mutilated, or destroyed
thereof and deliver such replacement to the SwingLine Lender.
(d) For all purposes of this Loan Agreement, the SwingLine
Loans and the Borrowers' obligations to the SwingLine
Lender constitute Revolving Credit Loans and are secured as
"Liabilities".
(e) SwingLine Loans may be subject to periodic settlement with
the Revolving Credit Lenders as provided in this Agreement, but
in any event, no less frequently than weekly.
2-10. THE LOAN ACCOUNT.
(a) An account ("Loan Account") shall be opened on the books
of the Administrative Agent in which a record shall be kept
of all loans and advances made under the Revolving Credit.
(b) The Administrative Agent shall also keep a record (either
in the Loan Account or elsewhere, as the Administrative Agent
may from time to time elect) of all interest, fees, service
charges, costs, expenses, and other debits owed to the
Administrative Agent and each Revolving Credit Lender on
account of the Liabilities and of all credits against such
amounts so owed.
(c) Except as otherwise provided herein, all fees, service
charges, costs, and expenses for which any Borrower is obligated
hereunder are payable on demand. In the determination of
Availability, the Administrative Agent may deem fees, service
charges, accrued interest, and other payments which will be due
and payable between the date of such determination and the first
day of the then next succeeding month as having been advanced
under the Revolving Credit whether or not such amounts are then
due and payable.
(d) The Administrative Agent, without the request of the Lead
Borrower, may advance under the Revolving Credit any interest,
fee, service charge, or other payment to which any Agent or any
Revolving Credit Lender is entitled from any Borrower pursuant
hereto and may charge the same to the Loan Account
notwithstanding that an OverLoan may result thereby. Such action
on the part of the Administrative Agent shall not
constitute a waiver of the Administrative Agent's rights
and each Borrower's obligations under Section 2:2-12(b). Any
amount which is added to the principal balance of the Loan
Account as provided in this Section 2:2-10(d) shall bear
interest at the interest rate then and thereafter applicable to
Base Margin Loans.
(e) Any statement rendered by the Administrative Agent or any
Revolving Credit Lender to the Lead Borrower concerning the
Liabilities shall be considered correct and accepted by each
Borrower and shall be conclusively binding upon each Borrower
unless the Lead Borrower provides the Administrative Agent with
written objection thereto within sixty (60) days from the
mailing of such statement, which written objection shall
indicate, with particularity, the reason for such objection. The
Loan Account and the Administrative Agent's books and records
concerning the loan arrangement contemplated herein and the
Liabilities shall be prima facie evidence and proof of the
items described therein.
2-11. THE REVOLVING CREDIT NOTES. The Borrowers' obligation to repay
loans and advances under the Revolving Credit, with interest as
provided herein, shall be evidenced by the respective Revolving
Credit Notes (each, a "Revolving Credit Note") which had been
executed and delivered at the execution of the 2001 Loan
Agreement . Neither the original nor a copy of any Revolving
Credit Note shall be required, however, to establish or prove
any Liability. In the event that any Revolving Credit Note is
ever lost, mutilated, or destroyed, each Borrower shall
execute a replacement thereof and deliver such replacement to the
Administrative Agent for delivery to such Revolving Credit Lender
2-12. PAYMENT OF THE LOAN ACCOUNT.
(a) The Borrowers may repay all or any portion of the
principal balance of the Loan Account from time to time until
the Termination Date.
(b) The Borrowers, without notice or demand from the
Administrative Agent or any Revolving Credit Lender,
shall pay the Administrative Agent for the benefit of the
Revolving Credit Lenders that amount, from time to time,
which is necessary so that there is no OverLoan outstanding.
(c) The Borrowers shall repay the then entire unpaid balance
of the Loan Account and all other Liabilities on the Termination
Date.
(d) The Administrative Agent shall endeavor to cause the
application of payments (if any), pursuant to Sections 2:2-12(a)
and 2:2-12(b) against Eurodollar Loans then outstanding in such
manner as results in the least cost to the Borrowers, but shall
not have any affirmative obligation to do so nor liability on
account of the Administrative Agent's failure to have done so.
In no event shall action or inaction taken by the Administrative
Agent excuse any Borrower from any indemnification obligation
under Section 2:2-12(e).
(e) The Borrowers shall indemnify the Administrative Agent and
each Revolving Credit Lender and hold the Administrative
Agent and each Revolving Credit Lender harmless from and
against any loss, cost or expense (including amounts payable by
the Administrative Agent or such Revolving Credit Lender on
account of "breakage fees" (so-called)) which the Administrative
Agent or such Revolving Credit Lender may sustain or incur
(including, without limitation, by virtue of acceleration after
the occurrence of any Event of Default) as a consequence of the
following:
(i) Default by any Borrower in payment of the
principal amount of or any interest on any Eurodollar Loan
as and when due and payable, including any such loss or
expense arising from interest or fees payable by such
Revolving Credit Lender in order to maintain its Eurodollar
Loans.
(ii) Default by any Borrower in making a borrowing or
conversion after the Lead Borrower has given (or is
deemed to have given) a request for a Revolving Credit Loan
or a request to convert a Revolving Credit Loan from one
applicable interest rate to another.
(iii) The making of any payment on a Eurodollar Loan
or the making of any conversion of any such Loan to a Base
Margin Loan on a day that is not the last day of the
applicable Interest Period with respect thereto.
2-13. INTEREST ON REVOLVING CREDIT LOANS.
(a) Each Revolving Credit Loan shall bear interest at the Base
Margin Rate unless timely notice is given (as provided in
Section 2:2-7) that the subject Revolving Credit Loan (or a
portion thereof) is, or is to be converted to, a Eurodollar
Loan.
(b) Each Revolving Credit Loan which consists of a Eurodollar
Loan shall bear interest at the applicable Eurodollar Rate.
(c) Subject to, and in accordance with, the provisions of this
Agreement, the Lead Borrower may cause all or a part of the
unpaid principal balance of the Loan Account to bear interest
at the Base Margin Rate or the Eurodollar Rate as specified
from time to time by notice by the Lead Borrower to the
Administrative Agent. For ease of reference and administration,
each part of the Loan Account which bears interest at the same
interest and for the same Interest Period is referred to herein
as if it were a separate "Revolving Credit Loan".
(d) The Lead Borrower shall not select, renew, or convert any
interest rate for a Revolving Credit Loan such that, in addition
to interest at the Base Margin Rate, there are more than six (6)
Eurodollar Rates applicable to the Revolving Credit Loans at any
one time.
(e) The Borrowers shall pay accrued and unpaid interest on
each Revolving Credit Loan in arrears as follows:
(i) On the applicable Interest Payment Date for
that Revolving Credit Loan.
(ii) On the Termination Date and on the End Date.
(iii) If an Event of Default has occurred and is
continuing: with such frequency as may be determined by the
Administrative Agent.
(f) The Base Margin and the Eurodollar Margin shall be
determined according to the Pricing Grid annexed hereto as
EXHIBIT 2:2-13.
(g) If an Event of Default has occurred and is continuing and
following the earlier of (i) the giving of a notice by the
Administrative Agent exercising its rights under this section,
or (ii) Acceleration, all Revolving Credit Loans shall bear
interest at a rate which is the aggregate of the rate applicable
to Base Margin Loans plus Two Percent (2%) per annum.
2-14. REVOLVING CREDIT COMMITMENT FEE. In consideration of the
commitment to make loans and advances to the Borrowers under
the Revolving Credit, and to maintain sufficient funds available
for such purpose, there has been earned and the Borrowers shall
pay the "Revolving Credit Commitment Fee" (so referred to
herein) in the amount and payable as provided in the Fee Letter.
2-15. ADMINISTRATIVE AGENT'S FEE. In addition to any other fee or
expense to be paid by the Borrowers on account of the
Revolving Credit, the Borrowers shall pay the Administrative
Agent the " Administrative Agent's Fee" at the times and in the
amounts as set forth the Fee Letter.
2-16. UNUSED LINE FEE.
(a) In addition to any other fee to be paid by the Borrowers
on account of the Revolving Credit, the Borrowers shall pay the
Administrative Agent the "Unused Line Fee" (so referred to herein)
of the following per annum percentage of the average difference,
during the quarter just ended (or relevant period with respect to
the payment being made on the Termination Date) between the
Revolving Credit Ceiling and the aggregate of the unpaid
principal balance of the Loan Account and the undrawn Stated
Amount of L/C's outstanding during the relevant period:
(i) Until the unpaid principal balance of the
Loan Account remains at or in excess of $50 Million for
seven consecutive days: 0.75%
(ii) All times after the unpaid principal balance of
the Loan Account has been at or in excess of $50 Million
for seven consecutive days: 0.50%
(b) The Unused Line Fee shall be paid in arrears, on the first
day of each Fiscal quarter after February 23, 2001 and on the
Termination Date.
2-17. EARLY TERMINATION FEE.
(a) Except as provided in Section 2:2-17(b), in the event
that the Termination Date occurs, for any reason, prior to the
Maturity Date, the Borrowers shall pay to the Administrative
Agent , for the benefit of the Revolving Credit Lenders, the
"Revolving Credit Early Termination Fee" (so referred to herein)
equal to the following percentage of Revolving Credit Ceiling:
============================================= ==================================
TERMINATION DATE IS REVOLVING CREDIT EARLY TERMINATION
FEE IS
============================================= ==================================
Prior to February 23, 2002 1.0%
--------------------------------------------- ----------------------------------
On or after February 23, 2002
and before February 23, 2003 0.5%
--------------------------------------------- ----------------------------------
On or after February 23, 2003 Nil
--------------------------------------------- ----------------------------------
(b) No Early Termination Fee shall be due and payable in the
event of the early termination of the Revolving Credit in
concert with a refinancing of the Revolving Credit agented or
provided by Fleet Retail Finance Inc. or any of its affiliates,
it being understood that neither any Revolving Credit Lender nor
any affiliate of any Revolving Credit Lender has agreed to
provide or to entertain a request to provide any such refinancing.
2-18. CONCERNING FEES. The Borrowers shall not be entitled to any
credit, rebate or repayment of any fee earned by any Agent or
any Revolving Credit Lender pursuant to this Agreement or any
Loan Document notwithstanding any termination of this
Agreement or suspension or termination of any Agent's and any
Revolving Credit Lender's respective obligation to make
loans and advances hereunder.
2-19. AGENTS' AND LENDERS' DISCRETION.
(a) Each reference in the Loan Documents to the exercise of
discretion or the like by any Agent or any Lender shall be to
such Person's exercise of its judgment, in good faith, based
upon such Person's consideration of any such factors as that
Agent or that Lender, taking into account information of
which that Person then has actual knowledge, believes:
(i) Will or reasonably could be expected to affect
the value of the Collateral, the enforceability of the
Collateral Agent's Collateral Interests therein, or
the amount which the Collateral Agent would likely
realize therefrom (taking into account delays which may
possibly be encountered in the Collateral Agent's
realizing upon the Collateral and likely Costs of Collection).
(ii) That any report or financial information
delivered to any Agent or any Lender by or on behalf of any
Borrower is incomplete, inaccurate, or misleading in any
material manner or was not prepared in accordance with the
requirements of this Agreement.
(iii) That any Borrower is InDefault.
(b) In the exercise of such judgement, each Agent or each
Lender also may take into account any of the following factors:
(i) Those included in, or tested by, the
definitions of "Eligible Inventory" and "Cost".
(ii) Material changes in or to the mix of the
Borrowers' Inventory.
(iii) Seasonality with respect to the Borrowers'
Inventory and patterns of retail sales.
(iv) Such other factors as each Agent and each Lender
reasonably determines as having a material bearing on
credit risks associated with the providing of loans and
financial accommodations to the Borrowers.
2-20. PROCEDURES FOR ISSUANCE OF L/C'S.
(a) The Lead Borrower may request that the Administrative
Agent cause the issuance by the Issuer of L/C's for the account
of any Borrower. Each such request shall be in such manner as may
from time to time be acceptable to the Administrative Agent.
(b) The Administrative Agent will endeavor to cause the
issuance of any L/C so requested by the Lead Borrower, provided
that , at the time that the request is made, the Revolving
Credit has not been suspended as provided in Section 2:2-7(g)
and if so issued:
(i) The aggregate Stated Amount of all L/C's then
outstanding, does not exceed Seventy-five Million Dollars
and No Cents ($75,000,000.00).
(ii) The expiry of the L/C is not later than the
earlier of Thirty (30) days prior to the Maturity Date
(unless the Borrowers provide cash collateral reasonably
satisfactory to the Agent in an amount equal to not less than
105% of the Stated Amount of any L/C which has an expiry
after that date) or the following:
(A) Standby's: One (1) year from initial
issuance.
(B) Documentary's: One Hundred Eighty (180)
days from issuance.
(iii) An OverLoan will not result from the issuance
of the subject L/C.
(c) Each Borrower shall execute such documentation to apply
for and support the issuance of an L/C as may be required by the
Issuer.
(d) There shall not be any recourse to, nor liability of, any
Agent or any Revolving Credit Lender on account of the
following to the extent that any of the following occurs for
reasons not within the reasonable control of the Issuer:
(i) Any delay or refusal by an Issuer to issue
an L/C;
(ii) Any action or inaction of an Issuer on account
of or in respect to, any L/C.
(e) The Borrowers shall reimburse the Issuer for the
amount of any honoring of a drawing under an L/C on the
same day on which such honoring takes place. The
Administrative Agent, without the request of any Borrower, may
advance under the Revolving Credit (and charge to the Loan
Account) the amount of any honoring of any L/C and other amount
for which any Borrower, the Issuer, or the Revolving
Credit Lenders become obligated on account of, or in respect to,
any L/C. Such advance shall be made whether or not any Borrower
is InDefault or such advance would result in an OverLoan.
Such action shall not constitute a waiver of the Administrative
Agent's rights under Section 2:2-12(b) hereof.
2-21. FEES FOR L/C'S.
(a) The Borrowers shall pay to the Administrative Agent a fee,
on account of L/C's, the issuance of which had been
procured by the Administrative Agent, quarterly in arrears,
and on the Termination Date and on the End Date, equal to the
following percentage per annum of the weighted average Stated
Amount of the subject L/C=s outstanding during the period in
respect of which such fee is being paid except that, if an Event
of Default has occurred and is continuing, such fee shall be
increased by two percent (2%) per annum:
(i) Standby L/C=s: The Eurodollar Margin(s) in
effect during the subject quarter.
(ii) Documentary L/C=s: The Eurodollar Margin(s) in
effect during the subject quarter minus Fifty (50) basis
points.
(b) In addition to the fee to be paid as provided in
Subsection 2:2-21(a), above, the Borrowers shall pay to the
Administrative Agent (or to the Issuer, if so requested by
Administrative Agent), on demand, the Issuer's then
standard fees associated with the issuance, processing,
negotiation, amendment, and administration of the L/C's.
(c) If any change in Applicable Law shall either:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirements against
letters of credit heretofore or hereafter issued by any
Issuer or with respect to which any Revolving Credit
Lender or any Issuer has an obligation to lend to
fund drawings under any L/C; or
(ii) impose on any Issuer any other condition or
requirements relating to any such letters of credit;
and the result of any event referred to in Section
2:2-21(c)(i) or 2:2-21(c)(ii), above, shall be to
increase the cost to any Revolving Credit Lender or to
any Issuer of issuing or maintaining any L/C (which
increase in cost shall be the result of such Issuer's
reasonable allocation among that Revolving Credit
Lender's or Issuer's letter of credit customers of the
aggregate of such cost increases resulting from such
events), then, following the delivery by the
Administrative Agent to the Lead Borrower of a certificate
of an officer of the subject Revolving Credit Lender or
the subject Issuer describing such change in law,
executive order, regulation, directive, or interpretation
thereof, its effect on such Revolving Credit Lender or
such Issuer, and the basis for determining such increased
costs and their allocation, the Administrative Agent, on
not less than fifteen (15) days notice to the Lead Borrower,
may debit the Loan Account by such amounts as shall be
sufficient to compensate the subject Revolving Credit
Lender or the subject Issuer for such increased cost. Any
Revolving Credit Lender's or any Issuer's determination of
costs incurred under Section 2:2-21(c)(i) or
2:2-21(c)(ii), above, and the allocation, if any, of such
costs among the Borrowers and other letter of credit
customers of such Revolving Credit Lender or such Issuer,
if done in good faith and made on an equitable
basis and in accordance with such officer's
certificate, shall be conclusive and binding on the
Borrowers.
2-22. CONCERNING L/C'S.
(a) None of the Issuer, the Issuer's correspondents, any
Revolving Credit Lender, any Agent, or any advising,
negotiating, or paying bank with respect to any L/C shall be
responsible in any way for:
(i) The performance by any beneficiary under any L/C
of that beneficiary's obligations to any Borrower.
(ii) The form, sufficiency, correctness, genuineness,
authority of any person signing; falsification; or the
legal effect of; any documents called for under
any L/C if (with respect to the foregoing) such
documents on their face appear to be in order.
(b) The Issuer may honor, as complying with the terms of any
L/C and of any drawing thereunder, any drafts or other
documents otherwise in order, but signed or issued by an
administrator, executor, conservator, trustee in
bankruptcy, debtor in possession, assignee for the
benefit of creditors, liquidator, receiver, or other
legal representative of the party authorized under such
L/C to draw or issue such drafts or other documents.
(c) Unless otherwise agreed to, in the particular instance,
each Borrower hereby authorizes any Issuer to:
(i) Select an advising bank, if any.
(ii) Select a paying bank, if any.
(iii) Select a negotiating bank.
(d) All directions, correspondence, and funds transfers
relating to any L/C are at the risk of the Borrowers.
The Issuer shall have discharged the Issuer's obligations
under any L/C which, or the drawing under which, includes
payment instructions, by the initiation of the method of
payment called for in, and in accordance with, such
instructions (or by any other commercially reasonable and
comparable method). No Agent, nor any Revolving Credit
Lender, nor the Issuer shall have any responsibility for
any inaccuracy, interruption, error, or delay in
transmission or delivery by post, telegraph or cable, or for
any inaccuracy of translation.
(e) Each Agent's, each Revolving Credit Lender's, and the
Issuer's rights, powers, privileges and immunities specified
in or arising under this Agreement are in addition to any
heretofore or at any time hereafter otherwise created or
arising, whether by statute or rule of law or contract.
(f) Except to the extent otherwise expressly provided
hereunder or agreed to in writing by the Issuer and
the Lead Borrower, documentary L/C's will be governed by
the Uniform Customs and Practice for Documentary Credits,
International Chamber of Commerce, Publication No. 500, and
standby L/C's will be governed by International Standby
Practices ISP98 (adopted by the International Chamber of
Commerce on April 6, 1998) and any respective
subsequent revisions thereof.
(g) The obligations of the Borrowers under this Agreement with
respect to L/C's are absolute, unconditional, and
irrevocable and shall be performed strictly in accordance with
the terms hereof under all circumstances, whatsoever including,
without limitation, the following:
(i) Any lack of validity or enforceability or
restriction, restraint, or stay in the enforcement of
this Agreement, any L/C, or any other agreement or
instrument relating thereto.
(ii) Any Borrower's consent to any amendment or
waiver of, or consent to the departure from, any L/C.
(iii) The existence of any claim, set-off, defense,
or other right which any Borrower may have at any time
against the beneficiary of any L/C.
(iv) Any good faith honoring of a drawing under any
L/C, which drawing possibly could have been dishonored
based upon a strict construction of the terms of the L/C.
2-23. CHANGED CIRCUMSTANCES.
(a) The Administrative Agent may advise the Lead Borrower that
the Administrative Agent has made the good faith
determination (which determination shall be final and
conclusive) of any of the following:
(i) Adequate and fair means do not exist for
ascertaining the rate for Eurodollar Loans.
(ii) The continuation of or conversion of any
Revolving Credit Loan to a Eurodollar Loan has been made
impracticable or unlawful by the occurrence of a
contingency that materially and adversely affects the
applicable market or the compliance by the Administrative
Agent or any Revolving Credit Lender in good faith with any
Applicable Law.
(iii) The indices on which the interest rates for
Eurodollar Loans are based shall no longer represent the
effective cost to the Agent or any Revolving Credit Lender
for U.S. dollar deposits in the interbank market for
deposits in which it regularly participates.
(b) In the event that the Administrative Agent advises the
Lead Borrower of an occurrence described in Section 2:2-23(a),
then, until the Administrative Agent notifies the Lead Borrower
that the circumstances giving rise to such notice no longer
apply:
(i) The obligation of the Agent or each Revolving
Credit Lender to make loans of the type affected by
such changed circumstances or to permit the Lead
Borrower to select the affected interest rate as
otherwise applicable to any Revolving Credit Loans
shall be suspended.
(ii) Any notice which the Lead Borrower had given the
Administrative Agent with respect to any Eurodollar Loan,
the time for action with respect to which has not
occurred prior to the Administrative Agent's having
given notice pursuant to Section 2:2-23(a), shall be
deemed at the option of the Administrative Agent to
not having been given.
2-24. DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT.
(a) Each Borrower hereby irrevocably designates and appoints
the Lead Borrower as that Borrower's agent to obtain loans and
advances under the Revolving Credit, the proceeds of which
shall be available to each Borrower for those uses as those set
forth in Section 2:2-1(d), 2:2-1(d), 2:2-1(d)(i), 2:2-1(d)(ii).
As the disclosed principal for its agent, each Borrower shall be
obligated to the Agent and each Revolving Credit Lender on
account of loans and advances so made under the Revolving
Credit as if made directly by the Revolving Credit Lenders to
that Borrower, notwithstanding the manner by which such loans
and advances are recorded on the books and records of the Lead
Borrower and of any Borrower.
(b) Each Borrower recognizes that credit available to it under
the Revolving Credit is in excess of and on better terms than it
otherwise could obtain on and for its own account and that one
of the reasons therefor is its joining in the credit facility
contemplated herein with all other Borrowers.
Consequently, each Borrower hereby assumes and agrees to
discharge all Liabilities of each of the other Borrowers as if
that Borrower so assuming and agreeing was each of the other
Borrowers.
(c) The Lead Borrower shall act as a conduit for each Borrower
(including itself, as a "Borrower") on whose behalf the Lead
Borrower has requested a Revolving Credit Loan.
(d) The proceeds of each loan and advance provided under the
Revolving Credit which is requested by the Lead Borrower shall be
deposited into the Operating Account or as otherwise indicated
by the Lead Borrower. The Lead Borrower shall cause the
transfer of the proceeds thereof to the (those) Borrower(s)
on whose behalf such loan and advance was obtained. Neither
the Agent nor any Revolving Credit Lender shall have any
obligation to see to the application of such proceeds.
2-25. REVOLVING CREDIT LENDERS' COMMITMENTS
(a) Subject to Section 17:17-1 (which provides for assignments
and assumptions of commitments), each Revolving Credit
Lender's "Revolving Credit Percentage Commitment", and
"Revolving Credit Dollar Commitment" (respectively so
referred to herein) is set forth on EXHIBIT 2:2-25, annexed
hereto.
(b) The obligations of each Revolving Credit Lender are
several and not joint. No Revolving Credit Lender shall have
any obligation to make any loan or advance under the Revolving
Credit in excess of either of the following:
(i) That Revolving Credit Lender's
Revolving Credit Percentage Commitment of the subject
loan or advance or of Availability.
(ii) that Revolving Credit Lender's
Revolving Credit Dollar Commitment.
(c) No Revolving Credit Lender shall have any liability to
the Borrowers on account of the failure of any other Revolving
Credit Lender to provide any loan or advance under the
Revolving Credit nor any obligation to make up any shortfall
which may be created by such failure.
(d) The Revolving Credit Dollar Commitments, Revolving Credit
Commitment Percentages, and identities of the Revolving Credit
Lenders may be changed, from time to time by the reallocation or
assignment of Revolving Credit Dollar Commitments and Revolving
Credit Commitment Percentages amongst the Revolving Credit
Lenders or with other Persons who determine to become
"Revolving Credit Lenders", provided, however unless an Event
of Default has occurred and is continuing (in which event,
no consent of any Borrower is required) any assignment to a
Person not then a Revolving Credit Lender shall be subject to
the prior consent of the Lead Borrower (not to be
unreasonably withheld), which consent will be deemed given
unless the Lead Borrower provides the Administrative Agent with
written objection, not more than Five (5) Business Days after the
Administrative Agent shall have given the Lead Borrower written
notice of a proposed assignment).
(e). Upon written notice given the Lead Borrower from time to
time by the Administrative Agent, of any assignment or allocation
referenced in Section 2:2-25(d):
(i) Each Borrower shall execute one or more
replacement Revolving Credit Notes to reflect such
changed Revolving Credit Dollar Commitments, Revolving
Credit Commitment Percentages, and identities and shall
deliver such replacement Revolving Credit Notes to
the Administrative Agent (which promptly thereafter
shall deliver to the Lead Borrower the Revolving Credit
Notes so replaced) provided however, in the event that
a Revolving Credit Note is to be exchanged following its
acceleration or the entry of an order for relief under
the Bankruptcy Code with respect to any Borrower, the
Administrative Agent, in lieu of causing the Borrowers
to execute one or more new Revolving Credit Notes,
may issue the Administrative Agent's
Certificate confirming the resulting Revolving
Credit Dollar Commitments and Revolving Credit Percentage
Commitments.
(ii) Such change shall be effective from the
effective date specified in such written notice and any
Person added as a Revolving Credit Lender shall have
all rights and privileges of a Revolving Credit Lender
hereunder thereafter as if such Person had been
a signatory to this Agreement and any other Loan
Document to which a Revolving Credit Lender is a
signatory and any Person removed as a Revolving Credit
Lender shall be relieved of any obligations or
responsibilities of a Revolving Credit Lender hereunder
thereafter.
ARTICLE 3: - THE TERM LOAN:
3-1. COMMITMENT TO MAKE TERM LOAN.
(a) Subject to satisfaction of the Conditions Precedent to the
amendment and restatement of the 2001 Loan Agreement (Article 4:)
by on or prior to the date of this Agreement, the Borrowers
shall borrow from the Term Lender and the Term Lender shall lend
to the Borrowers the sum $45 Million (the "Term Loan"),
repayable with interest as provided herein.
(b) The proceeds of the Term Loan shall be used solely for
working capital needs and general corporate purposes of the
Borrowers.
(c) No proceeds of the Term Loan may be used other than in the
ordinary course of the Borrowers' business and consistent with
the provisions of this Agreement.
3-2. THE TERM NOTE. The obligation to repay the Term Loan, with
interest as provided herein, shall be evidenced by a Note
(the "Term Note") in the form of EXHIBIT 3:3-2, annexed hereto,
executed by the Borrowers. Neither the original nor a copy of
the Term Note shall be required, however, to establish or
prove any Liability. In the event that the Term Note is ever
lost, mutilated, or destroyed, the Borrowers shall execute a
replacement thereof and deliver such replacement to the
Administrative Agent for delivery to the Term Lender.
3-3. PAYMENT OF PRINCIPAL OF THE TERM LOAN.
(a) Except as provided in Section 3:3-3(b), the Borrowers may
not repay all or any portion of the principal balance of the
Term Loan prior to the repayment in full of all Liabilities
under the Revolving Credit and the termination of any
obligation, under the Revolving Credit, of the Administrative
Agent and of any Revolving Credit Lender to make any loans or
to provide any financial accommodations pursuant to this
Agreement.
(b) From time to time on or after November 1, 2001, the
Borrowers may pay all or any part of the principal of the Term
Loan provided that each of the following conditions is satisfied:
(i) Such prepayment is accompanied by the payment of
any Term Loan Early Termination Fee due on account thereof.
(ii) After giving effect to such prepayment,
(A) Excess Availability is not less than
$45,000,000.00.
(B) No Borrower is InDefault.
(c) The Borrowers shall pay the Administrative Agent, for the
account of the Term Lender, the Term Loan Early Termination
Fee as and to the extent payable as provided in the Term Loan
Fee Letter except that no Term Loan Early Termination Fee shall
be due and payable in the event of a prepayment in connection
with a refinancing of the Term Loan agented or provided by Back
Bay Capital or by any successor fund managed by Back Bay
Capital, it being understood that neither Back Bay Capital nor
any such successor fund has agreed to provide or to entertain a
request to provide any such refinancing.
(d) The Borrowers shall repay the then entire unpaid balance
of the Term Loan (including capitalized PIK Interest) and all
accrued and unpaid interest thereon on the Termination Date.
3-4 INTEREST ON THE TERM LOAN.
(a) Subject to Sections 3:3-4(b) and 3:3-4(c), the unpaid
principal balance of the Term Loan (including any capitalized
PIK Interest) shall bear interest (determined on a 360 day
year and actual days elapsed), until repaid, fixed at 16.25% per
annum (the "Term Loan Interest Rate"), payable as follows:
(i) Accrued interest on the unpaid principal balance
of the Term Loan equal to 13% per annum ("Current
Pay Interest") shall be payable monthly in arrears,
on the first Business Day of each month (the "Term Loan
Interest Payment Date"), and on the Maturity Date.
(ii) Subject to Section 3:3-4(c), accrued interest on
the unpaid principal balance of the Term Loan in excess of
Current Pay Interest (which excess is referred to herein as
"PIK Interest") shall be payable as follows:
(A) The Borrowers shall have the option,
exercisable by irrevocable written notice by the
Lead Borrower to the Administrative Agent made at
least three (3) Business Days prior to the relevant
Term Loan Interest Payment Date, to pay all or any
part of such PIK Interest in cash on that Term
Loan Interest Payment Date.
(B) PIK Interest as to which the option
provided in Section 3:3-4(a)(ii)(A) is not exercised
shall be added to the then principal balance of the
Term Note as of the Term Loan Interest Payment Date
on which such interest would have been paid if such
option had been exercised.
(C) At the direction of the Term Lender,
following the occurrence and during the continuance
of any Event of Default (and whether or not
Acceleration has taken place), the Term Lender may
require PIK interest to be paid as if the option
provided in Section 3:3-4(a)(ii)(A) had been
timely exercised by the Lead Borrower.
(b) In the event of the amendment of any interest rate
which is or which may be applicable to the unpaid principal
balance of the Revolving Credit, the Term Loan Interest Rate
shall be increased by a like amount (e.g. if the Base Margin
Rate is increased by one-quarter of one percent per annum or the
Eurodollar Margin is increased by 25 basis points, the Term
Loan Interest Rate shall likewise be increased by one-quarter
of one percent per annum) and such increase shall be treated as
an increase to Current Pay Interest.
(c) Following the occurrence and during the continuance of any
Event of Default (and whether or not Acceleration has taken
place), at the direction of the Term Lender, interest shall
accrue and shall be payable on the unpaid principal balance
of the Term Loan at the aggregate of the Term Loan
Interest Rate then in effect plus three percent per annum.
3-5. TERM LOAN ANNIVERSARY FEES. The Borrowers shall pay the
Administrative Agent, for the account of the Term Lender,
the Term Loan Anniversary Fees at the times and in the amounts
provided in the Term Loan Fee Letter.
3-6. PAYMENTS ON ACCOUNT OF TERM LOAN. The Borrowers authorize the
Administrative Agent to determine and to pay over directly to
the Term Lender any and all amounts due and payable from time to
time under or on account of the Term Loan as advances under the
Revolving Credit it being understood, however, that the
authorization of the Administrative Agent provided in this
Section 3:3-6 shall not excuse the Borrowers from fulfilling
their obligations to the Term Lender on account of the Term
Loan nor place any obligation on the Administrative Agent to
do so. The Administrative Agent shall provide prompt advice
to the Lead Borrower of any amount which is so paid over
by the Administrative Agent to the Term Lender pursuant to this
Section 3:3-6.
ARTICLE 4: - CONDITIONS PRECEDENT:
As a condition to the effectiveness of the amendment and
restatement of this Agreement (which effectiveness shall be
marked by written confirmation thereof from the
Administrative Agent to the Lead Borrower) each of the
documents respectively described in Sections 4:4-1 through and
including 4:4-4, (each in form and substance satisfactory to the
Administrative Agent) shall have been delivered to the
Administrative Agent, and the conditions respectively
described in Sections 4:4-5 through and including 4:4-9,
shall have been satisfied:
4-1. CORPORATE DUE DILIGENCE.
(a) Certificates of corporate good standing for each Borrower,
respectively issued by the Secretary of State for the state
in which that Borrower is incorporated.
(b) Certificates of due qualification, in good standing,
issued by the Secretary(ies) of State of each State in which
the nature a Borrower's business conducted or assets owned could
require such qualification.
(c) Certificates of each Borrower's Secretary of the due
adoption, continued effectiveness, and setting forth the
texts of, each corporate resolution adopted in connection
with the establishment of the loan arrangement contemplated
by the Loan Documents and attesting to the true
signatures of each Person authorized as a signatory to any
of the Loan Documents.
4-2. OPINION. An opinion of counsel to the Borrowers in form and
substance satisfactory to the Administrative Agent.
4-3. ADDITIONAL DOCUMENTS. Such additional instruments and
documents as the Administrative Agent or its counsel reasonably
may require or request.
4-4. OFFICERS' CERTIFICATES. Certificates executed by the Chief
Financial Officer and any Executive Vice President of the Lead
Borrower which state that the representations and warranties
made by the Borrowers to the Agents and the Lenders in the
Loan Documents are true and complete as of the date of such
Certificate, and that no event has occurred which is or which,
solely with the giving of notice or passage of time (or both)
would be an Event of Default.
4-5. REPRESENTATIONS AND WARRANTIES. Each of the representations made
by or on behalf of each Borrower in this Agreement or in any of
the other Loan Documents or in any other report, statement,
document, or paper provided by or on behalf of each Borrower
shall be true and complete as of the date as of which
such representation or warranty was made.
4-6. MINIMUM DAY ONE AVAILABILITY. After giving effect to the
effectiveness of this amendment and restatement of the 2001 Loan
Agreement; the making of the Term Loan; all then held checks
(if any); accounts payable which are beyond credit terms then
accorded the Borrowers; overdrafts; any charges to the Loan
Account made in connection with the establishment of the
credit facility contemplated hereby; and L/C's to be issued
at, or immediately subsequent to, such establishment,
Adjusted Excess Availability shall not be less than
$100,000,000.00.
4-7. ALL FEES AND EXPENSES PAID. All fees due at or immediately after
the effectiveness of this amendment and restatement of the 2001
Loan Agreement, including an amendment fee in the sum of
$500,000.00 payable to the Administrative Agent for the
account of the Revolving Credit Lenders and all fees, costs,
and expenses incurred by the Administrative Agent, the
Collateral Agent, and the Term Lender in connection with the
establishment of the credit facility contemplated hereby
(including the fees and expenses of counsel to the Administrative
Agent, the Collateral Agent, and the Term Lender) shall have been
paid in full.
4-8. CERTAIN CONDITIONS SATISFIED. Each of the following conditions
is satisfied:
(a) No Borrower is InDefault.
(b) Confirmation that no financing statements in which
any Borrower is referenced as the Debtor and any Person other
than Collateral Agent as the Secured Party have been filed
subsequent to those filed in connection with the Borrowers'
execution of the 1999 Loan Agreement other than to reflect
Permitted Encumbrances except for any Special Permitted
Encumbrances (i.e. no additional filings with respect to
any Special Permitted Encumbrance).
(c) The following shall have been received by the Term Lender,
each of a then recent date and each in form and reflecting
results which are satisfactory to the Term Lender:
(i) Appraisals of the Borrowers' leasehold
interests.
(ii) Appraisal of the Borrowers' inventory.
(iii) Commercial financial examination.
4-9. NO ADVERSE CHANGE. No event shall have occurred or failed to
occur, which occurrence or failure is or could have a materially
adverse effect upon the Borrowers' financial condition,
taken as a whole, as reflected on the Business Plan.
4-10. BENEFIT OF CONDITIONS PRECEDENT. The conditions set forth in this
Article 4: are for the sole benefit of each Agent and each
Lender and may be waived by the Administrative Agent in whole
or in part without prejudice to any Agent or any Lender.
No document shall be deemed delivered to the
Administrative Agent, the Collateral Agent, the Term Lender or
any Revolving Credit Lender until received and accepted by
the Administrative Agent at its offices in Boston,
Massachusetts. Under no circumstances shall this Agreement
take effect until executed and accepted by the Administrative
Agent at said offices.
ARTICLE 5: - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
To induce each Lender to establish the credit facility
contemplated herein and to induce the Revolving Credit Lenders
to provide loans and advances under the Revolving Credit
(each of which loans shall be deemed to have been made in
reliance thereupon) and to induce the Term Lender to make the
Term Loan, the Borrowers, in addition to all other
representations, warranties, and covenants made by any
Borrower in any other Loan Document, make those
representations, warranties, and covenants included in this
Agreement.
5-1. PAYMENT AND PERFORMANCE OF LIABILITIES. The Borrowers shall pay
each payment Liability when due (or when demanded, if payable
on demand) and shall promptly, punctually, and faithfully perform
each other Liability.
5-2. DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS.
(a) Each Borrower presently is and hereafter shall remain in
good standing as a corporation under the laws of the State
in which it is organized, as set forth in the Preamble to this
Agreement and is and shall hereafter remain duly qualified
and in good standing in every other State in which, by reason
of the nature or location of each Borrower's assets or
operation of each Borrower's business, such qualification
may be necessary, except where the failure to so qualify would not
have a Material Adverse Effect.
(b) Each Borrower's respective organizational identification
number assigned to it by the State of its incorporation and
its respective federal employer identification number is
stated on EXHIBIT 5:5-2, annexed hereto.
(c) Except in consequence of a Permitted Merger, no Borrower
shall change its State of organization; any organizational
identification number assigned to that Borrower by that State;
or that Borrower's federal taxpayer identification number.
(d) Each Affiliate, as of the Second Restatement Date, is
listed on EXHIBIT 5:5-2. Each Affiliate listed on EXHIBIT 5:5-2
(except for the Parent) is a Subsidiary of the Parent. No
Borrower (except for the Parent) will create any Subsidiary nor
will the Parent permit any Subsidiary to create any Subsidiary
other than a Permitted Subsidiary.
(e) The Lead Borrower shall provide the Administrative Agent
with prior written notice of any entity's becoming or
ceasing to be an
Affiliate.
(f) Each Borrower has all requisite corporate power and
authority to execute and deliver all Loan Documents to which that
Borrower is a party and has and will hereafter retain all
requisite corporate power to perform all Liabilities.
(g) The execution and delivery by each Borrower of each Loan
Document to which it is a party; each Borrower's
consummation of the transactions contemplated by such Loan
Documents (including, without limitation, the creation of
Collateral Interests by that Borrower to secure the
Liabilities); each Borrower's performance under those of the
Loan Documents to which it is a party; the borrowings
hereunder; and the use of the proceeds thereof:
(i) Have been duly authorized by all necessary
corporate action.
(ii) Do not, and will not, contravene in any
material respect any provision of any Requirement of
Law or obligation of that Borrower.
(iii) Will not result in the creation or imposition
of, or the obligation to create or impose, any
Encumbrance upon any assets of that Borrower
pursuant to any Requirement of Law or
obligation, except pursuant to the Loan Documents.
(h) The Loan Documents have been duly executed and delivered
by each Borrower and are the legal, valid and binding
obligations of each Borrower, enforceable against each Borrower
in accordance with their respective terms, except as such
enforceability is limited by bankruptcy, insolvency, or other
laws relating to or affecting generally the enforcement of
creditors' rights and except to the extent that the
availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which
any proceeding therefor may be brought.
5-3. TRADE NAMES.
(a) EXHIBIT 5:5-3, annexed hereto, is a listing of:
(i) All names under which any Borrower has conducted its
business since January 1, 1995.
(ii) All Persons with whom any Borrower ever consolidated or
merged, or from whom any Borrower acquired in a single
transaction or in a series of related transactions
substantially all of such Person's assets since
January 1,1995.
(b) The Lead Borrower will provide the Administrative Agent
with not less than twenty-one (21) days prior written notice
(with reasonable particularity) of any change to any Borrower's
name from that under which that Borrower is conducting its
business at the execution of this Agreement and will not effect
such change unless each Borrower is then in compliance with
all provisions of this Agreement, except where such conflict would
not reasonably be expected to have a Material Adverse Effect.
5-4. INFRASTRUCTURE.
(a) Each Borrower has and will maintain a sufficient
infrastructure to conduct its business as presently
conducted and as contemplated to be conducted following its
execution of this Agreement.
(b) Each Borrower owns and possesses, or has the right to use
(and will hereafter own, possess, or have such right to
use) all patents, industrial designs, trademarks, trade names,
trade styles, brand names, service marks, logos, copyrights,
trade secrets, know-how, confidential information, and other
intellectual or proprietary property of any third Person
necessary for that Borrower's conduct of that Borrower's business.
(c) The conduct by each Borrower of that Borrower's business
does not presently infringe (nor will any Borrower conduct its
business in the future so as to infringe) the patents,
industrial designs, trademarks, trade names, trade styles,
brand names, service marks, logos, copyrights, trade
secrets, know-how, confidential information, or other
intellectual or proprietary property of any third Person,
except where such conflict would not reasonably be expected to
have a Material Adverse Effect.
5-5. LOCATIONS.
(a) Subject to Section 5:5-5(b), the Collateral, and the
books, records, and papers of Borrowers' pertaining thereto,
are kept and maintained solely at the following locations:
(i) The Lead Borrower's chief executive offices,
which, on the Second Restatement Date, are at 0000
Xxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000.
(ii) Those locations which are listed on EXHIBIT
5:5-5, annexed hereto, which EXHIBIT includes, with
respect to each such location, the name and address of
the landlord on the Lease which covers such location
(or an indication that a Borrower owns the subject
location) and of all service bureaus with which any
such records are maintained and the names and
addresses of each of then Borrowers' landlords.
(b) No Borrower shall remove any of the Collateral from the
locations described in Section 5:5-5(a) except as follows:
(i) To accomplish sales of Inventory in the
ordinary course of business.
(ii) To consummate the House2Home Conversion as
reflected on the Business Plan.
(iii) To move Inventory to such location or from
one such location to another such location.
(iv) To utilize such of the Collateral as is removed
from such locations in the ordinary course of business
(such as motor vehicles).
(v) To Stores opened after the execution of this
Agreement, but only where there is compliance with the
Section 5:5-6.
(vi) In connection with any disposition of Collateral
permitted by Section 5:5-14(d).
(vii) To other locations, not less than Thirty (30)
days prior written notice of which is provided to the
Administrative Agent, and provided that there is
compliance with all relevant provisions of the Loan
Documents (including, but not limited to, Section
5:5-26 (which relates to further assurances) in
connection therewith.
(c) Except as otherwise disclosed pursuant to, or permitted
by, this Section 5:5-5, no tangible personal property of any
Borrower is in the care or custody of any third party or stored
or entrusted with a bailee or other third party and none shall
hereafter be placed under such care, custody, storage, or
entrustment.
5-6. STORES.
(a) No Borrower will execute any Lease:
(i) other than in the ordinary course of business; or
(ii) which would result in a breach of this
Agreement.
(b) No Borrower will open any New Store except in compliance
with each of the following conditions:
(i) Not less than thirty (30) days prior written
notice of such opening is provided to the
Administrative Agent (with reasonable particularity of
the relevant facts and circumstances).
(ii) The subject opening will not result in a breach
of Section 5:5-6(c)(i) (which places a limit on the
number of New Store openings).
(iii) Such opening is in compliance with all other
provisions of this Agreement including, without
limitation, Section 5:5-26 (which relates to
further assurances).
(c) The Borrowers, as a whole, will not undertake any of
the following:
(i) Open more than the following number of New
Stores during the Fiscal year indicated:
=============================== ============================= ==================
Fiscal Year Ending If Prior to Term If After Term
Loan Retirement Loan Retirement
=============================== ============================= ==================
January 2002 0 0
------------------------------- ----------------------------- ------------------
January 2003 5 10
------------------------------- ----------------------------- ------------------
January 2004 10 15
------------------------------- ----------------------------- ------------------
January 2005 10 15
------------------------------- ----------------------------- ------------------
(ii) Close more than 5 Stores operated in the
House2Home format during any twelve (12) month period
nor more than 25 overall.
(iii) Permanently close (as distinguished from
converting to the House2Home concept) more than 50
Stores operated in the HomeBase format.
(iv) Close any Store other than by a going out of
business or similar event conducted by a
Nationally Recognized Inventory Liquidator acceptable
to the Administrative Agent.
5-7. TITLE TO ASSETS.
(a) The Borrowers are, and shall hereafter remain, the owners
of the Collateral free and clear of all Encumbrances with the
exceptions of:
(i) Collateral sold, conveyed or disposed of as
permitted by this Agreement.
(ii) Permitted Encumbrances.
(b) No Borrower has, and none shall have possession of, any
property on consignment to that Borrower, the Cost of which,
when aggregated with the Cost of Inventory on which there is
an Encumbrance, exceeds four percent (4%) of the Cost of all
of the Borrowers' Inventory at that time.
(c) No Borrower shall acquire or obtain the right to use any
Equipment, the acquisition or right to use of which Equipment
is otherwise permitted by this Agreement, in which Equipment
any third party has an interest, except for:
(i) Equipment which is merely incidental to the
conduct of that Borrower's business.
(ii) Equipment which is not directly or indirectly
necessary to the conduct of a Liquidation.
(iii) Equipment, the acquisition or right to use of
which has been consented to by the Administrative
Agent, which consent may be conditioned solely upon the
Administrative Agent's receipt of an agreement
(substantially in the form of EXHIBIT 5:5-7(c),
annexed hereto).
5-8. INDEBTEDNESS. The Borrowers do not and shall not hereafter
have any Indebtedness other than Permitted Indebtedness.
5-9. INSURANCE.
(a) EXHIBIT 5:5-9, annexed hereto, is a schedule of all
property, liability, and business interruption insurance
policies owned by the Borrowers or under which any Borrower
is the named insured. Each of such policies is in full force
and effect. Neither the issuer of any such policy nor any
Borrower is in default or violation of any such policy.
(b) The Borrowers shall have and maintain at all times
insurance covering such risks, in such amounts, containing such
terms, in such form, for such periods, and written by such
companies as is consistent with sound and prudent industry
practice.
(c) All insurance carried by the Borrowers shall provide for a
minimum of thirty (30) days' written notice of cancellation
to the Collateral Agent and all such insurance which covers
the Collateral shall include an endorsement in favor of the
Collateral Agent, which endorsement shall provide that the
insurance, to the extent of the Collateral Agent's interest
therein, shall not be impaired or invalidated, in whole or in
part, by reason of any act or neglect of any Borrower or by the
failure of any Borrower to comply with any warranty or condition
of the policy.
(d) The coverage reflected on EXHIBIT 5:5-9 presently
satisfies the foregoing requirements, it being recognized by
each Borrower, however, that such requirements may change
hereafter to reflect changing circumstances.
(e) The Lead Borrower shall furnish the Administrative Agent
from time to time with certificates or other evidence
satisfactory to the Administrative Agent regarding compliance
by the Borrowers with the foregoing requirements.
(f) In the event of the failure by the Borrowers to maintain
insurance as required herein, the Administrative Agent, at its
option, and at the Borrowers' expense, may obtain such
insurance, provided, however, the Administrative Agent's
obtaining of such insurance shall not constitute a cure or waiver
of any Event of Default occasioned by the Borrowers' failure to
have maintained such insurance.
5-10. LICENSES. Except for matters which, individually and in the
aggregate could not reasonably be expected to have a Material
Adverse Effect:
(a) Each license, distributorship, franchise, and similar
agreement issued to, or to which any Borrower is a party is
in full force and effect.
(b) No party to any such license or agreement is in default or
violation thereof.
(c) No Borrower has received any notice or threat of
cancellation of any such license or agreement.
5-11. LEASES.
(a) EXHIBIT 5:5-11, annexed hereto, is a schedule of all
presently effective Capital Leases as of the Second Restatement
Date. (Exhibit 5:5-5 includes a list of all other presently
effective Leases).
(b) As of the Second Restatement Date:
(i) Each of such Leases and Capital Leases is in full
force and effect as of the Second Restatement Date.
(ii) No party to any such Lease or Capital Lease is
in default or violation of any such Lease or Capital
Lease.
(iii) No Borrower has received any notice or threat
of cancellation of any such Lease or Capital Lease
except for matters which individually and in the
aggregate would not reasonably be expected to have a
Material Adverse Effect.
(c) Each Borrower hereby authorizes the Administrative Agent
at any time and from time to time while any Borrower is InDefault
to contact any of the Borrowers' respective landlords in
order to confirm the Borrowers' continued compliance with
the terms and conditions of the Lease(s) between the subject
Borrower and that landlord and to discuss such issues,
concerning the subject Borrower's occupancy under such
Lease(s), as the Administrative Agent may determine.
5-12. REQUIREMENTS OF LAW. Each Borrower is in compliance with, and
shall hereafter comply with and use its assets in
compliance with, all Requirements of Law except where the
failure of such compliance will not reasonably be expected
to have a Material Adverse Effect. No Borrower has received
any notice of any violation of any Requirement of Law
(other than of a violation which has no more than a de minimis
adverse effect on the Borrowers' business or assets),
which violation reasonably could be expected to have a
Material Adverse Effect.
5-13. LABOR RELATIONS.
(a) As of the Second Restatement Date, no Borrower is
presently a party to any collective bargaining or other labor
contract.
(b) There is not presently pending and, to any Borrower's
knowledge, there is not threatened any of the following which
reasonably could be expected to have a Material Adverse Effect:
(i) Any strike, slowdown, picketing, work
stoppage, or employee grievance process.
(ii) Any proceeding against or affecting any
Borrower relating to the alleged violation of any
Applicable Law pertaining to labor relations or before
National Labor Relations Board, the Equal
Employment Opportunity Commission, or any
comparable governmental body, organizational
activity, or other labor or employment dispute against
or affecting any Borrower, which, if determined
adversely to that Borrower could have a Material
Adverse Effect.
(iii) Any lockout of any employees by any Borrower
(and no such action is contemplated by any Borrower).
(iv) Any application for the certification of a
collective bargaining agent.
(c) No event has occurred or circumstance exists which
could provide the basis for any work stoppage or other labor
dispute which reasonably could be expected to have a Material
Adverse Effect.
(d) Each Borrower:
(i) Has complied in all material respects with all
Applicable Law relating to employment, equal
employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective
bargaining, the payment of social security and
similar taxes, occupational safety and health, and
plant closing.
(ii) Is not liable for the payment of a material
amount of compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for
that Borrower's failure to comply with any Applicable
Law referenced in Section 5:5-13(d)(i).
5-14. MAINTENANCE AND DISPOSITION OF COLLATERAL. The Borrowers shall:
(a) Keep the Collateral in good order and repair (ordinary
reasonable wear and tear and insured casualty excepted).
(b) Not suffer or cause the waste or destruction of any
material part of the Collateral.
(c) Not use any of the Collateral in violation of any
policy of insurance thereon.
(d) Not sell, lease, or otherwise dispose of any of the
Collateral, other than the following:
(i) The sale of Inventory, which sale is otherwise in
conformity with this Agreement.
(ii) The sale of Collateral by one Borrower to
another, which sale or other disposition is otherwise
in conformity with this Agreement.
(iii) The disposal of Equipment which is obsolete,
worn out, or damaged beyond repair, which Equipment is
replaced to the extent necessary to preserve or improve
the operating efficiency of any Borrower.
(iv) The disposal of equipment in concert with
Store closures permitted by Section 5:5-6.
(v) Permitted Real Estate Transactions.
(vi) The sale, to independent third parties, of
trademarks associated with the HomeBase concept.
(vii) The turning over to the Agent of all Receipts
as provided herein.
(viii) The disposition of any non-merchandise
inventory (such as labels, bags, and packaging
materials); damaged goods; return to vendor
merchandise; packaways; consigned inventory; and other
similar categories of Goods otherwise in compliance
with this Agreement.
5-15. REAL ESTATE TRANSACTIONS.
(a) The Borrowers, shall, and shall cause their Subsidiaries
to, actively market for sale and to use their respective best
efforts to sell all of their real estate on which any
Discontinued Store is located, each of which sales shall be
subject, however, to Section 5:5-15(b) and 5:5-15(c).
(b) The net cash proceeds to the seller from any such sale of
real estate shall be not less than the following:
(i) Except as permitted by Section
5:5-15(b)(ii), 72% of the then Real Estate FLV of such
real estate.
(ii) The Borrowers and such Subsidiaries may sell
owned real estate in one or more transactions in
which the net cash proceeds to the seller from each
such sale(s) is less than 72% of the then Real Estate
FLV, provided that the cumulative aggregate result of
the following, determined with respect to such sale(s),
does not exceed $4 Million:
(A) 72% of the Real Estate FLV of all such
real estate which has been sold in transactions
in which the net proceeds to the seller are less
than such 72%
Minus
(B) The actual net cash proceeds to the
seller(s) from all of such sales.
(c) Each seller of any real estate shall create a perfected
Collateral Interest in favor of the Collateral Agent to secure
the Liabilities (subject only to Permitted Encumbrances and
Collateral Interest Restrictions) in any noncash proceeds of
any such sale.
(d) Each Borrower shall timely, punctually, and faithfully
perform (within applicable grace periods) all of their respective
covenants and warranties to the Administrative Agent and/or
the Collateral Agent in each leasehold mortgage granted by
that Borrower to the Administrative Agent and/or the Collateral
Agent and shall cause each Subsidiary of that Borrower to timely,
punctually, and faithfully perform (within applicable grace
periods) all of their respective covenants and warranties to the
Administrative Agent and/or the Collateral Agent in each
mortgage granted by that Subsidiary to the Administrative
Agent and/or the Collateral Agent.
5-16. TAXES.
(a) With respect to the Borrowers' federal, state, and local
tax liability and obligations:
(i) The Lead Borrower, in compliance in all
material respects with Applicable Law, has properly
filed all returns due to be filed up to the date of this
Agreement, other than any return, the failure of which
to so file would not reasonably be expected to have
more than a de minimis adverse effect on the
Borrowers.
(ii) Except as described on EXHIBIT 5:5-16, as of the
Second Restatement Date:
(A) No audit or examination of the books and
records of any Borrower is being conducted by any
taxing authority.
(B) No agreement is extant which waives or
extends any statute of limitations applicable to
the right of any taxing authority to assert a
deficiency or make any other claim for or in
respect to federal income taxes.
(C) No issue has been raised in any tax
examination of any Borrower which, by application
of similar principles, reasonably could be
expected to result in the assertion of a
material deficiency for any fiscal year open
for examination, assessment, or claim by any
taxing authority.
(D) No Borrower is aware of any facts or
circumstances such that any claim could be made
against such Borrower by any taxing authority
where the result of such claim could reasonably
be expected to have a Material Adverse Effect.
(b) The Borrowers have, and hereafter shall: pay, as
they become due and payable, all taxes and unemployment
contributions and other charges of any kind or nature
levied, assessed or claimed against any Borrower or the
Collateral by any person or entity whose claim could result
in an Encumbrance upon any asset of any Borrower or by any
governmental authority; properly exercise any trust
responsibilities imposed upon any Borrower by reason of
withholding from employees' pay or by reason of any
Borrower's receipt of sales tax or other funds for the
account of any third party; timely make all contributions and
other payments as may be required pursuant to any Employee
Benefit Plan now or hereafter established by any Borrower;
and timely file all tax and other returns and other reports
with each governmental authority to whom any Borrower is
obligated to so file, provided, however, the Lead Borrower,
after establishing proper reserves, may in good faith and by
appropriate proceedings contest any tax, assessment, or other
governmental charge, subject however, to Section 5:5-16(c).
(c) No Borrower shall suffer or permit any tax lien to be
filed against it, which tax lien includes any Collateral
which consists of Inventory, Account, or a right to payment of
that Borrower, where such tax lien could have priority over the
Liabilities.
5-17. NO MARGIN XXXXX.Xx Borrower is engaged in the business of
extending credit for the purpose of purchasing or carrying
any margin stock (within the meaning of Regulations U, T, and
X of the Board of Governors of the Federal Reserve System of
the United States). No part of the proceeds of any borrowing
hereunder will be used at any time to purchase or carry any
such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock.
5-18. ERISA. Except for matters which individually or in the aggregate
are not reasonably expected to have a Material Adverse Effect,
no Borrower nor any ERISA Affiliate ever has or hereafter shall:
(a) Fail to be in compliance with that Borrower's Employee
Benefit Plan.
(b) Fail timely to file all reports and filings required by
ERISA to be filed by any Borrower.
(c) Engage in any "prohibited transactions" or "reportable
events" (respectively as described in ERISA).
(d) Engage in, or commit, any act such that a tax or penalty
could be imposed upon any Borrower on account thereof pursuant
to ERISA.
(e) Accumulate any material funding deficiency within the
meaning of ERISA.
(f) Terminate any Employee Benefit Plan such that a lien could
be asserted against any assets of any Borrower on account
thereof pursuant to ERISA.
(g) Be a member of, contribute to, or have any obligation
under any Employee Benefit Plan which is a multiemployer plan
within the meaning of Section 4001(a) of ERISA.
5-19. HAZARDOUS MATERIALS.
(a) Except for matters which individually or in the aggregate
are not reasonably expected to have a Material Adverse Effect,
no Borrower has ever: (i) been legally responsible for any
release or threat of release of any Hazardous Material or (ii)
received notification of the incurrence of any expense in
connection with the assessment, containment, or removal of
any Hazardous Material for which that Borrower would be
responsible.
(b) Each Borrower shall: (i) dispose of any Hazardous Material
only in compliance in all material respects with all
Environmental Laws and (ii) have possession of any Hazardous
Material only in the ordinary course of that Borrower's
business and in compliance in all material respects with
all Environmental Laws.
(c) The Lead Borrower shall provide the Administrative Agent
with written notice upon any Borrower's obtaining knowledge of
any incurrence of any expense or loss by any governmental
authority or other Person in connection with the assessment,
containment, or removal of any Hazardous Material, for which
expense or loss any Borrower may be liable, where such expense
or loss reasonably could be expected to have a Material Adverse
Effect.
5-20. LITIGATION. Except as described in EXHIBIT 5:5-20, annexed
hereto, there is not presently pending or threatened by or
against any Borrower any suit, action, proceeding, or
investigation which, if determined adversely to any Borrower,
could reasonably be expected to have a Material Adverse Effect.
5-21. DIVIDENDS. INVESTMENTS. CORPORATE ACTION.
(a) No Borrower shall:
(i) Pay any cash dividend or make any other
distribution in respect of any class of that Borrower's
capital stock, except that the Parent may declare
and issue dividends of its own capital stock.
(ii) Own, redeem, retire, purchase, or acquire any of
any Borrower's capital stock other than in
consequence of a Permitted Repurchase.
(iii) Invest in or purchase any stock or securities
or rights to purchase any such stock or securities,
of any Person other than the following:
(A) A Permitted Repurchase.
(B) A Permitted Investment.
(iv) Merge or consolidate or be merged or
consolidated with or into any other corporation or
other entity other than a Permitted Merger.
(v) Consolidate any of that Borrower's operations
with those of any other Person other than of another
Borrower.
(vi) Organize or create any Affiliate other than a
Permitted Subsidiary.
(vii) Subordinate any debts or obligations owed to
that Borrower by any third party to any other debts
owed by such third party to any other Person.
(viii) Acquire any assets other than in the ordinary
course and conduct of that Borrower's business as
conducted at the execution of this Agreement.
(b) The Parent shall not permit any Subsidiary to undertake
any of the foregoing actions unless, if that Affiliate were a
Borrower, that Affiliate could have done so.
5-22. LOANS. No Borrower shall make any loans or advances to, nor
acquire the Indebtedness of, any Person, provided, however, the
foregoing does not prohibit any of the following:
(a) Advance payments made to that Borrower's suppliers in the
ordinary course.
(b) Advances to that Borrower's officers, employees, and
salespersons with respect to reasonable expenses to be incurred
by such officers, employees, and salespersons for the benefit of
that Borrower, which expenses are properly substantiated by
the person seeking such advance and properly reimbursable by that
Borrower.
(c) Loans by one Borrower to another, not to exceed $1 Million
at any one time outstanding, but only at a time when the
unpaid principal balance of the Loan Account is less than
$25,000.00.
(d) Permitted Intercompany Loans.
5-23. PROTECTION OF ASSETS. The Administrative Agent, in the
Administrative Agent's discretion, and from time to time, if an
Event of Default has occurred and is continuing, may discharge
any tax or Encumbrance on any of the Collateral, or take any
other action which the Administrative Agent reasonably may
deem necessary or desirable to repair, insure, maintain,
preserve, collect, or realize upon any of the Collateral. The
Administrative Agent shall not have any obligation to undertake
any of the foregoing and shall have no liability on account of
any action so undertaken except where there is a specific finding
in a judicial proceeding (in which the Administrative Agent has
had an opportunity to be heard), from which finding no
further appeal is available, that the Administrative Agent
had acted in actual bad faith or in a grossly negligent manner.
The Borrowers shall pay to the Administrative Agent,
on demand, or the Administrative Agent, in its discretion,
may add to the Loan Account, all amounts paid or incurred by the
Administrative Agent pursuant to this section 5:5-23.
5-24. LINE OF BUSINESS. No Borrower shall engage in any business other
than the business in which it is currently engaged, the
business which will result from the execution of the House2Home
Conversion (the conduct of each of which is as reflected in the
Business Plan), or a business reasonably related thereto.
5-25. AFFILIATE TRANSACTIONS. No Borrower shall make any payment,
nor give any value to any Affiliate except for Permitted
Affiliate Transactions.
5-26. FURTHER ASSURANCES.
(a) No Borrower is the owner of, nor has it any interest in,
any property or asset which, immediately upon the satisfaction of
the conditions precedent to the effectiveness of the amendment
and restatement of the 2001 Agreement (Article 4:) will not be
subject to a perfected Collateral Interest in favor of the
Collateral Agent (subject only to Permitted Encumbrances
and Collateral Interest Restrictions) to secure the Liabilities.
(b) Except in consequence of the consummation of a Permitted
Real Estate Transaction (as to which, see Section 5:5-15),
no Borrower will hereafter have any interest in, nor acquire
any asset or property which, is not subject to such a perfected
Collateral Interest in favor of the Collateral Agent
to secure the Liabilities (subject only to Permitted Encumbrances
and Collateral Interest Restrictions).
(c) Each Borrower shall execute and deliver to the
Administrative Agent such instruments, documents, and papers,
and shall do all such things from time to time hereafter as the
Administrative Agent may request to carry into effect the
provisions and intent of this Agreement; to protect and
perfect the Collateral Agent's Collateral Interests in the
Collateral; and to comply with all applicable statutes and
laws, and facilitate the collection of the Receivables
Collateral. Each Borrower shall execute all such instruments as
may be required by the Collateral Agent with respect to the
recordation and/or perfection of the Collateral Interests
created or contemplated herein.
(d) Each Borrower hereby designates the Collateral Agent as
and for that Borrower's true and lawful attorney, with
full power of substitution, to sign and file any financing
statements in order to perfect or protect the Collateral Agent's
Collateral Interests in the Collateral.
(e) This Agreement constitutes an authenticated record which
authorizes the Collateral Agent to file such financing
statements as the Collateral Agent determines as appropriate
to perfect or protect the Collateral Interests created by this
Agreement.
(f) A carbon, photographic, or other reproduction of this
Agreement or of any financing statement or other instrument
executed pursuant to this Section 5:5-26 shall be sufficient
for filing to perfect the security
interests granted herein.
5-27. ADEQUACY OF DISCLOSURE.
(a) All financial statements furnished to each Agent and each
Lender by each Borrower have been prepared in accordance with
GAAP consistently applied and present fairly the condition of
the Borrowers at the date(s) thereof and the results of
operations and cash flows for the period(s) covered (provided
however, that unaudited financial statements are subject to
normal year end adjustments and to the absence of footnotes).
There has been no change in the Consolidated financial
condition, results of operations, or cash flows of the
Borrowers since the date(s) of such financial statements,
other than changes in the ordinary course of business, which
changes have not been materially adverse, either singularly or
in the aggregate or as reflected in the Business Plan.
(b) As of the Second Restatement Date, no Borrower has any
contingent obligations or obligation under any Lease or
Capital Lease which is not reflected in the Borrowers'
Consolidated financial statements (or in the footnotes
included with such statements) furnished to each Agent and each
Lender prior to the execution of this Agreement.
(c) To the best knowledge of the Borrowers, no document,
instrument, agreement, or paper now or hereafter given to any
Agent or to any Lender by or on behalf of each Borrower or any
guarantor of the Liabilities in connection with the
execution of this Agreement by each Agent and each Lender
contains or will contain any untrue statement of a material
fact or omits or, when taken as a whole, will omit to state a
material fact necessary in order to make the statements therein
not misleading. There is no fact known to any
Borrower (other than risks disclosed by the Parent to the
Administrative Agent or in the Parent's filings with the SEC)
which has, or which, in the foreseeable future could reasonably
be expected to have, a Material Adverse Effect.
5-28. NO RESTRICTIONS ON LIABILITIES. No Borrower shall enter into or
permit any Affiliate or Subsidiary to directly or indirectly
become subject to any agreement which prohibits or restricts,
in any manner, any Borrower's or any such Affiliate's or
Subsidiary's:
(a) Creation of, and granting of Collateral Interests in favor
of the Collateral Agent other than the following:
(i) In connection with a Permitted Real Estate
Transaction (as to which, see Section 5:5-15).
(ii) By documentation which evidences solely a
purchase money security interest in Equipment otherwise
permitted by this Agreement.
(b) Ability to incur Liabilities.
5-29. OTHER COVENANTS. No Borrower shall indirectly do or cause to be
done any act which, if done directly by that Borrower, would
breach any covenant contained in this Agreement.
ARTICLE 6: FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
6-1. MAINTAIN RECORDS. The Borrowers shall:
(a) At all times, keep proper books of account, in which full,
true, and accurate entries shall be made of all of the
Borrowers' financial transactions, all in accordance with
GAAP applied consistently with prior periods to fairly
reflect the Consolidated financial condition of the Borrowers
at the close of, and its results of operations for, the periods
in question.
(b) Timely provide the Administrative Agent with those
financial reports, statements, and schedules required by
this Article 6: or otherwise, each of which reports, statements
and schedules shall be prepared, to the extent applicable,
in accordance with GAAP applied consistently with prior
periods to fairly reflect the Consolidated financial condition
of the Borrowers at the close of, and the results of
operations for, the period(s) covered therein.
(c) At all times, keep accurate current records of the
Collateral including, without limitation, accurate current
stock, cost, and sales records of its Inventory, accurately
and sufficiently itemizing and describing the kinds, types,
and quantities of Inventory and the cost and selling prices
thereof.
(d) At all times, retain independent certified public
accountants who are reasonably satisfactory to the
Administrative Agent and instruct such accountants to fully
cooperate with, and be available to, the Administrative Agent
to discuss the Borrowers' financial performance, financial
condition, operating results, controls, and such other matters,
within the scope of the retention of such accountants,
as may be raised by the Administrative Agent.
(e) Not change any Borrower's fiscal year.
6-2. ACCESS TO RECORDS.
(a) Each Borrower shall accord the Administrative Agent with
access from time to time at reasonable times, on reasonable
notice, as the Administrative Agent may require to all
properties owned by or over which any Borrower has control.
The Administrative Agent shall have the right, and each
Borrower will permit the Administrative Agent from
time to time as Administrative Agent may request, to examine,
inspect, copy, and make extracts from any and all of the
Borrowers' books, records, electronically stored data,
papers, and files. Each Borrower shall make all of that
Borrower's copying facilities available to the Administrative
Agent.
(b) Each Borrower hereby authorizes the Administrative Agent
to:
(i) Inspect, copy, duplicate, review, cause to be
reduced to hard copy, run off, draw off, and otherwise
use any and all computer or electronically stored
information or data which relates to any Borrower, or any
service bureau, contractor, accountant, or other
person, and directs any such service bureau, contractor,
accountant, or other person fully to cooperate with the
Administrative Agent with respect thereto.
(ii) Verify, in a manner consistent with customary
commercial financing practices, at any time the
Collateral or any portion thereof, including
verification with Account Debtors, and/or with each
Borrower's computer billing companies, collection
agencies, and accountants and to sign the name of each
Borrower on any notice to each Borrower's Account Debtors
or verification of the Collateral.
(c) The Administrative Agent from time to time may designate
one or more representatives to exercise the Administrative
Agent's rights under this Section 6:6-2 as fully as if
the Administrative Agent were doing so.
6-3. NOTICE TO ADMINISTRATIVE AGENT.
(a) The Lead Borrower shall provide the Administrative Agent
with written notice promptly upon the occurrence of any of
the following events, which written notice shall be with
reasonable particularity as to the facts and
circumstances in respect of which such notice is being
given:
(i) Any change in any Borrower's Senior Officers.
(ii) Any ceasing of any Borrower's making of payment,
in the ordinary course, to any of its creditors where
the result thereof could reasonably be expected to have a
Material Adverse Effect.
(iii) Any Material Adverse Change.
(iv) Any Borrower's becoming InDefault.
(v) Any intention on the part of any Borrower to
discharge that Borrower's present independent
accountants or any withdrawal or resignation by such
independent accountants from their acting in such
capacity (as to which, see Subsection 6:6-1(d)).
(vi) Any litigation which, if determined adversely to
any Borrower, could reasonably be expected to have a
Material Adverse Effect on the financial condition of that
Borrower.
(b) The Lead Borrower shall provide the Administrative Agent
and the Term Lender with written notice promptly (with reasonable
particularity as to the relevant facts and circumstances) of the
following:
(i) Any failure by any Borrower to pay rent at any of
that Borrower's locations, which failure continues for
more than three (3) days following the last day on which
such rent was payable where the result of such failure
could reasonably be expected to be a Material Adverse
Effect.
(ii) The receipt, by any Borrower, of notice of the
initiation, pendency, or completion of the foreclosure
of the relevant lessor's interest in any demised
premises which is the subject of a leasehold mortgage to
secure the Liabilities.
(c) The Lead Borrower shall:
(i) Provide the Administrative Agent , promptly after
being distributed, with copies of any materials
distributed to the shareholders of the Parent
(qua such shareholders).
(ii) Provide the Administrative Agent , promptly
after being filed with the SEC, all registration
statements, annual, quarterly, and other reports filed
by the Parent.
(iii) At the request of the Administrative Agent,
from time to time provide the Administrative Agent with
copies of all advertising (including copies of all print
advertising and duplicate tapes of all video and radio
advertising).
(iv) At the request of the Administrative Agent, from
time to time, provide the Administrative Agent with
a copy of all offers to purchase any real estate reported
to the Administrative Agent pursuant to the monthly
financial reporting requirements set out in
Section 6:6-5 since the date through which the Lead
Borrower has previously provided such copies.
(v) Provide the Administrative Agent, promptly
following receipt by the Parent, with a copy of any
management letter or similar communications from any
accountant of the Parent.
6-4. BORROWING BASE CERTIFICATE. The Lead Borrower shall provide the
Administrative Agent with a Borrowing Base Certificate (in the
form of EXHIBIT 6:6-4 annexed hereto, as such form may be
revised from time to time by the Administrative Agent) as
follows:
(a) By 1:00PM on each Wednesday, as of the close of business
on the then immediately prior Saturday.
(b) With each Revolving Credit loan request made pursuant to
Section 2:2-7.
6-5. MONTHLY REPORTS. Monthly, the Lead Borrower shall provide
the Administrative Agent with the following:
(a) Timely as provided in EXHIBIT 6:6-5, annexed hereto, those
financial statements and reports described in EXHIBIT 6:6-5.
(b) The officer's compliance certificate described in Section
6:6-8.
6-6. QUARTERLY REPORTS. Quarterly, within Forty Five (45) days
following the end of each of the Borrowers' first three Fiscal
quarters, the Lead Borrower shall provide the Administrative
Agent with the following:
(a) A management prepared financial statement of the Borrowers
for the period from the beginning of the Borrowers' then
current fiscal year through the end of the subject quarter,
with comparative information for the same period of the
previous fiscal year, which statement shall include, at a
minimum, a balance sheet, income statement (which income
statement shall be on a store specific and on a
"consolidated" basis), statement of changes in
shareholders' equity, and cash flows and comparisons of same
Store sales for the corresponding quarter of the then
immediately previous year, as well as to the
Business Plan.
(b) A copy of the Borrowers' 10-Q filed with the SEC, for the
first second, and third fiscal quarters only.
(c) The officer's compliance certificate described in Section
6:6-8.
6-7. ANNUAL REPORTS. Annually, within ninety (90) days following the
end of the Borrowers' Fiscal year, the Lead Borrower
shall furnish the Administrative Agent with the following:
(a) The 10-K report for the Borrowers for that year, filed, or
to be filed with the SEC, which shall have been prepared
by, and bear the unqualified opinion of, the Borrowers'
independent certified public accountants (i.e. said statement
shall be "certified" by such accountants) and shall
include, at a minimum (with comparative information for the
then prior fiscal year) a balance sheet, income statement,
statement of changes in shareholders' equity, and cash flows.
(b) The officer's compliance certificate described in Section
6:6-8.
6-8. OFFICERS' CERTIFICATES. The Lead Borrower shall cause a Senior
Officer to provide such Person's Certificate with those monthly,
quarterly, and annual statements to be furnished pursuant to this
Agreement, which Certificate shall:
(a) Indicate that the subject statement was prepared in
accordance with GAAP or the requirements of this Agreement,
consistently applied in the preparation thereof and with prior
such statements of like kind furnished pursuant to this
Agreement, and presents fairly the Consolidated financial
condition of the Borrowers at the close of, and the results of
the Borrowers' operations and cash flows for, the period(s)
covered, subject, however to the following:
(i) Usual year end adjustments (this exception shall
not be included in the Certificate which accompanies
such annual statement).
(ii) Material Accounting Changes (in which event,
such Certificate shall include a schedule (in reasonable
detail) of the effect of each such Material
Accounting Change) not previously specifically
taken into account in the determination of the financial
performance covenant imposed pursuant to Section 6:6-11.
(iii) The absence of footnotes to monthly and
quarterly statements.
(b) Indicate either that (i) no Borrower
is InDefault, or (ii) if such an event has occurred, its nature
(in reasonable detail) and the steps (if any) being taken
or contemplated by the Borrowers to be taken on account thereof.
(c) Include calculations concerning the Borrowers' compliance
(or failure to comply) at the date of the subject statement
with each of the financial performance covenants included in
Section 6:6-11 hereof.
6-9. INVENTORIES, APPRAISALS, AND AUDITS.
(a) The Administrative Agent, at the expense of the Borrowers,
may participate in and/or observe each count and/or physical
inventory of so much of the Collateral as consists of Inventory
which is undertaken on behalf of the Borrowers.
(b) The Borrowers, shall cause physical inventories to be
undertaken as follows:
(i) Subject to Section 6:6-9(b)(ii), the
Borrowers, at their own expense, shall cause at least
one (1) physical inventory to be undertaken in each
fiscal year during which this Agreement is in effect
(the scheduling of which inventory shall be subject
to the Administrative Agent's discretion after the
occurrence and continuance of any Event of Default)
conducted by such inventory takers as are satisfactory to
the Administrative Agent and the Parent and which
employs a methodology consistent with that which had
been employed in physical inventories taken prior to
November 1, 1999.
(ii) The Administrative Agent may cause or require
additional inventories to be undertaken (in each
instance, at the expense of the Borrowers) if an Event
of Default or an Availability Trigger Event has
occurred and is continuing.
(iii) On the Administrative Agent's reasonable
request from time to time, the Lead Borrower shall
provide the Administrative Agent with a copy of the
preliminary results ("flash report") of a physical
inventory conducted pursuant to this Section 6:6-9(b)
(as well as of any other physical inventory undertaken
by any Borrower) within ten (10) days following the
completion of such inventory.
(iv) The Lead Borrower, within thirty (30) days
following the end of each of the Borrowers' Fiscal years,
shall provide the Administrative Agent with a
reconciliation of the results of the Borrowers' physical
inventories taken during the Fiscal year then just
ended and, to the extent not previously so posted,
shall post such results to the Borrowers' stock ledger
and, as applicable to the Borrowers' other financial
books and records.
(c) Upon the Administrative Agent's reasonable request from
time to time, the Borrowers shall permit the Administrative
Agent to obtain an appraisal, from time to time, of the
Borrowers' Inventory.
(i) Subject to Section 6:6-9(c)(ii) , the Borrowers
shall reimburse the Administrative Agent for the
Administrative Agent's out-of-pocket cost of up to four
(4) such appraisals in any Twelve (12) month period during
which this Agreement is in effect.
(ii) If such expense obligation arose while an Event
of Default or an Availability Trigger Event has
occurred and is continuing, the Borrowers shall
reimburse the Administrative Agent for all such
appraisals.
(d) Upon the Administrative Agent's reasonable request from
time to time, the Borrowers shall permit the Administrative
Agent to obtain an appraisal, from time to time, of the
Borrowers' leasehold interests and of real estate owned by any
Borrower or by any Borrower's Subsidiary.
(i) Subject to Section 6:6-9(d)(ii), the Borrowers
shall reimburse the Administrative Agent for the
Administrative Agent's out-of-pocket cost of one such
appraisal of each such leasehold and parcel of owned real
estate in any Twelve (12) month period during
which this Agreement is in effect.
(ii) If such expense obligation arose while an Event
of Default or an Availability Trigger Event has
occurred and is continuing, the Borrowers shall reimburse
the Administrative Agent for all such appraisals.
(e) The Borrowers shall reimburse the Administrative Agent for
the Administrative Agent's out-of-pocket cost of commercial
finance audits of the Borrowers' books and records as follows:
(i) Subject to Section 6:6-9(e)(ii), the Borrowers
shall reimburse the Administrative Agent for the
Administrative Agent's out-of-pocket cost of up to four
(4) such audits in any Twelve (12) month period during
which this Agreement is in effect.
(ii) If such expense obligation arose while an Event
of Default or an Availability Trigger Event has
occurred and is continuing, the Borrowers shall reimburse
the Administrative Agent for all such audits. Revolving
Credit Lenders, at their respective own expense, may
accompany and observe any commercial finance audit of
the Borrower's books which the Administrative Agent
causes to be undertaken.
6-10. ADDITIONAL FINANCIAL INFORMATION.
(a) In addition to all other information required to be
provided pursuant to this Article 6:, the Lead Borrower
promptly shall provide the Administrative Agent (and any
guarantor of the Liabilities), with such other and additional
information concerning the Borrowers, the Collateral, the
operation of the Borrowers' business, and the Borrowers'
financial condition, including original counterparts of
financial reports and statements, as the Administrative Agent
may from time to time request from the Lead Borrower.
(b) The Lead Borrower may provide the Administrative Agent,
from time to time hereafter, with updated forecasts of
the Borrowers' anticipated performance and operating results.
(c) In all events, the Lead Borrower, no earlier than Ninety
(90) days prior to the end of its fiscal year nor later than the
last day of the first fiscal quarter of the Borrower's
fiscal year, shall furnish the Administrative Agent with an
updated and extended forecast which shall go out at least
through the end of the subject fiscal year and shall include
an income statement, balance sheet, and statement of cash flow,
by month, each prepared in conformity with GAAP and consistent
with the Borrowers' then current practices.
(d) Each Agent and each Lender agrees that, except with the
prior consent of the Lead Borrower, it will not disclose
any confidential information with respect to the Borrowers
which is now or in the future furnished pursuant to this
Agreement or any other Loan Document, provided, however,
that each Agent and each Lender may disclose any such
information as follows:
(i) To the following (but only if the Person to whom
so disclosed is instructed to treat the such
information as confidential):
(A) To its employees, Affiliates, advisors
or counsel.
(B) To any prospective or actual transferee
or participant in connection with any
contemplated transfer or participation of
this Agreement, the Liabilities, or any
interest therein by any Agent or any Lender,
which transfer or participation is permitted
by the terms of this Agreement.
(C) To any Agent or any Lender.
(ii) As has become generally available to the public.
(iii) As may be required or appropriate in any
report, statement or testimony submitted to any
municipal, state, or federal regulatory body having or
claiming to have jurisdiction over that Agent or that
Lender.
(iv) As may be required or appropriate in respect to
any summons or subpoena or in connection with any
litigation
(v) In order to comply with any law, order,
regulation or ruling applicable to that Agent or that
Lender.
6-11. FINANCIAL PERFORMANCE COVENANTS. The Borrowers shall observe and
comply with those financial performance covenants set forth on
EXHIBIT 6:6-11, annexed hereto. Compliance with such financial
performance covenants shall be made as if no Material
Accounting Changes had been made (other than any Material
Accounting Changes specifically taken into account in the
setting of such covenants). The Administrative Agent may
determine the Borrowers' compliance with such covenants based
upon financial reports and statements provided by the Lead
Borrower to the Administrative Agent (whether or not such
financial reports and statements are required to be furnished
pursuant to this Agreement) as well as by reference to interim
financial information provided to, or commercially reasonably
developed by, the Administrative Agent.
ARTICLE 7: - USE OF COLLATERAL:
7-1. USE OF INVENTORY COLLATERAL.
(a) No Borrower shall engage in any sale or other
disposition of Inventory which consists of:
(i) Any sale or other disposition which is not for
fair consideration in the conduct of the Borrowers'
business in the ordinary course unless conducted as
part of the House2Home Conversion and/or unless
conducted in connection with any Store closure
(including any Store sale) permitted by this Agreement.
(ii) Sales or other dispositions to creditors.
(iii) Sales or other dispositions in bulk except in
connection with any Store closure permitted by this
Agreement.
(iv) Sales of any Collateral in breach of any
provision of this Agreement.
(b) No sale of Inventory by any Borrower shall be on
consignment, approval, or under any other circumstances such
that, with the exception of the Borrowers' customary return
policy applicable to the return of Inventory purchased by the
Borrowers' retail customers in the ordinary course, such
Inventory may be returned to a Borrower without the consent of
the Agent.
7-2. INVENTORY QUALITY. All Inventory now owned or hereafter acquired
by any Borrowers is and will be of good and merchantable
quality and free from defects (other than (x) quality problems
and defects within customary trade tolerances and (y) subject
to insured casualties).
7-3. ADJUSTMENTS AND ALLOWANCES. Each Borrower may grant such
allowances or other adjustments to that Borrower's Account
Debtors (exclusive of extending the time for payment of any
Account or Account Receivable in excess of $100,000.00, which
shall not be done without first obtaining the Administrative
Agent's prior written consent in each instance) as that Borrower
may reasonably deem to accord with sound business practice.
7-4. VALIDITY OF ACCOUNTS.
(a) The amount of each Account shown on the books, records,
and invoices of the Borrowers represented as owing by each
Account Debtor is and will be the correct amount actually owing
by such Account Debtor and shall have been fully earned by
performance by the Borrowers.
(b) No Borrower has any knowledge of any impairment of the
validity or collectibility of any of the Accounts which are
included in the calculation of the Borrowing Base
(except as stated therein and except as subject to
adjustments to Credit Card Receivables in the ordinary
course of business). The Lead Borrower shall notify the
Administrative Agent of any material such impairment promptly
after any Borrower becomes aware of any such impairment.
7-5. NOTIFICATION TO ACCOUNT DEBTORS. The Agent shall have the right
(after any Event of Default has occurred and is continuing) to
notify any of the Borrowers' Account Debtors to make payment
directly to the Agent and to collect all amounts due on account
of the Collateral.
ARTICLE 8: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
8-1 IMPLEMENTATION OF CASH CONCENTRATION SYSTEM.
(a) On the Second Restatement Date, the Blocked Account
Agreement is in full force and effect.
(b) The contents of each DDA (other than the Operating
Account) and of the Blocked Account and of the Boston
Concentration Account constitute Collateral and Proceeds
of Collateral.
(c) The Lead Borrower shall cause those actions described in
this Section 8:8-1(c) to take place on or before the first
request, pursuant to Section 2:2-7, for a loan under the
Revolving Credit:
(i) The amendment of the Blocked Account Agreement
with Xxxxx Fargo Bank, N.A. in a manner
satisfactory to the Administrative Agent so as to
provide that all disbursements from that account are made
solely at the direction of the Administrative Agent.
(ii) The implementation of a cash concentration
system such that all cash proceeds of sales, credit
card processor remittances, and Receipts which are
not remitted to that account at Xxxxx Fargo Bank,
N.A. which is subject to the Blocked Account
Agreement are remitted directly to the Boston
Concentration Account.
(iii) The operation, in a manner satisfactory to the
Administrative Agent, of the revamped cash
concentration system contemplated by Sections
8:8-1(c)(i) and 8:8-1(c)(ii) for a period of not less
than one week.
8-2. THE CONCENTRATION AND OPERATING ACCOUNTS.
(a) The following checking accounts have been or will be
established (and are so referred to herein):
(i) The "Boston Concentration Account" (so referred
to herein): Established by the Administrative Agent with
Fleet National Bank.
(ii) The "Operating Account" (so referred to herein):
One more accounts established by the Lead Borrower with
Fleet National Bank (the Operating Account is referred
to as the "Disbursement Account" in the 1999 Loan
Agreement).
(b) The Borrowers shall pay all fees and charges of, and
maintain such impressed balances as may be required by the
depository in which any account is opened as required hereby
(even if such account is opened by and/or is the property of the
Administrative Agent).
8-3. TERMINATION OF CASH CONCENTRATION SYSTEM.
(a) This Section 8:8-3 shall apply only in the event of and
following the Term Loan Retirement.
(b) The Administrative Agent, on written request of the Lead
Borrower, shall take steps to reverse the cash concentration
system described in Section 8:8-1(c), provided that both of
the following conditions are then satisfied:
(i) On the date on which such written request is
given, Excess Availability has been at least Seventy
Five Million Dollars ($75 Million) for not less than
five (5) consecutive Business Days.
(ii) No Event of Default has occurred and is
continuing.
(c) Following the Administrative Agent=s having taken those
steps required by Section 8:8-3(b), the Agent may (and on
instructions of the SuperMajority Lenders shall ) reimplement
the cash management system described in Section 8:8-1(c) upon
the occurrence of either of the following (in which event,
the Lead Borrowers and the Borrowers shall cooperate
with the Administrative Agent in such reimplementation):
(i) Any Event of Default .
(ii) An Availability Trigger Event.
8-4. PAYMENT OF LIABILITIES.
(a) On each Business Day, the Administrative Agent shall apply
the then collected balance of the Boston Concentration
Account (net of fees charged, and of such impressed balances as
may be required by the bank at which the Boston Concentration
Account is maintained): First, towards the SwingLine Loans and
Second, towards the unpaid balance of the Loan Account and all
other Liabilities which are then due and payable, provided,
however, for purposes of the calculation of interest on the
unpaid principal balance of the Loan Account, such payment
shall be deemed to have been made One (1) Business Day after such
transfer.
(b) The following rules shall apply to deposits and payments
under and pursuant to this Agreement:
(i) Funds shall be deemed to have been deposited to
the Boston Concentration Account on the Business
Day on which deposited, provided that notice of such
deposit is available to the Administrative Agent by
2:00PM on that Business Day.
(ii) Funds paid to the Administrative Agent, other
than by deposit to the Boston Concentration Account,
shall be deemed to have been received on the Business
Day when they are good and collected funds, provided
that notice of such payment is available to the
Administrative Agent by 2:00PM on that Business Day.
(iii) If notice of a deposit to the Boston
Concentration Account (Section 8:8-4(b)(i)) or
payment (Section 8:8-4(b)(ii)) is not available to the
Administrative Agent until after 2:00PM on a Business
Day, such deposit or payment shall be deemed to have
been made at 9:00AM on the then next Business Day.
(iv) All deposits to the Boston Concentration Account
and other payments to the Administrative Agent are
subject to clearance and collection.
(c) All credits against the Liabilities shall be conditional
upon final payment to the Administrative Agent for the account of
each Lender of the items giving rise to such credits. The amount
of any item credited against the Liabilities which is charged
back against the Administrative Agent or any Lender for any
reason or is not so paid shall be a Liability, whether or not the
item so charged back or not so paid is returned.
(d) The Administrative Agent shall transfer to the Operating
Account any surplus in the Boston Concentration Account
remaining after the application towards the Liabilities referred
to in Section 8:8-4(a), above (less those amount which are to be
netted out, as provided therein) provided, however, in the event
that
(i) any Borrower is InDefault; and
(ii) one or more L/C's are then outstanding,
then the Administrative Agent may establish a funded
reserve of up to 105% of the aggregate Stated Amounts
of such L/C's. Such funded reserve shall either be
(i) returned to the Borrowers in the event that no
Borrower is In Default or (ii) applied towards the
Liabilities following the occurrence of any Event
of Default described in Section 11:11-13 or
Acceleration.
8-5. THE OPERATING ACCOUNT. Except as otherwise specifically provided
in, or permitted by, this Agreement, all checks shall be drawn
by the Borrower upon, and other disbursements shall be made by
the Borrower solely from, the Operating Account or from its
payroll account.
ARTICLE 9: - GRANT OF SECURITY INTEREST:
9-1. GRANT OF SECURITY INTEREST. To secure the Borrowers' prompt,
punctual, and faithful performance of all and each of the
Liabilities, each Borrower hereby grants to the Collateral
Agent, for the ratable benefit of the Lenders, a continuing
security interest in and to, and assigns to the Collateral
Agent, for the ratable benefit of the Lenders, the following,
and each item thereof, whether now owned or now due, or in
which that Borrower has an interest, or hereafter acquired,
arising, or to become due, or in which that Borrower obtains an
interest, and all products, Proceeds, substitutions, and
accessions of or to any of the following (all of which,
together with any other property in which the Collateral Agent
may in the future be granted a Collateral Interest, is referred
to herein as the "Collateral"):
(a) All Accounts and accounts receivable.
(b) All Inventory.
(c) All General Intangibles.
(d) All Equipment.
(e) All Goods.
(f) All Farm Products.
(g) All Fixtures.
(h) All Chattel Paper.
(i) All Letter-of-Credit Rights.
(j) All Payment Intangibles.
(k) All Supporting Obligations.
(l) All books, records, and information relating to the
Collateral and/or to the operation of each Borrower's
business, and all rights of access to such books,
records, and information, and all property in which
such books, records, and information are stored,
recorded, and maintained.
(m) All Investment Property, Instruments, Documents,
Deposit Accounts, money, policies and certificates of
insurance, deposits, impressed accounts, compensating
balances, cash, or other property.
(n) All insurance proceeds, refunds, and premium rebates,
including, without limitation, proceeds of fire and
credit insurance, whether any of such proceeds,
refunds, and premium rebates arise out of any of the
foregoing. (9:9-1(a) through 9:9-1(m)) or otherwise.
(o) All liens, guaranties, rights, remedies, and
privileges pertaining to any of the foregoing
(9:9-1(a) through 9:9-1(n)), including the right of
stoppage in transit.
9-2. EXTENT AND DURATION OF SECURITY INTEREST.
(a) The security interest created herein is subject to any
applicable Collateral Interest Restrictions.
(b) The security interest created and granted herein is in
addition to, and supplemental of, any security interest
previously granted by any Borrower to the Collateral Agent
and shall continue in full force and effect applicable to all
Liabilities until both (a) all Liabilities have been paid
and/or satisfied in full and (b) the security interest
created herein is specifically terminated in writing by a
duly authorized officer of the Collateral Agent.
(c) It is intended that, with respect to any term used herein
to describe Collateral, which term is defined in either
(or both) the UCC as in effect on the date when this Agreement
was executed by the Borrowers or in UCC9'99, the meaning
given that term shall be the more encompassing of the two
definitions.
(d) It is further intended that the scope of all Collateral
Interests created by any Borrower to secure the Liabilities be
broadly construed in favor of the Administrative Agent and
that, subject to any applicable Collateral Interest
Restrictions, they cover all assets of each Borrower.
(e) The Collateral Agent shall execute and deliver all such
instruments and documents as the Lead Borrower from time to time
reasonably may request to facilitate the consummation of a
Permitted Real Estate Transaction, provided in each instance,
that none of such instruments or documents create any obligations
or liability to any Agent or any Lender not specifically
provided for in this Agreement.
ARTICLE 10: - AGENTS AS BORROWER'S ATTORNEY-IN-FACT:
10-1. APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower hereby irrevocably
constitutes and appoints each Agent (acting through any of its
officers) as that Borrower's true and lawful attorney, with full
power of substitution, following the occurrence and during the
continuance of an Event of Default, to convert the Collateral
into cash at the sole risk, cost, and expense of that Borrower,
but for the sole benefit of the Agents and the Lenders.
The rights and powers granted the Collateral Agent by this
appointment include but are not limited to the right and power
to:
(a)Prosecute, defend, compromise, or release any action
relating to the Collateral.
(b)Sign change of address forms to change the address to which
each Borrower's mail is to be sent to such address as the
Collateral Agent shall designate; receive and open each
Borrower's mail; remove any Receivables Collateral and
Proceeds of Collateral therefrom and turn over the balance of
such mail either to the Lead Borrower or to any trustee in
bankruptcy or receiver of the Lead Borrower, or
other legal representative of a Borrower whom the Collateral
Agent determines to be the appropriate person to whom to so
turn over such mail.
(c) Endorse the name of the relevant Borrower in favor of the
Collateral Agent upon any and all checks, drafts, notes,
acceptances, or other items or instruments; sign and endorse the
name of the relevant Borrower on, and receive as secured party,
any of the Collateral, any invoices, schedules of
Collateral, freight or express receipts, or bills of lading,
storage receipts, warehouse receipts, or other documents of
title respectively relating to the Collateral.
(d) Sign the name of the relevant Borrower on any notice to
that Borrower's Account Debtors or verification of the
Receivables Collateral; sign the relevant Borrower's name on
any Proof of Claim in Bankruptcy against Account Debtors, and
on notices of lien, claims of mechanic's liens, or
assignments or releases of mechanic's liens securing the
Accounts.
(e) Take all such action as may be necessary to obtain the
payment of any letter of credit and/or banker's acceptance of
which any Borrower is a beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver,
alter or supply goods, if any, necessary to fulfill in whole
or in part the purchase order of any customer of each Borrower.
(g) Use, license or transfer any or all General Intangibles of
each Borrower.
10-2. NO OBLIGATION TO ACT. The Collateral Agent shall not be obligated
to do any of the acts or to exercise any of the powers
authorized by Section 10:10-1 herein, but if the Collateral
Agent elects to do any such act or to exercise any of such
powers, it shall not be accountable for more than it
actually receives as a result of such exercise of power,
and shall not be responsible to any Borrower for any act or
omission to act except for any act or omission to act as to
which there is a final determination made in a judicial
proceeding (in which proceeding the Collateral Agent has had
an opportunity to be heard) which determination includes a
specific finding that the subject act or omission to act had
been grossly negligent or in actual bad faith.
ARTICLE 11: - EVENTS OF DEFAULT:
The occurrence of any event described in this Article 11: respectively
shall constitute an "Event of Default" herein.
11-1. FAILURE TO PAY PRINCIPAL OR INTEREST. The failure by any Borrower
to pay any principal or interest when due under the Revolving Credit
or the Term Loan.
11-2. FAILURE TO MAKE OTHER PAYMENTS. The failure by any Borrower to
pay within five (5) days of when due, any fee, or other payment
Liability (other than as set forth in Section 11:11-1, above) under any
of the Loan Documents.
11-3. FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD). The
failure by any Borrower to promptly, punctually, faithfully and timely
perform, discharge, or comply with any covenant or Liability not
otherwise described in Section 11:11-1 or Section 11:11-2 hereof,
and included in any of the following provisions hereof:
Section Relates to :
-----------------------------------------------------
5:5-5 Location of Collateral
5:5-7 Title to Assets
5:5-8 Indebtedness
5:5-9 Insurance Policies
5:5-16(c) Tax Liens
5:5-21 Dividends. Investments. Other
Corporate Actions
5:5-25 Affiliate Transactions
6:6-11 Financial Performance Covenants
7:7-1 Use of Inventory Collateral
Article 8: Cash Management
11-4. FINANCIAL REPORTING REQUIREMENTS. The failure by the Lead
Borrower or any Borrower to promptly, punctually, faithfully and
timely perform, discharge, or comply with the financial reporting
requirements included in Article 6:, subject, however, to the
following limited number of grace periods applicable to certain of
those requirements:
==================================== ============== ========================= ================================
REPORT/STATEMENT REQUIRED GRACE PERIOD MAXIMUM NUMBER OF GRACE PERIODS
BY SECTION
==================================== ============== ========================= ================================
Borrowing Base Certificate 6:6-4, 6:6-4 One Business Day Six in any 12 months
------------------------------------ -------------- -------------------------- --------------------------------
Monthly Reports 6:6-5 Six Business Days Three in any 12 months
------------------------------------ -------------- -------------------------- --------------------------------
Notice of Change in Senior Officers 6:6-3(a)(i) Twenty Days One in any 12 months
------------------------------------ -------------- -------------------------- --------------------------------
Notice of Material Adverse Change 6:6-3(a)(iii) Ten Business Days One in any 12 months
------------------------------------ -------------- -------------------------- --------------------------------
Retain Accountants 6:6-3(a)(v) Twenty Days Once
==================================== ============== ========================== ================================
11-5. FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD). The
failure by any Borrower, twenty (20) days following the earlier, with
respect to that Borrower's failure to promptly, punctually and
faithfully perform, discharge, or comply with any covenant or
Liability not described in any of Sections 11:11-1, 11:11-2,
11:11-3, or 11:11-4 hereof, to have cured such failure:
(a) That Borrower's knowledge of such failure to perform,
discharge, or comply.
(b) Written notice from the Administrative Agent to the
Lead Borrower of such failure to perform, discharge or comply.
11-6. MANDATORY ACCELERATION. The Administrative Agent's receipt
of an Acceleration Notice pursuant to Section 14:14-3(b) or 14:14-3(c).
11-7. MISREPRESENTATION. Any representation or warranty at
any time made by any Borrower to any Agent or any Lender was not true
or complete in all material respects when given.
11-8. ACCELERATION OF OTHER DEBT. BREACH OF LEASE. The occurrence of
any event such that any Indebtedness of any Borrower in excess of $5
Million to any creditor other than the Administrative Agent or any
Revolving Credit Lender could be accelerated or, without the consent
of any Borrower, any Leases with monthly base rent aggregating not
less than $200,000.00 could be terminated prior to their stated
termination date (whether or not the subject creditor or lessor takes
any action on account of such occurrence).
11-9. DEFAULT UNDER OTHER AGREEMENTS. The occurrence of any breach of
any covenant or failure timely to discharge any Liability imposed by,
or of any default under, any agreement (including any Loan Document)
between any Agent or any Lender and any Borrower or instrument given
by any Borrower to any Agent or any Lender and the expiry, without
cure, of any applicable grace period (notwithstanding that the
subject Agent or Lender may not have exercised all or any of its rights
on account of such breach or default).
11-10. UNINSURED LOSS.The occurrence, in consequence of any single
event or series of connected events, of the uninsured loss, theft,
damage, or destruction of or to the Collateral in excess of the
following:
(a) If an Availability Trigger Event has occurred and is then
continuing (i.e. no Availability Cure has thereafter occurred):
In excess of $5 Million.
(b) Under all circumstances other than as described in Section
11:11-10(a): $10 Million.
11-11. ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.
(a) The service of process upon any Agent or any Lender or any
Participant seeking to attach, by trustee, mesne, or other process, any
of funds of any Borrower on deposit with, or assets of any Borrower in
the possession of, that Agent or that Lender or such Participant.
(b) The entry of any judgment against any Borrower, which
judgment is not satisfied (if a money judgment) or appealed from (with
execution or similar process stayed) within thirty (30) days of
its entry and which judgment, when added to all other money
judgments, aggregates in excess of $100,000.00.
(c) The occurrence of any Material Adverse Effect.
11-12. BUSINESS FAILURE..Any act by, against, or relating to any
Borrower, or its property or assets, which act constitutes the
determination, by any Borrower, to initiate a program of partial or
total self-liquidation (not otherwise permitted by this
Agreement); application for, consent to, or sufferance of the
appointment of a receiver, trustee, or other person, pursuant to court
action or otherwise, over all, or any part of any Borrower's property;
the granting of any trust mortgage or execution of an assignment for the
benefit of the creditors of any Borrower, or the occurrence of any
other voluntary or involuntary liquidation or extension of debt
agreement for any Borrower; the offering by or entering into by any
Borrower of any composition, extension, or any other arrangement
seeking relief from or extension of the debts of any Borrower;
or the initiation of any judicial or non-judicial proceeding or
agreement by, against, or including any Borrower which seeks or
intends to accomplish a reorganization or arrangement with creditors;
and/or the initiation by or on behalf of any Borrower of the liquidation
or winding up of all or any part of any Borrower's business or
operations, and if such action is initiated against any Borrower, it is
not timely contested, or if so timely contested, is not dismissed within
sixty (60) days of when initiated.
11-13. BANKRUPTCY. The failure by any Borrower to generally pay
the debts of that Borrower as they mature; adjudication of
bankruptcy or insolvency relative to any Borrower; the entry of an order
for relief or similar order with respect to any Borrower in any
proceeding pursuant to the Bankruptcy Code or any other federal
bankruptcy law; the filing of any complaint, application, or
petition by any Borrower initiating any matter in which any
Borrower is or may be granted any relief from the debts of that
Borrower pursuant to the Bankruptcy Code or any other insolvency
statute or procedure; the filing of any complaint, application, or
petition against any Borrower initiating any matter in which that
Borrower is or may be granted any relief from the debts of that
Borrower pursuant to the Bankruptcy Code or any other insolvency
statute or procedure, which complaint, application, or petition is
not timely contested in good faith by that Borrower by appropriate
proceedings or, if so contested, is not dismissed within sixty (60) days
of when filed.
11-14. DEFAULT BY GUARANTOR OR AFFILIATE. The occurrence of any of the
foregoing Events of Default with respect to any guarantor of the
Liabilities, or the occurrence of any of the foregoing Events of
Default with respect to any such guarantor as if such guarantor were a
"Borrower" described therein.
11-15. INDICTMENT - FORFEITURE. The indictment of, or institution of
any legal process or proceeding against, any Borrower, under any federal,
state, municipal, and other civil or criminal statute, rule,
regulation, order, or other requirement having the force of law
where the relief, penalties, or remedies sought or available
include the forfeiture of any property of that Borrower and/or the
imposition of any stay or other order, the effect of which, could
reasonably be expected to have a Material Adverse Effect.
11-16. TERMINATION OF GUARANTY. The termination or attempted
termination of any guaranty by any guarantor of the Liabilities.
11-17. CHALLENGE TO LOAN DOCUMENTS.
(a) Any challenge by or on behalf of any Borrower or any
guarantor of the Liabilities to the validity of any Loan Document
or the applicability or enforceability of any Loan Document strictly in
accordance with the subject Loan Document's terms or which seeks to
void, avoid, limit, or otherwise adversely affect any security
interest created by or in any Loan Document or any payment made
pursuant thereto.
(b) Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable
strictly in accordance with the subject Loan Document's terms or
which voids, avoids, limits, or otherwise adversely affects any
security interest created by any Loan Document or any payment made
pursuant thereto.
11-18. CHANGE IN CONTROL. Any Change in Control.
ARTICLE 12: - RIGHTS AND REMEDIES UPON DEFAULT:
00-0 Xxxxxxxxxxxx.Xxxx the occurrence of any Event of Default as
described in Section 11:11-13, all Indebtedness of the Borrower to the
Lenders shall be immediately due and payable. Upon the occurrence
of any Event of Default other than as described in Section 11:11-13,.
the Administrative Agent may (and on the issuance of Acceleration
Notice(s) requisite to the causing of Acceleration, the Administrative
Agent shall) declare all Indebtedness of the Borrowers to the Lenders to
be immediately due and payable and may exercise all of the
Administrative Agent's Rights and Remedies (and the Collateral Agent may
likewise exercise all of its rights and remedies upon default)
as the Administrative Agent from time to time thereafter determines as
appropriate.
12-2. RIGHTS OF ENFORCEMENT. The Collateral Agent shall have all of
the rights and remedies of a secured party upon default under the
UCC, in addition to which the Collateral Agent shall have all and each
of the following rights and remedies:
(a) To give notice to any bank at which any DDA or Blocked
Account is maintained and in which Proceeds of Collateral are deposited,
to turn over such Proceeds directly to the Collateral Agent.
(b) To give notice to any customs broker of any of the
Borrowers to follow the instructions of the Collateral Agent as provided
in any written agreement or undertaking of such broker in favor of
the Collateral Agent.
(c) To collect the Receivables Collateral with or without the
taking of possession of any of the Collateral.
(d) To take possession of all or any portion of the
Collateral.
(e) To sell, lease, or otherwise dispose of any or all of the
Collateral, in its then condition or following such preparation or
processing as the Collateral Agent deems advisable and with or
without the taking of possession of any of the Collateral.
(f) To conduct one or more going out of business sales which
include the sale or other disposition of the Collateral.
(g) To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.
12-3. SALE OF COLLATERAL.
(a) Any sale or other disposition of the Collateral may be at
public or private sale upon such terms and in such manner as the
Collateral Agent deems advisable, having due regard to compliance
with any statute or regulation which might affect, limit, or apply
to the Collateral Agent's disposition of the Collateral.
(b) The Collateral Agent, in the exercise of the Collateral
Agent's rights and remedies upon default, may conduct one or more going
out of business sales, in the Collateral Agent's own right or by one or
more agents and contractors. Such sale(s) may be conducted upon any
premises owned, leased, or occupied by any Borrower. The Collateral
Agent and any such agent or contractor, in conjunction with any such
sale, may augment the Inventory with other goods (all of which other
goods shall remain the sole property of the Collateral Agent or such
agent or contractor). Any amounts realized from the sale of such goods
which constitute augmentations to the Inventory (net of an allocable
share of the costs and expenses incurred in their disposition) shall be
the sole property of the Collateral Agent or such agent or contractor
and neither any Borrower nor any Person claiming under or in right of
any Borrower shall have any interest therein.
(c) Unless the Collateral is perishable or threatens to
decline speedily in value, or is of a type customarily sold on a
recognized market (in which event the Collateral Agent shall provide the
Lead Borrower such notice as may be practicable under the
circumstances), the Collateral Agent shall give the Lead Borrower at
least ten (10) days prior written notice of the date, time, and place
of any proposed public sale, and of the date after which any private
sale or other disposition of the Collateral may be made. Each
Borrower agrees that such written notice shall satisfy all
requirements for notice to that Borrower which are imposed under the
UCC or other applicable law with respect to the exercise of the
Collateral Agent's rights and remedies upon default.
(d) The Collateral Agent, the Administrative Agent, and any
Lender may purchase the Collateral, or any portion of it at any sale
held under this Article.
(e) If any of the Collateral is sold, leased, or otherwise
disposed of by the Collateral Agent on credit, the Liabilities shall
not be deemed to have been reduced as a result thereof unless and
until payment is finally received thereon by the Collateral Agent.
(f) The Collateral Agent shall turn over to the Administrative
Agent the proceeds of the exercise by the Collateral Agent of its
rights and remedies under this Article 12:. The Administrative
Agent shall apply the proceeds of the Collateral Agent's exercise of
its rights and remedies upon default pursuant to this Article 12:
in accordance with Sections 14:14-7 and 14:14-8.
12-4. OCCUPATION OF BUSINESS LOCATION. In connection with the
Collateral Agent's exercise of the Collateral Agent's rights under this
Article 12:, the Collateral Agent may enter upon, occupy, and use any
premises owned or occupied by each Borrower, and may exclude each
Borrower from such premises or portion thereof as may have been so
entered upon, occupied, or used by the Collateral Agent. The
Collateral Agent shall not be required to remove any of
the Collateral from any such premises upon the Collateral Agent's
taking possession thereof, and may render any Collateral unusable to the
Borrowers. In no event shall the Collateral Agent be liable to any
Borrower for use or occupancy by the Collateral Agent of any premises
pursuant to this Article 12:, nor for any charge (such as wages for any
Borrower's employees and utilities) incurred in connection with the
Collateral Agent's exercise of the Collateral Agent's Rights and
Remedies.
12-5. GRANT OF NONEXCLUSIVE LICENSE. Each Borrower hereby grants to the
Collateral Agent a royalty free nonexclusive irrevocable license to use,
apply, and affix any trademark, trade name, logo, or the like in which
any Borrower now or hereafter has rights, such license being with
respect to the Collateral Agent's exercise of the rights hereunder
including, without limitation, in connection with any completion of
the manufacture of Inventory or sale or other disposition of Inventory.
12-6. ASSEMBLY OF COLLATERAL. The Collateral Agent may require any
Borrower to assemble the Collateral and make it available to the
Collateral Agent at the Borrowers' sole risk and expense at a place
or places which are reasonably convenient to both the Collateral Agent
and the Lead Borrower.
12-7. RIGHTS AND REMEDIES. The rights, remedies, powers, privileges,
and discretions of the Agents hereunder (herein, the Agents'
Rights and Remedies") shall be cumulative and not exclusive of any
rights or remedies which it would otherwise have. No delay or
omission by an Agent in exercising or enforcing any of the Agents'
Rights and Remedies shall operate as, or constitute, a waiver
thereof. No waiver by an Agent of any Event of Default or of any default
under any other agreement shall operate as a waiver of any other
default hereunder or under any other agreement. No single or partial
exercise of any of the Agents' Rights or Remedies, and no express or
implied agreement or transaction of whatever nature entered into
between any Agent and any person, at any time, shall preclude the other
or further exercise of the Agents' Rights and Remedies. No waiver by
any Agent of any of the Agents' Rights and Remedies on any one occasion
shall be deemed a waiver on any subsequent occasion, nor shall it be
deemed a continuing waiver. The Agents' Rights and Remedies may
be exercised at such time or times and in such order of preference
as the Agents may determine. The Agents' Rights and Remedies may be
exercised without resort or regard to any other source of satisfaction
of the Liabilities.
ARTICLE 13: - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
13-1. REVOLVING CREDIT FUNDING PROCEDURES. Subject to Section 13:13-2:
(a) The Agent shall advise each Revolving Credit Lender, no
later than 2:00PM on a date on which any Revolving Credit Loan
(other than a SwingLine Loan) is to be made on that date. Such advice,
in each instance, may be by telephone or facsimile transmission,
provided that if such advice is by telephone, it shall be confirmed in
writing. Advice of a Revolving Credit Loan shall include the amount
of and interest rate applicable to the subject Revolving Credit
Loan.
(b) Subject to that Revolving Credit Lender's Revolving Credit
Dollar Commitment, each Revolving Credit Lender, by no later than the
end of business on the day on which the subject Revolving Credit Loan
is to be made, shall Transfer that Revolving Credit Lender's
Revolving Credit Percentage Commitment of the subject Revolving Credit
Loan to the Administrative Agent.
13-2. SWINGLINE LOANS.
(a) In the event that, when a Revolving Credit Loan is
requested, the aggregate unpaid balance of the SwingLine Loan is less
than the SwingLine Loan Ceiling, then the SwingLine Lender may advise
the Administrative Agent that the SwingLine Lender has determined to
include up to the amount of the requested Revolving Credit Loan as
part of the SwingLine Loan. In such event, the SwingLine Lender shall
Transfer the amount of the requested Revolving Credit Loan to the
Administrative Agent.
(b) The SwingLine Loan shall be converted to a Revolving
Credit Loan in which all Revolving Credit Lenders participate as follows:
(i) At any time and from time to time, the SwingLine
Lender may advise the Administrative Agent that all, or any
part of the SwingLine Loan is to be converted to a Revolving
Credit Loan in which all Revolving Credit Lenders participate.
(ii) At the initiation of a Liquidation, the then
entire unpaid principal balance of the SwingLine Loan
shall be converted to a Revolving Credit Loan in which all
Revolving Credit Lenders participate. In either such event,
the Administrative Agent shall advise each Revolving
Credit Lender of such conversion as if, and with the same
effect as if such conversion were the making of a Revolving
Credit Loan as provided in Section 13:13-1.
(c) The SwingLine Lender, in separate capacities, may also be
one or more Agents, a Revolving Credit Lender, and the Term Lender.
(d) The SwingLine Lender, in its capacity as SwingLine Lender,
is not a "Revolving Credit Lender" for any of the following purposes:
(i) Except as otherwise specifically provided in the
relevant Section, any distribution pursuant to Section 14:14-7.
(ii) Determination of whether the requisite Loan
Commitments have Consented to action requiring such Consent.
13-3. ADMINISTRATIVE AGENT'S COVERING OF FUNDINGS:
(a) ........Each Revolving Credit Lender shall make available
to the Administrative Agent, as provided herein, that Revolving Credit
Lender's Revolving Credit Percentage Commitment of the following:
(i) Each Revolving Credit Loan, up to the maximum
amount of that Revolving Credit Lender's Revolving Credit
Dollar Commitment of the Revolving Credit Loans.
(ii) Up to the maximum amount of that Revolving
Credit Lender's Revolving Credit Dollar Commitment of each
L/C Drawing (to the extent that such L/C Drawing is not
"covered" by a Revolving Credit Loan as provided herein).
(b) In all circumstances, the Administrative Agent may:
(i) Assume that each Revolving Credit Lender, subject
to Section 13:13-3(a), timely shall make available
to the Administrative Agent that Revolving Credit Lender's
Revolving Credit Percentage Commitment of each Revolving
Credit Loan, notice of which is provided pursuant to Section
13:13-1 and shall make available, to the extent not "covered"
by a Revolving Credit Loan, that Revolving Credit Lender's
Revolving Credit Percentage Commitment of any honoring of an
L/C.
(ii) In reliance upon such assumption, make available
the corresponding amount to the Borrowers.
(iii) Assume that each Revolving Credit Lender timely
shall pay, and shall make available, to the Administrative
Agent all other amounts which that Revolving Credit Lender is
obligated to so pay and/or make available hereunder or under
any of the Loan Documents.
(c) In the event that, in reliance upon any of such
assumptions, the Administrative Agent makes available, a Revolving
Credit Lender's Revolving Credit Percentage Commitment of one or more
Revolving Credit Loans, or any other amount to be made available
hereunder or under any of the Loan Documents, which amount a Revolving
Credit Lender (a "Delinquent Revolving Credit Lender") fails to provide
to the Administrative Agent within One (1) Business Day of written
notice of such failure, then:
(i) The amount which had been made available by the
Administrative Agent is an " Administrative Agent's Cover"
(and is so referred to herein).
(ii) All interest paid by the Borrowers on account of
the Revolving Credit Loan or coverage of the subject L/C
Drawing which consist of the Administrative Agent's Cover
shall be retained by the Administrative Agent until the
Administrative Agent's Cover, with interest, has been paid.
(iii) The Delinquent Revolving Credit Lender shall
pay to the Administrative Agent, on demand, interest at a rate
equal to the prevailing federal funds rate on any
Administrative Agent's Cover in respect of that Delinquent
Revolving Credit Lender.
(iv) The Administrative Agent shall have succeeded to
all rights to payment to which the Delinquent Revolving
Credit Lender otherwise would have been entitled hereunder
in respect of those amounts paid by or in respect of the
Borrowers on account of the Administrative Agent's Cover
together with interest until it is repaid. Such payments shall
be deemed made first towards the amounts in respect of which
the Administrative Agent's Cover was provided and only then
towards amounts in which the Delinquent Revolving Credit Lender
is then participating. For purposes of distributions to be
made pursuant to Section 13:13-4(a) (which relates to
ordinary course distributions) or Section 14:14-7 (which
relates to distributions of proceeds of a Liquidation)
below, amounts shall be deemed distributable to a
Delinquent Revolving Credit Lender (and consequently,
to the Administrative Agent to the extent to which the
Administrative Agent is then entitled) at the highest level of
distribution (if applicable) at which the Delinquent
Revolving Credit Lender would otherwise have been entitled to
a distribution.
(v) Subject to Subsection 13:13-3(c)(iv), the
Delinquent Revolving Credit Lender shall be entitled to receive
any payments from the Borrowers to which the Delinquent
Revolving Credit Lender is then entitled, provided however
there shall be deducted from such amount and retained by the
Administrative Agent any interest to which the
Administrative Agent is then entitled on account
of Section 13:13-3(c)(ii), above.
(d) A Delinquent Revolving Credit Lender shall not be relieved
of any obligation of such Delinquent Revolving Credit Lender hereunder
(all and each of which shall constitute continuing obligations
on the part of any Delinquent Revolving Credit Lender).
(e) A Delinquent Revolving Credit Lender may cure its status
as a Delinquent Revolving Credit Lender by paying the Administrative
Agent the aggregate of the following:
(i) The Administrative Agent's Cover (to the
extent not previously repaid by the
Borrowers and retained by the Administrative
Agent in accordance with Subsection
13:13-3(c)(iv), above) with respect to that
Delinquent Revolving Credit Lender.
Plus
(ii) The aggregate of the amount payable under
Subsection 13:13-3(c)(iii), above (which
relates to interest to be paid by that
Delinquent Revolving Credit Lender).
Plus
(iii) All such costs and expenses as may be
incurred by the Administrative Agent in the
enforcement of the Administrative Agent's
rights against such Delinquent Revolving
Credit Lender.
13-4. ORDINARY COURSE DISTRIBUTIONS: REVOLVING CREDIT. (This Section
13:13-4 applies unless the provisions of Section 14:14-7 (which relates
to distributions in the event of a Liquidation) become operative).
(a) Weekly, on such day as may be set from time to time by the
Administrative Agent (or more frequently at the Administrative Agent's
option) the Administrative Agent and each Revolving Credit Lender
shall settle up on amounts advanced under the Revolving Credit and
collected funds received in the Concentration Account.
(b) The Administrative Agent shall distribute to the SwingLine
Lender and to each Revolving Credit Lender, such Person's respective
Pro-Rata share of interest payments on the Revolving Credit Loans when
actually received and collected by the Administrative Agent
(excluding the 1 Business Day for settlement provided for in Section
8:8-4(a), which shall be for the account of the Administrative Agent
only). For purposes of calculating interest due to a Revolving Credit
Lender, that Revolving Credit Lender shall be entitled to receive
interest on the actual amount contributed by that Revolving Credit
Lender towards the principal balance of the Revolving Credit Loans
outstanding during the applicable period covered by the interest
payment made by the Borrowers. Any net principal reductions to the
Revolving Credit Loans received by the Administrative Agent in
accordance with the Loan Documents during such period shall not reduce
such actual amount so contributed, for purposes of calculation of
interest due to that Revolving Credit Lender, until the
Administrative Agent has distributed to that Revolving Credit
Lender its pro-rata share thereof.
(c) The Administrative Agent shall distribute fees paid on
account of the Revolving Credit, as follows:
(i) Revolving Credit Commitment Fee: As provided by
separate agreement between the Administrative Agent and each
respective Revolving Credit Lender.
(ii) Administrative Agent's Fee: Retained by and for
the account of the Administrative Agent.
(iii) Fees described in Section 2:2-21(b) (which
relates to fees associated with, among other things, the
issuance of L/C's): Retained by the Issuer.
(iv) All other fees: To the Revolving Credit Lenders,
based on their respective Revolving Credit Percentage
Commitments, except that no Lender shall have any interest
in, or right to receive any part of any interest which
reflects "float" as described in the proviso included in
Section 8:8-4(a). Any such float shall be for the
account of the Administrative Agent only.
(d) No Revolving Credit Lender shall have any interest in, or
right to receive any part of, the Administrative Agent's Fee to be paid
by the Borrowers to the Administrative Agent pursuant to this Agreement.
(e) No Lender shall have any interest in, or right to receive
any part of, the Administrative Agent's Fee to be paid by the Borrowers
to the Administrative Agent pursuant to this Agreement
(f) No Revolving Credit Lender shall have any interest in, or
right to receive any part of in any Term Loan Fees.
(g) Any amount received by the Administrative Agent or the
Collateral Agent as reimbursement for any cost or expense (including
without limitation, attorneys' reasonable fees) shall be
distributed by the Administrative Agent to that Person which is
entitled to such reimbursement as provided in this Agreement (and if
such Person(s) is (are) the Revolving Credit Lenders, pro-rata based
upon their respective Revolving Credit Commitment Percentages at the
date on which the expense, in respect of which such
reimbursement is being made, was incurred).
(h) Each distribution pursuant to this Section 13:13-4 is
subject to Section 13:13-3(c),above.
13-5. ORDINARY COURSE DISTRIBUTIONS : TERM LOAN (This Section 13:13-5
applies unless the provisions of Section 14:14-7 (which relates to
distributions in the event of a Liquidation) become operative). The
Administrative Agent shall distribute to the Term Lender payments on
account of principal of, and interest on, the Term Loan and Term
Loan Fees as received and collected by the Administrative Agent
from the Borrowers in accordance with the provisions of this Agreement
or as made available by the Administrative Agent as the proceeds
of advances under the Revolving Credit.
ARTICLE 14: - ACCELERATION AND LIQUIDATION:
14-1. ACCELERATION NOTICES
(a) The Administrative Agent may give the Collateral Agent and
Revolving Credit Lenders an Acceleration Notice at any time
following the occurrence and continuance of an Event of Default.
(b) The SuperMajority Lenders may give the Administrative
Agent an Acceleration Notice at any time following the
occurrence and continuance of an Event of Default. Such notice may be
by multiple counterparts, provided that counterparts executed by the
requisite Revolving Credit Lenders are received by the Administrative
Agent within a period of five (5) consecutive Business Days.
(c) The Term Lender may give the Administrative Agent an
Acceleration Notice as follows:
(i) At any time following the occurrence and
continuance of an Event of Default which occurs after a
BuyOut.
(ii) At any time following the occurrence of an Event
of Default described in Section 11:11-13.
(iii) At any time following the occurrence of an
Event of Default which occurs after the Revolving Credit
Loan Debt has been paid in full, all L/C's have been cash
collateralized, and there is no obligation on the
Revolving Credit Lenders to make any further loans or to
provide any further financial accommodation under the
Revolving Credit.
(iv) At any time as permitted pursuant to Section
14:14-2.
14-2. MANDATORY ACCELERATION RIGHT OF TERM LENDER:
(a) The Term Lender may initiate a Standstill Period by
written notice to the Administrative Agent at any time after the
occurrence and during the continuance of any Term Loan Action Event.
(b) Upon the expiry of the Standstill Period, the Term Lender
may give the Administrative Agent and the Collateral Agent an
Acceleration Notice unless either 14:14-2(b)(i) or 14:14-2(b)(ii)
is applicable:
(i) Acceleration has been stayed by judicial or
statutory process.
(ii) As applicable:
(A) If the relevant Term Loan Action Event
had been a Term Loan Availability Breach: On any day during
the relevant Standstill Period, no Term Loan Availability
Breach exists or occurs.
(B) If the relevant Term Loan Action Event
is a Minimum Excess Availability Breach: On any day during the
relevant Standstill Period, no Minimum Excess Availability
Breach exists or occurs.
(C) If the relevant Term Loan Action Event
is a Term Loan Payment Breach: All then due Term Loan Payments
(other than those which would be due only if the Term Loan
were accelerated) are paid prior to the expiry of the relevant
Standstill Period.
(c) The occurrence of any Term Loan Action Event during any
Standstill Period (other than the Term Loan Action Event in respect
of which such Standstill Period was initiated) shall give rise to
the right of the Term Lender to initiate a separate Standstill
Period on account of such other Term Loan Action Event.
14-3. ACCELERATION.Unless stayed by judicial or statutory process,
the Administrative Agent shall Accelerate the Revolving Credit
Obligations and the Term Loan Obligations within a commercially
reasonable time following:
(a) The Administrative Agent's giving of an Acceleration
Notice to the Collateral Agent and the Revolving Credit Lenders as
provided in Section 14:14-1(a).
(b) The Administrative Agent's receipt of an Acceleration
Notice from the SuperMajority Lenders, in compliance with Section
14:14-1(b) .
(c) The Administrative Agent's receipt of an Acceleration
Notice from the Term Lender, in compliance with Section 14:14-1(c).
14-4. INITIATION OF LIQUIDATION Unless stayed by judicial or statutory
process, a Liquidation shall be initiated by the Collateral Agent
within a commercially reasonable time following Acceleration of the
Revolving Credit Obligations and the Term Loan Obligations.
14-5. ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION
(a) At the initiation of a Liquidation:
(i) The unpaid principal balance of the SwingLine
Loan (if any) shall be converted, pursuant to Section
13:13-2(b)(ii), to a Revolving Credit Loan in which
all Revolving Credit Lenders participate.
(ii) The Administrative Agent and the Revolving
Credit Lenders shall "net out" each Revolving
Credit Lender's respective contributions towards the
Revolving Credit Loans, so that each Revolving Credit
Lender holds that Revolving Credit Lender's Revolving
Credit Percentage Commitment of the Revolving Credit
Loans and advances.
(b) Following the initiation of a Liquidation, each Revolving
Credit Lender shall contribute, towards any L/C thereafter honored
and not immediately reimbursed by the Borrowers, that Revolving
Credit Lender's Revolving Credit Percentage Commitment of such honoring.
14-6. COLLATERAL AGENT'S CONDUCT OF LIQUIDATION
(a) Any Liquidation shall be conducted by the Collateral
Agent, with the advice and assistance of the Administrative Agent
and the Lenders.
(b) The Collateral Agent may establish one or more Nominees to
"bid in" or otherwise acquire ownership to any Post Foreclosure Asset.
(c) The Collateral Agent shall manage the Nominee and manage
and dispose of any Post Foreclosure Assets with a view towards the
realization of the economic benefits of the ownership of the Post
Foreclosure Assets and in such regard, the Collateral Agent
and/or the Nominee may operate, repair, manage, maintain, develop,
and dispose of any Post Foreclosure Asset in such manner as the
Collateral Agent determines as appropriate under the
circumstances.
(d) Each Agent may decline to undertake or to continue taking
a course of action or to execute an action plan (whether proposed by an
Agent or a Lender) unless indemnified to that Agent's satisfaction by
the Lenders against any and all liability and expense which may be
incurred by that Agent by reason of taking or continuing to take that
course of action or action plan, except for any action taken or
omitted to be taken as to which a final judicial determination
has been or is made (in a proceeding in which that Agent has had an
opportunity to be heard) that that Agent had acted in a grossly
negligent manner, in actual bad faith, or in willful misconduct.
(e) The Administrative Agent and each Lender shall execute all
such instruments and documents not inconsistent with the provisions
of this Agreement as the Administrative Agent and/or the Nominee
reasonably may request with respect to the creation and governance of
any Nominee, the conduct of the Liquidation, and the management and
disposition of any Post Foreclosure Asset.
14-7. DISTRIBUTION OF LIQUIDATION PROCEEDS:
(a) The Collateral Agent may establish one or more reasonably
funded reserve accounts into which proceeds of the conduct of any
Liquidation may be deposited in anticipation of future expenses which may
be incurred by any Agent in the exercise of rights as a secured creditor
of the Borrowers and prior claims which the Agents anticipate may need
to be paid.
(b) The Collateral Agent shall distribute the proceeds of any
Liquidation to the Administrative Agent.
(c) The Administrative Agent shall distribute the net proceeds
of Liquidation, as distributed to the Administrative Agent by the
Collateral Agent pursuant to Section 14:14-7(b), in accordance with the
relative priorities set forth in Section 14:14-8.
(d) Each Lender, on the written request of the Administrative
Agent and/or any Nominee, not more frequently than once each month,
shall reimburse the Agents and/or any Nominee, pro-rata, for any
cost or expense reasonably incurred by the Agents and/or the
Nominee in the conduct of a Liquidation, which amount is not
covered out of current proceeds of the Liquidation, which
reimbursement shall be paid over to and distributed by the
Administrative Agent.
14-8. RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION
(a) The relative priorities to the proceeds of a Liquidation
of Collateral (other than Term Loan Priority Collateral) are as follows:
(i) Subject to Section 14:14-8(c) (which relates
to the allocation of third party costs and
expenses): To the Agents as reimbursement
for all reasonable third party costs and
expenses incurred by the Agents and to
Lenders' Special Counsel and to any funded
reserve established pursuant to Section
14:14-7(a); and then
(ii) To the SwingLine Lender, on account of any
SwingLine loans not converted to Revolving
Credit Loans pursuant to Section
14:14-5(a)(i); and then
(iii) To the Revolving Credit Lenders (other than
any Delinquent Revolving Credit Lender),
pro-rata, to the unpaid principal balance of
Revolving Credit Debt; and then
(iv) To the Revolving Credit Lenders (other than
any Delinquent Revolving Credit Lender),
pro-rata, to accrued interest which
constitutes Revolving Credit Debt; and then
(v) To the Revolving Credit Lenders (other than
any Delinquent Revolving Credit Lender),
pro-rata, to Revolving Credit Fees, other
than the Revolving Credit Early
Termination Fee;and then
(vi) To the Term Lender, to the principal balance
of the Term Loan Obligations (including
capitalized PIK Interest); and then
(vii) To the Term Lender, to accrued interest
which constitutes Term Loan Obligations
(including PIK Interest which has not been
capitalized); and then
(viii) To any Delinquent Revolving Credit Lenders,
pro-rata to amounts to which such Revolving
Credit Lenders otherwise would have been
entitled pursuant to Sections
14:14-8(a)(iii), 14:14-8(a)(iv),and
14:14-8(a)(v) ; and then
(ix) To the Revolving Credit Lenders, pro-rata,
to the extent of the Revolving Credit Early
Termination Fee (if any); and then
(x) To the Term Lender, to any remaining Term
Loan Obligations, including any Term
Loan Early Termination Fee and any Term Loan
Anniversary Fee; and then
(xi) To any other Liabilities; and then
(xii) As provided by applicable law.
(b) The relative priorities to the proceeds of a Liquidation
of Term Loan Priority Collateral are as follows:
(i) Subject to Section 14:14-8(c) (which relates
to the allocation of third party costs and
expenses): To the Agents as reimbursement
for all reasonable third party costs and
expenses incurred by the Agents and to
Lenders' Special Counsel and to any funded
reserve established pursuant to Section
14:14-7(a); and then
(ii) To the Term Lender, to the principal balance
of the Term Loan Obligations (including
capitalized PIK Interest); and then
(iii) To the Term Lender, to accrued interest
which constitutes Term Loan Obligations
(including PIK Interest which has not been
capitalized); and then
(iv) To the Revolving Credit Lenders (other than
any Delinquent Revolving Credit Lender),
pro-rata, to the unpaid principal balance of
Revolving Credit Debt; and then
(v) To the Revolving Credit Lenders (other than
any Delinquent Revolving Credit Lender),
pro-rata, to accrued interest which
constitutes Revolving Credit Debt; and then
(vi) To the Revolving Credit Lenders
(other than any Delinquent Revolving Credit
Lender), pro-rata, to Revolving Credit
Fees, other than the Revolving Credit Early
Termination Fee;and then
(vii) To any Delinquent Revolving Credit Lenders,
pro-rata to amounts to which such Revolving
Credit Lenders otherwise would have been
entitled pursuant to Sections
14:14-8(b)(iv), 14:14-8(b)(v), and
14:14-8(b)(vi) ; and then
(viii) To the Term Lender, to any remaining Term
Loan Obligations, including any Term Loan
Early Termination Fee and any Term Loan
Anniversary Fee; and then
(ix) To the Revolving Credit Lenders, pro-rata,
to the extent of the Revolving Credit Early
Termination Fee (if any); and then
(x) To any other Liabilities; and then
(xi) As provided by applicable law.
(c) The Agents shall allocate their third party costs and
expenses in a commercially reasonable manner.
ARTICLE 15: - THE AGENTS:
15-1. APPOINTMENT OF THE AGENT
(a) Each Lender appoints and designates Fleet Retail
Finance Inc. as the "Administrative Agent" hereunder and under the Loan
Documents.
(b) Each Lender appoints and designates Fleet Retail Finance
Inc. as the "Collateral Agent" hereunder and under the Loan Documents.
(c) Each Lender authorizes each Agent:
(i) To execute those of the Loan Documents and all
other instruments relating thereto to which that Agent is a party.
(ii) To take such action on behalf of the Lenders and
to exercise all such powers as are expressly delegated to that
Agent hereunder and in the Loan Documents and all related
documents, together with such other powers as are reasonably
incident thereto.
(d) The CIT Group/ Business Credit, Inc. has been granted the
title of ADocumentation Agent@, in which capacity, it shall not have
any rights nor any responsibilities. It may resign such position,
at any time, on written notice to the Administrative Agent ; and shall
cease to be Documentation Agent contemporaneous with its ceasing to be
a Revolving Credit Lender.
(e) Foothill Capital Corporation has been granted the title of
"Syndication Agent", in which capacity, it shall not have any rights
nor any responsibilities. It may resign such position, at any time, on
written notice to the Administrative Agent; and shall cease
to be Syndication Agent contemporaneous with its ceasing to be a
Revolving Credit Lender.
15-2. RESPONSIBILITIES OF AGENTS
(a) The Administrative Agent shall have principal
responsibilities for and primary authority for the administration of
the credit facility contemplated by the Loan Agreement and for all
matters for which theCollateral Agent is not responsible. In all
instances where the allocation of responsibility and authority,
as between the Collateral Agent and the Administrative Agent is
in doubt, the Administrative Agent shall be vested with such
responsibility and authority.
(b) The Collateral Agent shall have principal responsibilities
for and primary authority for the conduct of the Liquidation,
(c) Neither Agent shall have any duties or responsibilities
to, or any fiduciary relationship with, any Lender except for those
expressly set forth in this Agreement.
(d) Neither Agent nor any of its Affiliates shall be
responsible to any Lender for any of the following:
(i) Any recitals, statements, representations or
warranties made by any Borrower or any other Person.
(ii) Any appraisals or other assessments of the
assets of any Borrower or of any other Person responsible for
or on account of the Liabilities.
(iii) The value, validity, effectiveness,
genuineness, enforceability, or sufficiency of the Loan
Agreement, the Loan Documents or any other document referred
to or provided fortherein.
(iv) Any failure by any Borrower or any other Person
(other than the subject Agent) to perform its obligations
under the Loan Documents.
(e) Each Agent may employ attorneys, accountants, and other
professionals and agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such
attorneys, accountants, and other professionals or agents or
attorneys-in-fact selected by the subject Agent with
reasonable care. No such attorney, accountant, other
professional, agent, or attorney-in-fact shall be responsible for
any action taken or omitted to be taken by any other such Person.
(f) Neither Agent, nor any of its directors, officers, or
employees shall be responsible for any action taken or omitted to be
taken or omitted to be taken by any other of them in connection herewith
in reliance upon advice of their respective counsel nor, in any other
event except for any action taken or omitted to be taken as to which a
final judicial determination has been or is made (in a proceeding
in which such Person has had an opportunity to be heard) that such
Person had acted in a grossly negligent manner, in actual bad
faith, or in willful misconduct.
(g) Neither Agent shall have any responsibility in any event
for more funds than that Agent actually receives and collects.
(h) The Agents, in their separate capacities as Lenders, shall
have the same rights and powers hereunder as any other Lender.
15-3. CONCERNING DISTRIBUTIONS BY THE AGENTS
(a) Each Agent, in that Agent's reasonable discretion based
upon that Agent's determination of the likelihood that additional
payments will be received, expenses incurred, and/or claims made by
third parties to all or a portion of such proceeds, may delay the
distribution of any payment received on account of the Liabilities.
(b) Each Agent may disburse funds prior to determining that
the sums which that Agent expects to receive have been
finally and unconditionally paid to that Agent. If and to the
extent that Agent does disburse funds and it later becomes apparent
that the Agent did not then receive a payment in an amount equal to
the sum paid out, then any Lender to whom the Agent made the funds
available, on demand from the Agent, shall refund to the
Administrative Agent the sum paid to that person.
(c) If, in the opinion of an Agent, the distribution of any
amount received by that Agent might involve that Agent in liability,
or might be prohibited hereby, or might be questioned by any Person,
then that Agent may refrain from making distribution until that
Agent's right to make distribution has been adjudicated by a court of
competent jurisdiction.
(d) The proceeds of any Lender's exercise of any right of, or
in the nature of, set-off shall be deemed, First, to the extent that a
Lender is entitled to any distribution hereunder, to constitute such
distribution and Second, shall be shared with the other Lenders as if
distributed pursuant to (and shall be deemed as distributions under)
Section 14:14-8.
(e) Each Lender recognizes that the crediting of the Borrowers
with the "proceeds" of any transaction in which a Post Foreclosure
Asset is acquired is a non-cash transaction and that, in consequence,
no distribution of such "proceeds" will be made by the Administrative
Agent to any Lender.
(f) In the event that (x) a court of competent jurisdiction
shall adjudge that any amount received and distributed by the
Administrative Agent is to be repaid or disgorged or (y) the
SuperMajority Lenders determine to effect such repayment or
disgorgement, then each Lender to which any such distribution shall
have been made shall repay, to the Agent which had made such
distribution, that Lender's Pro-Rata share of the amount so
adjudged or determined to be repaid or disgorged.
15-4. DISPUTE RESOLUTION: Any dispute among the Lenders and/or any
Agent concerning the interpretation, administration, or
enforcement of the financing arrangements contemplated by this or any
other Loan Document or the interpretation or administration of this or
any other Loan Document which cannot be resolved amicably shall be
resolved in the United States District Court for the District of
Massachusetts, sitting in Boston or in the Superior Court of Suffolk
County, Massachusetts, to the jurisdiction of which courts each Lender
hereto hereby submits.
15-5. DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS The Administrative
Agent will forward to each Lender, promptly after the Administrative
Agent's receipt thereof, a copy of each notice or other document
furnished to the Administrative Agent pursuant to this Agreement,
including monthly, quarterly, and annual financial statements
received from the Lead Borrower pursuant to Article 6: of this
Agreement, other than any of the following:
(a) Routine communications associated with requests for Revolving
Credit Loans and/or the issuance of L/C's.
(b) Routine or nonmaterial communications.
(c) Any notice or document required by any of the Loan Documents to be
furnished to the Lenders by the Lead Borrower.
(d) Any notice or document of which the Administrative Agent has
knowledge that such notice or document had been forwarded to the
Lenders other than by the Administrative Agent.
15-6. CONFIDENTIAL INFORMATION
(a) Each Lender will maintain, as confidential, all of the
following:
(i) Proprietary approaches, techniques, and methods
of analysis which are applied by the Administrative
Agent in the administration of the credit facility
contemplated by this Agreement.
(ii) Proprietary forms and formats utilized by the
Administrative Agent in providing reports to the
Lenders pursuant hereto, which forms or formats are not
of general currency.
(b) Nothing included herein shall prohibit the disclosure of
any such information as may be required to be provided by judicial
process or by regulatory authorities having jurisdiction over any party
to this Agreement.
15-7. RELIANCE BY AGENTS Each Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram,
telex, or facsimile) reasonably believed by that Agent to be genuine
and correct and to have been signed or sent by or on behalf of the
proper person or persons, and upon advice and statements of
attorneys, accountants and other experts selected by that Agent.
As to any matters not expressly provided for in this Agreement,
any Loan Document, or in any other document referred to therein,
that Agent shall in all events be fully protected in acting, or in
refraining from acting, in accordance with the applicable Consent
required by this Agreement. Instructions given with the requisite
Consent shall be binding on all Lenders.
15-8. NON-RELIANCE ON AGENTS AND OTHER LENDERS
(a) Each Lender represents to all other Lenders and to
the Agents that such Lender:
(i) Independently and without reliance on any
representation or act by any Agent or by any other Lender,
and based on such documents and information as that
Lender has deemed appropriate, has made such
Lender's own appraisal of the financial condition and
affairs of the Borrowers and decision to enter into this
Agreement.
(ii) Has relied upon that Lender's review of the Loan
Documents by that Lender and by counsel to that Lender
as that Lender deemed appropriate under the circumstances.
(b) Each Lender agrees that such Lender, independently and
without reliance upon any Agent or any other Lender, and based
upon such documents and information as such Lender shall deem
appropriate at the time, will continue to make such Lender's own
appraisals of the financial condition and affairs of the Borrowers
when determining whether to take or not to take any discretionary action
under this Agreement.
(c) Neither Agent in the discharge of that Agent's duties
hereunder, shall be required to make inquiry of, or to inspect the
properties or books of, any Person.
(d) Except for notices, reports, and other documents and
information expressly required to be furnished to the Lenders
by the Administrative Agent hereunder (as to which, see Section
15:15-5), the Agents shall not have any affirmative duty or
responsibility to provide any Lender with any credit or other
information concerning any Person, which information may
come into the possession of Agents or any Affiliate of an Agent.
(e) Each Lender, at such Lender's request, shall have
reasonable access to all nonprivileged documents in the possession
of the Agents, which documents relate to the Agents' performance
of their duties hereunder.
15-9. INDEMNIFICATION . Without limiting the liabilities of the
Borrowers under any this or any of the other Loan Documents, each
Lender shall indemnify each Agent, pro-rata, for any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (including attorneys' reasonable fees and expenses
and other out-of-pocket expenditures) which may at any time be
imposed on, incurred by, or asserted against that Agent and in any way
relating to or arising out of this Agreement or any other Loan Document
or any documents contemplated by or referred to therein or the
transactions contemplated thereby or the enforcement of any of terms
hereof or thereof or of any such other documents, provided, however,
no Lender shall be liable for any of the foregoing to the extent that
any of the foregoing arises from any action taken or omitted
to be taken by the subject Agent as to which a final judicial
determination has been or is made (in a proceeding in which the
subject Agent has had an opportunity to be heard) that the subject
Agent had acted in a grossly negligent manner, in actual bad faith, or
in willful misconduct.
15-10. RESIGNATION OF AGENT
(a) An Agent may resign at any time by giving 60 days prior
written notice thereof to the Lenders and to the other Agent. Upon
receipt of any such notice of resignation, the SuperMajority Lenders
shall have the right to appoint a successor to such Agent (and if no
Event of Default has occurred, with the consent of the Lead Borrower,
not to be unreasonably withheld and, in any event, deemed given by the
Lead Borrower if no written objection is provided by the Lead Borrower
to the (resigning) Agent within seven (7) Business Days
notice of such proposed appointment). If a successor Agent shall not
have been so appointed and accepted such appointment within 30 days
after the giving of notice by the resigning Agent, then the resigning
Agent may appoint a successor Agent, which shall be a financial
institution having a combined capital and surplus in excess of $1
Billion. The consent of the Lead Borrower otherwise
required by this Section 15:15-10(a) shall not be required if
an Event of Default has occurred and is continuing.
(b) Upon the acceptance of any appointment as an Agent
hereunder by a successor Agent, such successor shall thereupon succeed
to, and become vested with, all the rights, powers, privileges,
and duties of the (resigning) Agent so replaced, and the (resigning)
Agent shall be discharged from the (resigning) Agent's duties and
obligations hereunder, other than on account of any responsibility
for any action taken or omitted to be taken by the (resigning) Agent as
to which a final judicial determination has been or is made (in a
proceeding in which the (resigning) Person has had an opportunity to be
heard) that such Person had acted in a grossly negligent manner or in
bad faith.
(c) After any retiring Agent's resignation, the provisions of
this Agreement and of all other Loan Documents shall continue in effect
for the retiring Person's benefit in respect of any actions taken or
omitted to be taken by it while it was acting as an Agent.
ARTICLE 16: - ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:
16-1. ADMINISTRATION OF CREDIT FACILITIES
(a) Except as otherwise specifically provided in this
Agreement, each Agent may take any action with respect to the credit
facility contemplated by the Loan Documents as that Agent determines
to be appropriate within their respective areas of responsibility and
authority, as set forth in Sections 15:15-2(b) and 15:15-2(a),
provided, however, neither Agent is under any affirmative obligation
to take any action which it is not required by this Agreement or the
Loan Documents specifically to so take.
(b) At the Term Lender=s request, from time to time, the
Administrative Agent, shall consider the imposition or revision of one
or more Availability Reserves. The Administrative Agent shall
impose or revise such Availability Reserve(s), provided that the
Administrative Agent determines in its discretion that such requested
Availability Reserve(s) reflect impediments to the Collateral Agent's
ability to realize upon any real estate or leasehold interest, a
Collateral Interest in which has been granted to the Collateral
Agent. Any such imposition or revision shall be made in accordance
with the applicable notice requirements of Section 2:2-3(b).
(c) Except as specifically provided in the following Sections
of this Agreement, whenever a Loan Document or this Agreement
provides that action may be taken or omitted to be taken in an Agents'
discretion, that Agent shall have the sole right to take, or refrain
from taking, such action without, and notwithstanding, any vote of the
Lender:
Actions Described in Section Type of Consent Required
----------------------------- -----------------------------
16:16-2 Majority Lenders
16:16-3 SuperMajority Lenders
16:16-4 Certain Consent
16:16-5 Unanimous Consent
16:16-6 Consent of SwingLine Lender
16:16-7 Consent of Term Lender
16:16-8 Consent of the Agents
(d) The rights granted to the Lenders in those sections
referenced in Section 16:16-1(c) shall not otherwise limit or impair any
Agent's exercise of its discretion under the Loan Documents.
16-2. ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS Except as
otherwise provided in this Agreement, the Consent or direction of the
Majority Lenders is required for any amendment, waiver, or
modification of any Loan Document.
16-3. ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY LENDERS The
Consent or direction of the SuperMajority Lenders is required as
follows:
(a) The Revolving Credit Lenders agree that any loan or
advance under the Revolving Credit which results in a Protective
OverAdvance may be made by the Administrative Agent in its discretion
without the Consent of the Revolving Credit Lenders and that each
Revolving Credit Lender shall be bound thereby, provided, however,
the Consent or direction of the SuperMajority Lenders is required
to permit a Protective OverAdvance to be outstanding for more than
45 consecutive Business Days or more than twice in any twelve month
period. (Any Protective OverAdvance which is permitted by this
Section 16:16-3(a) is referred to as a "Permitted Protective
OverAdvance").
(b) If any Borrower is then InDefault, the SuperMajority
Lenders may direct the Administrative Agent to suspend the Revolving
Credit, whereupon, as long as a Borrower is InDefault, the only
Revolving Credit Loans which may be made are the following:
(i) Revolving Credit Loans made to "cover" the
honoring of L/C's.
(ii) Except as otherwise provided in Section
16:16-3(a), Protective OverAdvances).
(iii) Permitted Protective OverAdvances.
(iv) Revolving Credit Loans made with Consent of
the SuperMajority Lenders.
(c) If an Event of Default has occurred and not been duly
waived, the SuperMajority Lenders may:
(i) Give the Administrative Agent an Acceleration
Notice in accordance with Section 14:14-1(b).
(ii) Direct the Administrative Agent to increase the
rates of interest applicable to the Liabilities to
the applicable default rates of interest as provided
in, and to the extent permitted by, this Agreement.
16-4. ACTION REQUIRING CERTAIN CONSENT The following Consent shall be
required for the following actions:
=========================================================== ========================================================
ACTION REQUIRED CONSENT
=========================================================== ========================================================
(a) Any change to the dates on which any payment of The SuperMajority Lenders, but only if the Term Lender
principal of the Term Loan shall be due and payable is included as one of such SuperMajority Lenders whose
or the amount of any such payment. Consent has been given to the relevant action.
----------------------------------------------------------- --------------------------------------------------------
(b) Any increase the SwingLine Loan Ceiling. The SwingLine Lender.
and
Revolving Credit Lenders (other than Delinquent
Revolving Credit Lenders) holding 51% or more
of the Loan Commitments of the Revolving Credit
Lenders to make Revolving Credit Loans (other than
any Loan Commitments held by Delinquent Revolving Credit
Lenders)
----------------------------------------------------------- --------------------------------------------------------
(c) Any of the following: All Revolving Credit Lenders (other than any
(i) Forgiveness of all or any portion of Delinquent Revolving Credit Lender)
any payment Liability which constitutes principal,
interest, or fees payable to or on account of the
Revolving Credit Lenders.
(ii) Any decrease in any interest rate or
fee payable to the Revolving Credit Lenders on account of
the Revolving Credit Loans.
----------------------------------------------------------- --------------------------------------------------------
(d) Release of any leasehold mortgage or mortgage The Majority Lenders, but only if the Term Lender is
which secures the Liabilities other than in connection included as one of such Majority Lenders whose
with a Permitted Real Estate Transaction. Consent has been given to the relevant action
----------------------------------------------------------- --------------------------------------------------------
(e) Any amendment, modification, or waiver of any of The Majority Lenders, but only if the Term Lender is
the following Sections of this Agreement: included as one of such Majority Lenders whose
(i) 5:5-15 (which relates to certain real Consent has been given to the relevant action.
estate transactions)
(ii) 14:14-1(c) or 14:14-2 (which relate to the
circumstances under which the Term Lender may require
Acceleration) or of any component thereof.
(iii) Any amendment or waiver of the trade
support financial performance covenant set forth on
EXHIBIT 6:6-11(a).
----------------------------------------------------------- --------------------------------------------------------
(f) Any amendment of any of the following Definitions The Majority Lenders, but only if the Term Lender is
"Adjusted Excess Availability" included as one of such Majority Lenders whose Consent
"Excess Availability" has been given to the relevant action.
"Minimum Excess Availability Breach"
"Standstill Period"
"Term Loan Availability Breach"
"Term Loan Payment Breach"
=========================================================== ========================================================
16-5. ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT None of the
following may take place except with Unanimous Consent:
(a) Any increase in any Revolving Credit Lender's Revolving
Credit Dollar Commitment or Revolving Credit Percentage Commitment
(other than by reason of the application of Section 16:16-11 (which
deals with NonConsenting Revolving Credit Lenders) or Section 17:17-1
(which deals with assignments and participations)).
(b) Any change to the Maturity Date.
(c) Any decrease in any interest rate or fee payable under any
of the Loan Documents (other than any Agent's Fee (for which the
consent of the Agents shall also be required)) and of any fee
provided for by any Fee Letter (which may be amended by written
agreement between the Lead Borrower on the one hand, and the
Administrative Agent and the Term Lender on the other).
(d) Any release of a material portion of the Collateral not
otherwise required or provided for in the Loan Documents or to
facilitate a Liquidation.
(e) Any amendment or waiver of the minimum Excess Availability
financial performance covenant set forth on EXHIBIT 6:6-11(a).
(f) Any amendment of Section 14:14-8 (which relates to
relative priorities in proceeds of a Liquidation and is generally
referred to as the "waterfall" provision).
(g) Any amendment of the definition of the terms "Revolving
Credit Borrowing Base", ATerm Loan Borrowing Base@, or "Availability"
or of any Definition of any component thereof, such that more credit
would be available to the Borrowers, based on the same assets, as
would have been available to the Borrowers immediately prior to such
amendment , it being understood, however,that:
(i) The foregoing shall not limit the adjustment by
the Administrative Agent of any Reserve in the
Administrative Agent's administration of the Revolving
Credit as otherwise permitted by this Agreement.
(ii) The foregoing shall not prevent the
Administrative Agent, in its administration of the
Revolving Credit, from restoring any component of
Revolving Credit Borrowing Base or Term Loan Borrowing
Base which had been lowered by the Administrative Agent
back to the value of such component, as stated in this
Agreement or to an intermediate value.
(h) Any release of any Person obligated on account of the
Liabilities.
(i) The making of any Revolving Credit Loan to the extent
which, when made, would constitute an OverLoan which is not a Protective
OverAdvance, provided, however,
(i) no Consent shall be required in connection with
the making of any Revolving Credit Loan to "cover" any
honoring of a drawing under any L/C; and
(ii) each Lender recognizes that subsequent to the
making of a Revolving Credit Loan which does not
constitute a Protective OverAdvance, the unpaid
principal balance of the Loan Account may exceed
Revolving Credit Borrowing Base on account of changed
circumstances beyond the control of the Administrative
Agent (such as a drop in collateral value).
(j) The waiver of the obligation of the Borrowers to reduce
the unpaid principal balance of loans under the Revolving Credit to an
amount so that
(i) no OverLoan (other than a Protective OverAdvance)
is outstanding; or
(ii) subject to the time limits included in Section
16:16-3(a) (which places time and frequency limits on
Protective OverAdvance), no Protective OverAdvance is
outstanding.
(k) Any amendment of this Article 16:.
(l) Amendment of any of the following Definitions:
"Appraised Inventory Liquidation Value"
"Appraised Inventory Percentage"
"Consent"
"Majority Lender"
"Permitted Protective OverAdvance"
"Protective OverAdvance"
"SuperMajority Lenders"
"Unanimous Consent"
16-6. ACTIONS REQUIRING SWINGLINE LENDER CONSENT No action, amendment,
or waiver of compliance with, any provision of the Loan Documents
or of this Agreement which affects the SwingLine Lender may be
undertaken without the Consent of the SwingLine Lender.
16-7. ACTIONS REQUIRING TERM LENDER CONSENT None of the following
may be made without the Consent of the Term Lender:
(a) Any amendment, modification, or waiver of any
provision of Article 3: (entitled "The Term Loan").
(b) Any amendment of Section 17:17-4 of this Agreement (which
relates to assignments by the Term Lender).
(c) Any amendment to this Agreement which increases any
interest rate which is or which may be applicable to the unpaid
principal balance of the Revolving Credit such that that interest
rate is more than one percent per annum or 100 basis points higher
than that rate as provided in this Agreement as originally executed
(which consent may be conditioned upon a like increase in the Term
Loan Interest Rate).
(d) The imposition upon the Borrowers of any amendment or
similar fee unless the Term Lender receives a pro rata share thereof.
(e) Any forgiveness of all or any portion of any payment
Liability consisting of principal or interest under the Term Loan
or any fee which is distributable to the Term Lender.
16-8. ACTIONS REQUIRING AGENTS' CONSENT
(a) No action, amendment, or waiver of compliance with, any
provision of the Loan Documents or of this Agreement which affects an
Agent in its capacity as an Agent may be undertaken without the
written consent of the Agents.
(b) No action referenced herein which affects the rights,
duties, obligations, or liabilities of an Agent shall be effective
without the written consent of the Agents.
16-9. MISCELLANEOUS ACTIONS
(a) Notwithstanding any other provision of this Agreement, no
single Lender independently may exercise any right of action or
enforcement against or with respect to any Borrower.
(b) Each Agent shall be fully justified in failing or refusing
to take action under this Agreement or any Loan Document on behalf of
any Lender unless that Agent shall first
(i) receive such clear, unambiguous, written
instructions as that Agent deems appropriate; and
(ii) be indemnified to that Agent's satisfaction by
the Lenders against any and all liability and expense
which may be incurred by that Agent by reason of taking
or continuing to take any such action, unless such
action had been grossly negligent, in willful
misconduct, or in bad faith.
(c) Each Agent may establish reasonable procedures for the
providing of direction and instructions from the Lenders to that
Agent, including its reliance on multiple counterparts, facsimile
transmissions, and time limits within which such direction and
instructions must be received in order to be included in a
determination of whether the requisite Loan Commitments has
provided its direction, Consent, or instructions, provided that
in no event shall either Agent shorten the time period for Consent.
16-10. ACTIONS REQUIRING LEAD BORROWER'S CONSENT
(a) Subject to Section 16:16-10(b) the provisions of this
Agreement which are included in the following Articles may be amended
without the consent of any Borrower, but only if the subject
amendment relates to the relationships of the Lenders and the Agents
inter se and neither creates any additional nor augments any existing
obligation on any Borrower under any Loan Document nor relieves any
Agent or any Lender from any commitment or undertaking to any Borrower.
Article Title of Article
----------------- -------------------------------------------
13: Revolving Credit Fundings and Distributions
14: Acceleration and Liquidation
15: The Agents
16: Action By Agents - Consents - Amendments -
Waivers(other than as provided in Section
16:16-10(b))
17: Assignments and Participations
(b) Subject to Section 16:16-10(c), the following provisions
of this Agreement may not be amended without the consent of the Lead
Borrower:
Section Relates To
----------------- -------------------------------------------
16:16-3 SuperMajority Lenders
16:16-5 Unanimous Consent
16:16-10 Actions Requiring Borrower's Consent
(c) The Lead Borrower's consent to the amendment of those
provisions referenced in Section 16:16-10(b) shall be deemed
given unless written objection is made, within Seven (7) Business
Days following the Administrative Agent's giving notice to the
Borrower of the proposed amendment thereof, provided that the
Administrative Agent may rely on such passage of time as consent by the
Lead Borrower only if such written notice states that consent
will be deemed effective if no objection is received within such time
period.
16-11. NONCONSENTING REVOLVING CREDIT LENDER
(a) In the event that a Revolving Credit Lender (in this
Section 16:16-11, a "NonConsenting Revolving Credit Lender") does not
provide its Consent to a proposal by the Administrative Agent to
take action which requires consent under this Article 16:, then
one or more Revolving Credit Lenders who provided Consent to such
action may require the assignment, without recourse and in accordance
with the procedures outlined in Section 17:17-1, below, of the
NonConsenting Revolving Credit Lender's commitment hereunder on
fifteen (15) days of written notice to the Administrative Agent
and to the NonConsenting Revolving Credit Lender.
(b) At the end of such fifteen (15) days, and provided that
the NonConsenting Revolving Credit Lender delivers the Revolving
Credit Note held by the NonConsenting Revolving Credit Lender to the
Administrative Agent, the Revolving Credit Lenders who have given
such written notice shall Transfer the following to the NonConsenting
Revolving Credit Lender:
(i) Such NonConsenting Revolving Credit Lender's
Pro-Rata share of the principal and interest of the
Revolving Credit Loans to the date of such assignment.
(ii) All fees distributable hereunder to the
NonConsenting Revolving Credit Lender to the date of such
assignment.
(iii) Any out-of-pocket costs and expenses for which
the NonConsenting Revolving Credit Lender is entitled to
reimbursement from the Borrowers.
(c) In the event that the NonConsenting Revolving Credit
Lender fails to deliver to the Administrative Agent the Revolving
Credit Note held by the NonConsenting Revolving Credit Lender as
provided in Section 16:16-11(b), then:
(i) The amount otherwise to be Transferred to the
NonConsenting Revolving Credit Lender shall be
Transferred to the Administrative Agent and held by the
Administrative Agent, without interest, to be turned
over to the NonConsenting Revolving Credit Lender upon
delivery of the Revolving Credit Note held by that
NonConsenting Revolving Credit Lender.
(ii) The Revolving Credit Note held by the
NonConsenting Revolving Credit Lender shall have no
force or effect
whatsoever.
(iii) The NonConsenting Revolving Credit Lender shall
cease to be a "Revolving Credit Lender".
(iv) The Revolving Credit Lender(s) which have
Transferred the amount to the Administrative Agent as
described above shall have succeeded to all rights and
become subject to all of the obligations of the
NonConsenting Revolving Credit Lender as "Revolving
Credit Lender".
(d) In the event that more than One (1) Revolving Credit
Lender wishes to require such assignment, the NonConsenting
Revolving Credit Lender's commitment hereunder shall be divided
among such Revolving Credit Lenders, pro-rata based upon their
respective Revolving Credit Percentage Commitments, with the
Administrative Agent coordinating such transaction.
(e) The Administrative Agent shall coordinate the retirement
of the Revolving Credit Note held by the NonConsenting Revolving
Credit Lender and the issuance of Revolving Credit Notes to those
Revolving Credit Lenders which "take-out" such NonConsenting Revolving
Credit Lender, provided, however, no processing fee otherwise to be
paid as provided in Section 17:17-2(b) shall be due under such
circumstances.
16-12. REPLACEMENT OF DELINQUENT REVOLVING CREDIT LENDER
(a) In the event that a Delinquent Revolving Credit Lender
fails to cure its status as a Delinquent Revolving Credit Lender
(as to which, see Section 13:13-3(e)) within Thirty (30) days
following its having become a Delinquent Revolving Credit Lender, then,
subject to, and in accordance with the procedures outlined and referred
to in this Section 16:16-12, the Delinquent Revolving Credit Lender's
commitment hereunder may be assigned without recourse or consent of the
Delinquent Revolving Credit Lender.
(b) Any one or more Revolving Credit Lenders which are not
Delinquent Revolving Credit Lenders may require such assignment by
written notice given to the Administrative Agent and the Lead
Borrower, at any time during the fifteen (15) day period which
commences after the expiry of the thirty (30) days referenced in
Section 16:16-12(a).
(c) In the event that no Revolving Credit Lenders provide its
written notice prior to the expiry of the fifteen (15) days
referenced in Section 16:16-12(b), then the Administrative Agent may
require such assignment to one or more Eligible Assignees (subject to
any consent of the Lead Borrower required by Section 2:2-25(d)) by
giving notice of its nomination of one or more replacements for the
Delinquent Revolving Credit Lender at any time during the
then next following fifteen (15) days.
(d) In the event that neither any Revolving Credit Lender
provides its written notice as provided in Section 16:16-12(b)
nor the Administrative Agent nominates a replacement for the
Delinquent Revolving Credit Lender to which the Lead Borrower consents,
as provided in Section 16:16-12(c), then the Lead Borrower, at any
time thereafter may nominate a replacement for the Delinquent
Revolving Credit Lender by written notice to the Administrative
Agent, provided that:
(i) Such nominee is an Eligible Assignee.
(ii) The Administrative Agent shall have given its
written consent to such nomination, which consent
shall not be unreasonably withheld or delayed.
(e) Within fifteen (15) days following the designation (and
the consent, if applicable, of the Administrative Agent or of the
Lead Borrower) or one or more replacements for the Delinquent
Revolving Credit Lender, those replacements shall Transfer to the
Administrative Agent, the aggregate of the Delinquent Revolving
Credit Lender's Pro-Rata share of the principal and interest of
the Revolving Credit Loans to the date of such assignment.
(f) Following the Administrative Agent=s receipt of the
aggregate described in Section 16:16-12(e), the Administrative
Agent shall Transfer such aggregate to the Delinquent Revolving
Credit Lender, net of the amounts set forth below (which shall be
distributed to, and retained by, the Administrative Agent), but
only if the Delinquent Revolving Credit Lender delivers the
Revolving Credit Note held by the Delinquent Revolving Credit
Lender:
(i) The Administrative Agent's Cover (to the
extent not previously repaid by the Borrower
and retained by the Administrative Agent in
accordance with Subsection 13:13-3(c)(iv),
above) with respect to that Delinquent
Revolving Credit Lender.
Plus
(ii) The aggregate of the amount payable under
Subsection 13:13-3(c)(iii), above (which
relates to interest to be paid by that
Delinquent Revolving Credit Lender).
Plus
(iii) All such costs and expenses as may be
incurred by the Administrative Agent in the
enforcement of the Administrative Agent's
rights against such Delinquent Revolving
Credit Lender.
The Delinquent Revolving Credit Lender shall remain liable for any
deficiency remaining after the above application.
(g) In the event that the Delinquent Revolving Credit Lender
fails to deliver to the Administrative Agent the Revolving Credit Note
held by the Delinquent Revolving Credit Lender,
(i) The amount otherwise to be Transferred to the
Delinquent Revolving Credit Lender shall be Transferred to the
Administrative Agent and held by the Administrative Agent, without
interest, to be turned over to the Delinquent Revolving Credit Lender
upon delivery of the Revolving Credit Note held by that Delinquent
Revolving Credit Lender.
(ii) The Revolving Credit Note held by the Delinquent
Revolving Credit Lender shall have no force or effect whatsoever.
(iii) The Delinquent Revolving Credit Lender shall
cease to be a "Revolving Credit Lender".
(h) Immediately upon its (or their) transfer of the aggregate
referred to in Section 16:16-12(e), the Persons who have made such
Transfer(s) shall have succeeded to all rights and become subject to all
of the obligations of the Delinquent Revolving Credit Lender as
"Revolving Credit Lender".
(i) The Administrative Agent shall coordinate the retirement
of the Revolving Credit Note held by the Delinquent Revolving Credit
Lender and the issuance of Revolving Credit Notes to those Persons
who have become Revolving Credit Lenders pursuant to this Section
16:16-12, provided, however, no processing fee otherwise to be paid as
provided in Section 17:17-2(b) shall be due under such circumstances.
16-13. THE BUYOUT:
(a) The Term Lender may (but shall not be obligated to) cause
the assignment to the Term Lender or the Term Lender's designee,
by the Revolving Credit Lenders, of all right, title and interest in,
to, arising under, or in respect of the Revolving Credit Obligations upon
five (5) Business Days prior written notice given to the
Administrative Agent and the Lead Borrower at any time either of the
following conditions is satisfied:
(i) The Term Lender has the right, under Section
14:14-1(c), to give an Acceleration Notice.
(ii) The Administrative Agent has declined to
implement or adjust any Availability Reserve or Inventory Reserve
requested by the Term Lender, which request by the Term Lender is with
a view towards maintaining and preserving the Lenders' security and
other collateral interests with respect to the potential impairment of
valuation or priority.
(b) Such assignments shall be effected on the Business Day
next following the expiry of such five (5) Business Days by the
execution, by the Revolving Credit Lenders, of an Assignment and
Assumption (in the form of EXHIBIT 17:17-1, annexed hereto) in exchange
for the payment, in immediately available funds, of the amount of
Revolving Credit Obligations (other than the Revolving Credit Early
Termination Fee) as of the date on which such assignment is made.
(c) In the event that, following the consummation of a BuyOut,
the Term Lender actually receives any Revolving Credit Early
Termination Fee which had been provided for in the Loan Agreement
(which receipt, if in connection with a Liquidation, shall be determined
on a last dollar out basis),then the Term Lender shall pay over such
Revolving Credit Early Termination Fee to the Administrative Agent for
distribution to those Persons who were Revolving Credit Lenders immediately
prior to such BuyOut, it being understood that the Term Lender, in its sole
discretion, may waive the entitlement to, or the amount of, such fee;
shall not be under any obligation to prosecute the recovery of such fee;
and may condition its payment over to the Administrative Agent on the
Administrative Agent's providing of such indemnification as is reasonably
mutual satisfactory of the Administrative Agent and the Term Lender.
ARTICLE 17: - ASSIGNMENTS BY LENDERS:
17-1. ASSIGNMENTS AND ASSUMPTIONS BY REVOLVING CREDIT LENDERS
(a) Except as provided herein, each Revolving Credit Lender
(in this Section 17:17-1(a), an "Assigning Revolving Credit Lender") may
assign to one or more Eligible Assignees (in this Section 17:17-1(a),
each an "Assignee Revolving Credit Lender") all or a portion of that
Revolving Credit Lender's interests, rights and obligations under this
Agreement and the Loan Documents (including all or a portion of its
Commitment) and the same portion of the Revolving Credit Loans at the
time owing to it, and of the Revolving Credit Note held by the Assigning
Revolving Credit Lender, provided that:
(i) The Administrative Agent shall have given its
prior written consent to such assignment, which consent shall not be
unreasonably withheld, but need not be given if the proposed assignment
would result in any resulting Revolving Credit Lender's having a Dollar
Commitment of less than the "minimum hold" amount specified in Section
17:17-1(a)(iii) or if there would be more than Eight (8) Revolving
Credit Lenders. (For provisions which deal with any required consent of
the Borrowers to such assignment, see Section 2:2-25(d)).
(ii) Each such assignment shall be of a constant, and
not a varying, percentage of all the Assigning Revolving Credit
Lender's rights and obligations under this Agreement.
(iii) Following the effectiveness of such assignment,
the Assigning Revolving Credit Lender's Dollar Commitment (if not an
assignment of all of the Assigning Revolving Credit Lender's
Commitment) shall not be less than $10,000,000.00.
17-2. ASSIGNMENT PROCEDURES. (This Section 17:17-2 describes the
procedures to be followed in connection with an assignment effected pursuant
to this Article 17: and permitted by Section 17:17-1).
(a) The parties to such an assignment shall execute and
deliver to the Administrative Agent, for recording in the Register,
an Assignment and Acceptance substantially in the form of EXHIBIT 17:17-1,
annexed hereto.
(b) The Assigning Revolving Credit Lender shall deliver to the
Administrative Agent, with such Assignment and Acceptance, the Revolving
Credit Note held by the subject Assigning Revolving Credit
Lender and the Administrative Agent's processing fee of $3,500.00,
provided, however, no such processing fee shall be due where the Assigning
Revolving Credit Lender is one of the Revolving Credit Lenders at the
initial execution of this Agreement.
(c) The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or similar list
(the "Register") for the recordation of the names and addresses of the
Revolving Credit Lenders and of the Revolving Credit Percentage Commitment
and Revolving Credit Percentage Commitment of each Revolving Credit Lender.
The Register shall be available for inspection by the Revolving Credit
Lenders and the Lead Borrower at any reasonable time and from time to
time upon reasonable prior notice. In the absence of manifest error,
the entries in the Register shall be conclusive and binding on all
Lenders. The Administrative Agent and the Revolving Credit Lenders
may treat each Person whose name is recorded in the Register as a
"Revolving Credit Lender" hereunder for all purposes of this
Agreement.
(d) The Assigning Revolving Credit Lender and Assignee
Revolving Credit Lender, directly between themselves, shall make all
appropriate adjustments in payments for periods prior to the effective
date of an Assignment and Assumption.
17-3. EFFECT OF ASSIGNMENT.
(a)From and after the effective date specified in an
Assignment and Acceptance which has been executed, delivered, and
recorded (which effective date the Administrative Agent may delay
by up to Five (5) Business Days after the delivery of such Assignment
and Acceptance):
(i) The Assignee Revolving Credit Lender:
(A) Shall be a party to this Agreement and
the Loan Documents (and to any amendments thereof) as fully as
if the Assignee Revolving Credit Lender had executed each.
(B) Shall have the rights of a Revolving
Credit Lender hereunder to the extent of the Revolving Credit
Percentage Commitment and Revolving Credit Percentage
Commitment assigned by such Assignment and Acceptance.
(ii) The Assigning Revolving Credit Lender shall be
released from the Assigning Revolving Credit Lender's obligations under
this Agreement and the Loan Documents to the extent of the Commitment
assigned by such Assignment and Acceptance.
(iii) The Administrative Agent shall undertake to
obtain and distribute replacement Revolving Credit Notes to the subject
Assigning Revolving Credit Lender and Assignee Revolving Credit Lender.
(b) By executing and delivering an Assignment and Acceptance,
the parties thereto confirm to and agree with each other and with all
parties to this Agreement as to those matters which are set forth in the
subject Assignment and Acceptance.
17-4. ASSIGNMENT BY TERM LENDER. The interest of the Term Lender in the
Term Loan and hereunder respectively are freely assignable by the Term
Lender on reasonable notice to the Lead Borrower and subject to
reasonable procedures established by the Administrative Agent.
ARTICLE 18: - NOTICES:
18-1. NOTICE ADDRESSES. All notices, demands, and other communications
made in respect of any Loan Document (other than a request for a loan or
advance or other financial accommodation under the Revolving Credit)
shall be made to the following addresses, each of which may be changed
upon seven (7) days written notice to all others given by certified mail,
return receipt requested:
If to either Agent:
Fleet Retail Finance Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xxxxx X. Xxxx
Director
Fax : 000 000 0000
With a copies to:
Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xxxxxxx X. Xxxxxx, Esquire
Fax : 000 000 0000
And
Back Bay Capital Funding LLC
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xxxxxx Xxxxxxx
Director
Fax : 000 000 0000
If to the Lead Borrower
And All Borrowers:
HomeBase, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention : Xxxxxx Xxxxx
Fax : 000 000 0000
With copies to:
HomeBase, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention : Xxxx Xxxxx
Vice President and General
Counsel
Fax : 000 000 0000
and
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention : Xxxx X. Xxxxxx, Esquire
Fax : 000 000 0000
18-2. NOTICE GIVEN.
(a) Except as otherwise specifically provided herein, notices
shall be deemed made and correspondence received, as follows (all times
being local to the place of delivery or receipt):
(i) By mail: the sooner of when actually received or
Three (3) days following deposit in the United States (postage prepaid)
as certified mail, return receipt requested.
(ii) By recognized overnight express delivery: the
Business Day following the day when sent.
(iii) By Hand: If delivered on a Business Day after
9:00 AM and no later than Three (3) hours prior to the close of
customary business hours of the recipient, when delivered. Otherwise,
at the opening of the then next Business Day.
(iv) By Facsimile transmission (which must include a
header on which the party sending such transmission is indicated): If
sent on a Business Day after 9:00 AM and no later than Three (3) hours
prior to the close of customary business hours of the recipient, one
(1) hour after being sent. Otherwise, at the opening of the then next
Business Day.
(b) Rejection or refusal to accept delivery and inability to
deliver because of a changed address or Facsimile Number for which no due
notice was given shall each be deemed receipt of the notice sent.
18-3. WIRE INSTRUCTIONS NOTICE GIVEN. Subject to change in the same
manner that a notice address may be changed (as to which, see Section
18:18-1), wire transfers to the Administrative Agent shall be made in
accordance with the following wire instructions:
Pay To: Fleet Bank NA
ABA: 000-000-000
Account#: 00000000
Attention: Fleet Retail Finance
Reference: HomeBase
ARTICLE 19: - TERM:
19-1. TERMINATION OF REVOLVING CREDIT. The Revolving Credit shall
remain in effect (subject to suspension as provided in Section 2:2-7(g)
hereof) until the Termination Date.
19-2. ACTIONS ON TERMINATION.
(a) On the Termination Date, the Borrowers shall pay the
Administrative Agent (whether or not then due), in immediately available
funds, all then Liabilities including, without limitation: the following:
(i) The entire balance of the Loan Account (including
the unpaid principal balance of the Revolving Credit Loans, and the
SwingLine Loan, and the Term Loan ).
(ii) Any then remaining installments of the Revolving
Credit Commitment Fee.
(iii) Any then remaining installments of the
Agent's Fee.
(iv) Any payments due on account of the
indemnification obligations included in Section 2:2-12(e).
(v) Any accrued and unpaid Unused Line Fee.
(vi) Any applicable Revolving Credit Early
Termination Fee.
(vii) All accrued and unpaid interest (including
all accrued and unpaid Current Pay Interest and all accrued and unpaid
PIK Interest) on the Term Loan.
(viii) Any applicable installments of the Term Loan
Anniversary Fee.
(ix) Any applicable Term Loan Early Termination
Fee.
(x) Any Revolving Credit Obligations and Term
Loan Obligations not described above.
(xi) All unreimbursed costs and expenses of each
Agent and of Lenders' Special Counsel for which each Borrower is
responsible.
(b) On the Termination Date, the Borrowers shall also shall
make such arrangements concerning any L/C's then outstanding as are
reasonably satisfactory to the Administrative Agent.
(c) Until such payment (Section 19:19-2(a)) and arrangements
concerning L/C's (Section 19:19-2(b)), all provisions of this Agreement,
other than those included in Article 2: which place any
obligation on the Administrative Agent or any Revolving Credit Lender
to make any loans or advances or to provide any financial accommodations
to any Borrower and those included in Article 3: which place any obligation
on the Term Lender to make any loan or advance or to provide any financial
accommodation to any Borrower shall remain in full force and effect until
all Liabilities shall have been paid in full.
(d) The release by the Collateral Agent of the Collateral
Interests granted the Collateral Agent by the Borrowers hereunder may be
upon such conditions and indemnifications as the Administrative Agent may
require.
ARTICLE 20: - GENERAL:
20-1. PROTECTION OF COLLATERAL. No Agent has any duty as to the
collection or protection of the Collateral beyond the safe custody of
such of the Collateral as may come into the possession of that Agent.
20-2. PUBLICITY. The Agents (or either of them) and the Term
Lender respectively may issue a "tombstone" notice of the establishment
of the credit facility contemplated by this Agreement and may make
reference to each Borrower (and may utilize any logo or other distinctive
symbol associated with each Borrower) in connection with any
advertising, promotion, or marketing undertaken by the Agents (or either
of them) and/or the Term Lender.
20-3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Borrowers and their respective representatives, successors, and assigns
and shall enure to the benefit of each Agent and each Lender and their
respective successors and assigns, provided, however, no trustee or
other fiduciary appointed with respect to any Borrower shall have any
rights hereunder. In the event that any Agent or any Lender assigns or
transfers its rights under this Agreement, the assignee shall thereupon
succeed to and become vested with all rights, powers, privileges, and
duties of such assignor hereunder and such assignor shall thereupon
be discharged and relieved from its duties and obligations hereunder.
20-4. SEVERABILITY. Any determination that any provision of this
Agreement or any application thereof is invalid, illegal, or
unenforceable in any respect in any instance shall not affect the
validity, legality, or enforceability of such provision in any other
instance, or the validity, legality, or enforceability of any other
provision of this Agreement.
20-5. AMENDMENTS. COURSE OF DEALING.
(a) This Agreement and the other Loan Documents incorporate
all discussions and negotiations between each Borrower and each Agent and
each Lender, either express or implied, concerning the matters included
herein and in such other instruments, any custom, usage, or course of
dealings to the contrary notwithstanding. No such discussions,
negotiations, custom, usage, or course of dealings shall limit, modify,
or otherwise affect the provisions thereof. No failure by any Agent or any
Lender to give notice to the Lead Borrower of any Borrower's having
failed to observe and comply with any warranty or covenant included in any
Loan Document shall constitute a waiver of such warranty or covenant
or the amendment of the subject Loan Document. No change made by the
Administrative Agent to the manner by which the Revolving Credit Borrowing
Base or the Term Loan Borrowing Base is determined shall obligate the
Administrative Agent to continue to determine either of such borrowing
bases in that manner.
(b) Each Borrower may undertake any action otherwise
prohibited hereby, and may omit to take any action otherwise required
hereby, upon and with the express prior written consent of the
Administrative Agent. Subject to Article 16:, no consent, modification,
amendment, or waiver of any provision of any Loan Document shall be
effective unless executed in writing by or on behalf of the party to be
charged with such modification, amendment, or waiver (and if such party
is the Administrative Agent then by a duly authorized officer thereof).
Any modification, amendment, or waiver provided by the Administrative
Agent shall be in reliance upon all representations and warranties
theretofore made to the Administrative Agent by or on behalf of the
Borrowers (and any guarantor, endorser, or surety of the Liabilities)
and consequently may be rescinded in the event that any of such
representations or warranties was not true and complete in all material
respects when given.
20-6. POWER OF ATTORNEY. In connection with all powers of attorney
included in this Agreement, each Borrower hereby grants unto the
Administrative Agent (acting through any of its officers) full power to
do any and all things necessary or appropriate in connection with the
exercise of such powers as fully and effectually as that Borrower might
or could do, hereby ratifying all that said attorney shall do or cause to
be done by virtue of this Agreement. No power of attorney set forth in this
Agreement shall be affected by any disability or incapacity suffered by
any Borrower and each shall survive the same. All powers conferred upon
the Administrative Agent or the Collateral Agent by this Agreement,
being coupled with an interest, shall be irrevocable until this
Agreement is terminated by a written instrument executed by a duly
authorized officer of the Administrative Agent.
20-7. APPLICATION OF PROCEEDS. The proceeds of any collection, sale, or
disposition of the Collateral by or on behalf of any Agent, or of any
other payments received hereunder by or on behalf of any Agent, shall
be applied towards the Liabilities in such order and manner as the
Administrative Agent determines in its sole discretion, consistent,
however, with Sections 8:8-4, 14:14-7 and 14:14-8 and any other applicable
provisions of this Agreement which mandate the application of payments
in a particular manner or order. The Borrowers shall remain liable for
any deficiency remaining following such application.
20-8. INCREASED COSTS. If, as a result of the adoption of any change to
any Requirement of Law, or of the interpretation or application thereof
by any court or by any governmental or other authority or entity
charged with the administration thereof, whether or not having the force of
law, which:
(a) subjects any Lender to any taxes or changes the basis of
taxation, or increases any existing taxes, on payments of principal,
interest or other amounts payable by any Borrower to the Administrative
Agent or any Lender under this Agreement (except for taxes on the
Administrative Agent or any Lender based on net income or capital
imposed by the jurisdiction in which the principal or lending offices
of the Administrative Agent or that Lender are located);
(b) imposes, modifies or deems applicable any reserve, cash
margin, special deposit or similar requirements against assets held by,
or deposits in or for the account of or loans by or any other
acquisition of funds by the relevant funding office of any Lender
(other than reserves and assessments taken into account in the
determination of the interest rate applicable to Eurodollar Loans);
(c). imposes on any Lender any other condition with
respect to any Loan Document; or
(d) imposes on any Lender a requirement to maintain or
allocate capital in relation to the Liabilities;
and the result of any of the foregoing, in such Lender's reasonable
opinion, is to increase the cost to that Lender of making or maintaining
any loan, advance or financial accommodation or to reduce the income
receivable by that Lender in respect of any loan, advance or financial
accommodation by an amount which that Lender deems to be material, then
within fifteen (15) days written notice from the Administrative Agent,
from time to time, to the Lead Borrower (such notice to set out in
reasonable detail the facts giving rise to and a summary
calculation of such increased cost or reduced income), the Borrowers
shall forthwith pay to the Administrative Agent, for the benefit of
the subject Revolving Credit Lender, upon receipt of such notice, that
amount which shall compensate the subject Lender for such additional cost
or reduction in income, provided, however, no Borrower shall be liable for
any such increased expense incurred or reduction in amount received by a
Revolving Credit Lender where such notice is not given to the Lead Borrower
within 120 days following that date on which the subject Revolving Credit
Lender knew or reasonably should have known of such effect.
20-9. COSTS AND EXPENSES OF THE AGENTS AND TERM LENDER.
(a) The Borrowers shall pay from time to time on demand all
Costs of Collection and all reasonable costs, expenses, and
disbursements (including attorneys' reasonable fees and expenses) which
are incurred by the each Agent and of the Term Lender in connection
with the preparation, negotiation, execution, and delivery of this
Agreement and of any other Loan Documents, and all other reasonable costs,
expenses, and disbursements which may be incurred by any Agent or the Term
Lender in connection with or in respect to the credit facility
contemplated hereby or which otherwise are incurred with
respect to the Liabilities. The Borrowers shall not have any
responsibility to reimburse any Person on account of costs, expenses, and
disbursements (including attorneys' fees and expenses) incurred or paid
on account of a dispute solely amongst and between any of the Agents and
any of the Lenders.
(b) The Borrowers shall pay from time to time on demand all
reasonable costs and expenses (including attorneys' reasonable fees
and expenses) incurred, following the occurrence of any Event of Default,
by the Lenders to Lenders' Special Counsel.
(c) Each Borrower authorizes the Administrative Agent, on
fifteen (15) days prior notice with reasonable particularity to the
Lead Borrower, to pay all such fees and expenses and in the Administrative
Agent's discretion, to add such fees and expenses to the Loan Account.
(d) The undertaking on the part of each Borrower in this
Section 20:20-9 shall survive payment of the Liabilities and/or any
termination, release, or discharge executed by any Agent in favor of any
Borrower, other than a termination, release, or discharge which makes
specific reference to this Section 20:20-9.
20-10. COPIES AND FACSIMILES. Each Loan Document and all documents and
papers which relates thereto which have been or may be hereinafter furnished
any Agent or any Lender may be reproduced by any Lender or by any Agent
by any photographic, microfilm, xerographic, digital imaging, or other
process, and such Person making such reproduction may destroy any document
so reproduced. Any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether
or not the original is in existence and whether or not such reproduction
was made in the regular course of business). Any facsimile which bears proof
of transmission shall be binding on the party which or on whose behalf such
transmission was initiated and likewise shall be so admissible in evidence as
if the original of such facsimile had been delivered to the party which or on
whose behalf such transmission was received.
20-11. MASSACHUSETTS LAW. This Agreement and all rights and
obligations hereunder, including matters of construction, validity, and
performance, shall be governed by the law of The Commonwealth of
Massachusetts.
20-12. CONSENT TO JURISDICTION.
(a) Each Borrower agrees that any legal action, proceeding,
case, or controversy against any Borrower with respect to any Loan Document
may be brought in the Superior Court of Suffolk County Massachusetts
or in the United States District Court, District of Massachusetts,
sitting in Boston, Massachusetts, as the Administrative Agent may elect
in the Administrative Agent's sole discretion. By execution and delivery
of this Agreement, each Borrower, for itself and in respect of its
property, accepts, submits, and consents generally and unconditionally,
to the jurisdiction of the aforesaid courts.
(b) Each Borrower WAIVES any objection based on forum non
conveniens and any objection to venue of any action or proceeding
instituted under any of the Loan Documents and consents to the granting
of such legal or equitable remedy as is deemed appropriate by the Court.
(c) Nothing herein shall affect the right of the
Administrative Agent to bring legal actions or proceedings in any
other competent jurisdiction.
(d) Each Borrower agrees that any action commenced by any
Borrower asserting any claim arising under or in connection with this
Agreement or any other Loan Document shall be brought solely in the
Superior Court of Suffolk County Massachusetts or in the United States
District Court, District of Massachusetts, sitting in Boston, Massachusetts,
and that such Courts shall have exclusive jurisdiction with respect to any
such action.
20-13. INDEMNIFICATION. Each Borrower shall indemnify, defend, and hold
each Agent and each Lender and any of their respective employees, officers,
or agents (each, an "Indemnified Person") harmless of and from any claim
brought or threatened against any Indemnified Person by any Borrower,
any guarantor or endorser of the Liabilities, or any other Person (as well
as from attorneys' reasonable fees, expenses, and disbursements in
connection therewith) on account of the relationship of the Borrowers or
of any other guarantor or endorser of the Liabilities (each of claims which
may be defended, compromised, settled, or pursued by the Indemnified Person
with counsel of the Lender's selection, but at the expense of the
Borrowers) other than any claim as to which a final determination is
made in a judicial proceeding (in which the Administrative Agent and any
other Indemnified Person has had an opportunity to be heard), which
determination includes a specific finding that the Indemnified Person
seeking indemnification had acted in a grossly negligent manner or in actual
bad faith. This indemnification shall survive payment of the Liabilities
and/or any termination, release, or discharge executed by the Administrative
Agent in favor of the Borrowers, other than a termination, release, or
discharge duly executed on behalf of the Administrative Agent which makes
specific reference to this Section 20:20-13.
20-14. RULES OF CONSTRUCTION. The following rules of construction shall
be applied in the interpretation, construction, and enforcement of
this Agreement and of the other Loan Documents:
(a) Unless otherwise specifically provided for herein,
interest and any fee or charge which is stated as a per annum percentage
shall be calculated based on a 365/366 day year and actual days elapsed.
(b) The same value shall be applied to like components of the
Revolving Credit Borrowing Base and the Term Loan Borrowing Base on any
date on which both of such borrowing bases are being calculated.
(c) The determination of any component of the Revolving Credit
Borrowing Base, Eligible Leasehold Parameters, and/or the Term Loan
Borrowing Base which is dependent on an appraised value shall be based
on the then most recent such appraisal (and if applicable, which
appraisal satisfies all requirements applicable to such appraisal, as
provided in this Agreement).
(d) Each reference herein to a "mortgage" or "leasehold
mortgage" granted is to
(i) the functional equivalent, under applicable
real estate law, to such an instrument; and
(ii) an instrument which is satisfactory to the
Administrative Agent acting on instructions of the Term
Lender.
(e) Any term used herein to describe Collateral or a Person,
which term is defined in either (or both) the UCC as in effect on the date
when this Agreement was executed by the Borrowers or in UCC9'99, shall be
given the meaning which is the more encompassing of the two definitions.
(f) Words in the singular include the plural and words in the
plural include the singular.
(g) Each warranty and representation made by any Borrower
which includes reference to an EXHIBIT is made as of the Second
Restatement Date.
(h) Cross references to Sections in this Agreement begin with
the Article in which that Section appears, followed by a colon, and then
the Section to which reference is made. (For example, a reference to
"Section 5:5-6" is to Section 5-6, which appears in Article 5 of this
Agreement).
(i) Titles, headings (indicated by being underlined or shown
in SMALL CAPITALS) and any Table of Contents are solely for convenience
of reference; do not constitute a part of the instrument in which included;
and do not affect such instrument's meaning, construction, or effect.
(j) The words "includes" and "including" are not limiting.
(k) Text which follows the words "including, without
limitation" (or similar words) is illustrative and not limitational.
(l) Text which is shown in italics (except for parenthesized
italicized text), shown in bold, shown IN ALL CAPITAL LETTERS, or
in any combination of the foregoing, shall be deemed to be conspicuous.
(m) The words "may not" are prohibitive and not permissive.
(n) Any reference to a Person's "knowledge" (or words of
similar import) is to the knowledge of the Borrowers' respective
Senior Officers.
(o) Terms which are defined in one section of any Loan
Document are used with such definition throughout the instrument in
which so defined.
(p) The symbol "$" refers to United States Dollars.
(q) Unless limited by reference to a particular Section or
provision, any reference to "herein", "hereof", or "within" is to the
entire Loan Document in which such reference is made.
(r) References to "this Agreement" or to any other Loan
Document is to the subject instrument as amended to the date on
which application of such reference is being made.
(s) Except as otherwise specifically provided, all references
to time are to Boston time. (t) In the determination of any
notice, grace, or other period of time prescribed or
allowed hereunder:
(i) Unless otherwise provided (I) the day of the act,
event, or default from which the designated period of time begins to
run shall not be included and the last day of the period so computed
shall be included unless such last day is not a Business Day, in which
event the last day of the relevant period shall be the then next
Business Day and (II) the period so computed shall end at 5:00 PM on
the relevant Business Day.
(ii) The word "from" means "from and including".
(iii) The words "to" and "until" each mean "to, but
excluding". (iv) The word "through" means "to and
including".
(u) The Loan Documents shall be construed and interpreted in a
harmonious manner and in keeping with the intentions set forth in
Section 20:20-15 hereof, provided, however, in the event of any
inconsistency between the provisions of this Agreement and any other Loan
Document, the provisions of this Agreement shall govern and control.
20-15. INTENT. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) All Collateral Interests created in favor of the
Collateral Agent at any time and from time to time secure all
Liabilities, whether now existing or contemplated or hereafter arising.
(c) All reasonable costs, expenses, and disbursements incurred
by any Agent and the Term Lender, and, to the extent provided in Section
20:20-9 each Lender, in connection with such Person's relationship(s)
with any Borrower shall be borne by the Borrowers.
20-16. PARTICIPATIONS: Each Lender may sell participations to one or
more financial institutions (each, a "Participant") in that Lender's
interests herein provided that no such participation shall include any
provision which accords the Person purchasing such participation with
the right, vis a vis the Administrative Agent, to consent to any action,
amendment, or waiver which is subject to any requirement herein for
approval by all or a requisite number or proportion of the Lenders.
No such sale of a participation shall relieve a Lender from that
Lender's obligations hereunder nor obligate any Agent to any Person
other than a Lender.
20-17. RIGHT OF SET-OFF. Any and all deposits or other sums at any time
credited by or due to any Borrower from any Agent or any Lender
or any Participant or from any Affiliate of any of the foregoing,
and any cash, securities, instruments or other property of any Borrower
in the possession of any of the foregoing, whether for safekeeping or
otherwise (regardless of the reason such Person had received the same)
shall at all times constitute security for all Liabilities and for any
and all obligations of each Borrower to each Agent and such Lender or any
Participant or such Affiliate and may be applied or set off against the
Liabilities and against such obligations at any time, whether or not
such are then due and whether or not other collateral is then
available to any Agent or that Lender.
20-18. PLEDGES TO FEDERAL RESERVE BANKS: Nothing included in this
Agreement shall prevent or limit any Lender, to the extent that such
Lender is subject to any of the twelve Federal Reserve Banks organized
under '4 of the Federal Reserve Act (12 U.S.C. '341) from pledging all
or any portion of that Lender's interest and rights under this Agreement,
provided, however, neither such pledge nor the enforcement thereof shall
release the pledging Lender from any of its obligations hereunder or under
any of the Loan Documents.
20-19. MAXIMUM INTEREST RATE. Regardless of any provision of any Loan
Document, neither any Agent nor any Lender shall be entitled to contract
for, charge, receive, collect, or apply as interest on any Liability,
any amount in excess of the maximum rate imposed by Applicable Law. Any
payment which is made which, if treated as interest on a Liability would
result in such interest's exceeding such maximum rate shall be held,
to the extent of such excess, as additional collateral for the Liabilities
as if such excess were "Collateral."
20-20. WAIVERS.
(a) Each Borrower (and all guarantors, endorsers, and sureties
of the Liabilities) make each of the waivers included in Section
20:20-20(b), below, knowingly, voluntarily, and intentionally, and
understands that each Agent and each Lender, in establishing the facilities
contemplated hereby and in providing loans and other financial
accommodations to or for the account of the Borrowers as provided herein,
whether not or in the future, is relying on such waivers.
(b) EACH BORROWER, AND EACH SUCH GUARANTOR, ENDORSER, AND
SURETY RESPECTIVELY WAIVES THE FOLLOWING:
(i) Except as otherwise specifically required hereby,
notice of non-payment, demand, presentment, protest and all forms of
demand and notice, both with respect to the Liabilities and the
Collateral.
(ii) Except as otherwise specifically required
hereby, the right to notice and/or hearing prior to an Agent's
exercising of that Agent's rights upon default.
(iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH ANY AGENT OR ANY LENDER IS OR BECOMES A PARTY
(WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST ANY AGENT
OR ANY LENDER OR IN WHICH ANY AGENT OR ANY LENDER IS JOINED AS A PARTY
LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF,
ANY RELATIONSHIP AMONGST OR BETWEEN ANY BORROWER OR ANY OTHER PERSON
AND THE AGENT AND EACH LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN
ANY TRIAL OF ANY SUCH CASE OR CONTROVERSY).
(iv) The benefits or availability of any stay,
limitation, hindrance, delay, or restriction (including, without
limitation, any automatic stay which otherwise might be imposed
pursuant to Section 362 of the Bankruptcy Code) with respect to any
action which any Agent may or may become entitled to take hereunder.
(v) Any defense, counterclaim, set-off, recoupment,
or other basis on which the amount of any Liability, as stated on the
books and records of the Administrative Agent, could be reduced or
claimed to be paid otherwise than in accordance with the tenor of and
written terms of such Liability.
(vi) Any claim to consequential, special, or punitive
damages.
The "Lead Borrower and the Borrowers"
HOMEBASE, INC.
(The "LEAD BORROWER" and a "BORROWER")
By_________________________________
Print Name:________________________________
Title:________________________________
HOMECLUB INC., OF TEXAS
By_________________________________
Print Name:________________________________
Title:________________________________
HOMECLUB, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
FLEET RETAIL FINANCE INC.
("ADMINISTRATIVE AGENT")
By_________________________________
Print Name:________________________________
Title:________________________________
FLEET RETAIL FINANCE INC.
("COLLATERAL AGENT")
By_________________________________
Print Name:________________________________
Title:________________________________
BACK BAY CAPITAL FUNDING LLC
("TERM LENDER")
By_________________________________
Print Name:________________________________
Title:________________________________
The "Revolving Credit Lenders"
THE CIT GROUP / BUSINESS CREDIT, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
FOOTHILL CAPITAL CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
GMAC BUSINESS CREDIT LLC
By_________________________________
Print Name:________________________________
Title:________________________________
GMAC COMMERCIAL CREDIT LLC
By_________________________________
Print Name:________________________________
Title:________________________________
LASALLE BUSINESS CREDIT, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
NATIONAL CITY COMMERCIAL FINANCE, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
PROVIDENT BANK
By_________________________________
Print Name:________________________________
Title:________________________________
TEXTRON FINANCIAL CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
GENERAL ELECTRIC CAPITAL CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
