EXHIBIT 10.1
EXECUTION COPY
BRIDGE TERM LOAN
CREDIT AGREEMENT
DATED AS OF OCTOBER 3, 2005
by and among
WHITEHALL JEWELLERS, INC.,
THE LENDERS
PARTY HERETO,
and
PWJ LENDING LLC
as Administrative Agent and Collateral Agent,
for the Agent, and the Lenders
TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND RULES OF INTERPRETATION.............................................................. 1
2. TERM CREDIT LOANS..................................................................................... 13
3. INTENTIONALLY OMITTED................................................................................. 15
4. INTENTIONALLY OMITTED................................................................................. 15
5. CERTAIN GENERAL PROVISIONS............................................................................ 15
6. COLLATERAL SECURITY................................................................................... 20
7. REPRESENTATIONS AND WARRANTIES........................................................................ 20
8. AFFIRMATIVE COVENANTS OF THE BORROWER................................................................. 26
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER............................................................ 34
10. FINANCIAL COVENANTS OF THE BORROWER................................................................... 41
11. CLOSING CONDITIONS.................................................................................... 41
12. INTENTIONALLY DELETED................................................................................. 45
13. EVENTS OF DEFAULT; ACCELERATION; ETC.................................................................. 45
14. SETOFF................................................................................................ 48
15. THE AGENTS............................................................................................ 48
16. EXPENSES.............................................................................................. 55
17. INDEMNIFICATION....................................................................................... 56
18. SURVIVAL OF COVENANTS, ETC............................................................................ 57
19. ASSIGNMENT AND PARTICIPATION.......................................................................... 57
20. NOTICES, ETC.......................................................................................... 60
21. GOVERNING LAW......................................................................................... 61
22. HEADINGS.............................................................................................. 61
23. COUNTERPARTS.......................................................................................... 61
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TABLE OF CONTENTS
(continued)
PAGE
24. ENTIRE AGREEMENT, ETC................................................................................. 62
25. WAIVER OF JURY TRIAL.................................................................................. 62
26. INTENTIONALLY OMITTED................................................................................. 62
27. SEVERABILITY.......................................................................................... 62
28. INTERCREDITOR AGREEMENT............................................................................... 62
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BRIDGE TERM LOAN
CREDIT AGREEMENT
This BRIDGE TERM LOAN CREDIT AGREEMENT is made as of October 3, 2005, by
and among (a) WHITEHALL JEWELLERS, INC. (the "Borrower"), a Delaware corporation
having its principal place of business at 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000; (b) the lending institutions from time to time party
hereto (collectively, the "Lenders"); and (c) PWJ LENDING LLC ("Prentice"), a
Delaware limited liability company, as administrative agent (in such capacity,
the "Administrative Agent") and the collateral agent (in such capacity, the
"Collateral Agent") for the Agents (as hereinafter defined) and the Lenders.
WHEREAS, the Borrower has requested that the Lenders make a loan available
to the Borrower for, among other things, general corporate and working capital
purposes; and
WHEREAS, the Lenders are willing to provide such financing on the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and benefits to be derived herefrom, the Borrower, the Lenders
and the Agents agree as follows:
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1 Definitions. The following terms shall have the meanings set forth in
this Section 1 or elsewhere in the provisions of this Credit Agreement referred
to below:
Administrative Agent. Prentice, in its capacity as administrative agent
for the benefit of Lenders and the Agents and with respect to the Security
Documents.
Administrative Agent's Head Office. The Administrative Agent's head office
located at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Administrative Agent's Special Counsel. Xxxxxxx Xxxx & Xxxxx LLP, or such
other counsel as may be approved by the Administrative Agent.
Affiliate. Any Person (other than Prentice, its Affiliates, associates and
Related Funds) that would be considered to be an affiliate of the Borrower under
Rule 144(a) of the Rules and Regulations of the Securities and Exchange
Commission, as in effect on the date hereof, if the Borrower were issuing
securities.
Agents. Collectively, the Administrative Agent and the Collateral Agent.
Asset Disposition Prepayment. See Section 5.4.3.
Assignment and Acceptance. See Section 19.1.
Balance Sheet Date. October 3, 2005.
Blocked Account Agreement. Each Blocked Account Agreement entered into by
the Borrower, the Senior Administrative Agent and a depository institution
satisfactory to the Senior Administrative Agent, which shall be in form and
substance acceptable to the Administrative Agent.
Borrower. As defined in the preamble hereto.
Borrowing Base Report. A Borrowing Base Report, as defined in and as
attached to the Senior Credit Agreement as Exhibit A.
Business Day. Any day, other than a Saturday or Sunday, on which banking
institutions in Chicago, Illinois and New York, New York are open for the
transaction of banking business.
Capital Assets. Fixed and/or capital assets, both tangible (such as land,
buildings, fixtures, samples, tools and die, software, software development,
machinery and equipment) and intangible (such as software, patents, copyrights,
trademarks, franchises and goodwill); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with Generally Accepted
Accounting Principles.
Capital Expenditures. Amounts paid or indebtedness incurred by the
Borrower or any of its Subsidiaries in connection with the purchase or lease by
the Borrower or any of its Subsidiaries of Capital Assets that would be required
to be capitalized and shown on the balance sheet of such Person in accordance
with Generally Accepted Accounting Principles.
Capitalized Leases. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with Generally Accepted Accounting
Principles.
CERCLA. See Section 7.18.
Closing Date. The first date on which the conditions set forth in Section
11 have been satisfied or waived and the Term Loan is made.
Closing Fee. The Closing Fee is two percent (2.00%) of the Total
Commitment.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All of the property, rights and interests of the Borrower that
are or are intended to be subject to the security interests created by the
Security Documents.
Collateral Agent. Prentice, in its capacity as collateral agent for the
benefit of Lenders and the Agents under and with respect to the Security
Documents.
Collateral Trustee. The collateral trustee appointed to act on behalf of
the Suppliers, as set forth in the Trade Vendor Extension Agreement.
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Commitment. With respect to each Lender, the amount set forth on Schedule
1 hereto as the amount of such Lender's commitment to make a Term Loan to the
Borrower.
Commitment Percentage. With respect to each Lender, the percentage set
forth on Schedule 1 hereto as such Lender's percentage of the aggregate
Commitments of all of the Lenders.
Consolidated or consolidated. With reference to any term defined herein,
shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with Generally Accepted Accounting
Principles.
Consolidated EBITDA. With respect to the Borrower and its Subsidiaries and
any particular fiscal period, the consolidated earnings (or loss) from
operations of the Borrower and its Subsidiaries for such period, after
eliminating therefrom all non-cash extraordinary nonrecurring items of income
(including gains on the sale of assets and earnings from the sale of
discontinued business lines), and after all expenses and other proper charges,
but before payment or provision for (a) any income taxes or interest expenses
for such period, (b) depreciation for such period, (c) amortization for such
period, and (d) all other non-cash charges for such period, all determined in
accordance with Generally Accepted Accounting Principles.
Credit Agreement. This Bridge Term Loan Credit Agreement, including the
Schedules and Exhibits hereto, as may be amended, modified or restated from time
to time.
Default. See Section 13.1.
Delinquent Lender. Means any Lender that fails (i) to make available to
the Administrative Agent its pro rata share of the Term Loan or (ii) to comply
with the provisions of Section 15 with respect to making dispositions and
arrangements with the other Lenders, where such Lender's share of any payment
received, whether by setoff or otherwise, is in excess of its pro rata share of
such payments due and payable to all of the Lenders, in each case as, when and
to the full extent required by the provisions of this Credit Agreement. A
"Delinquent Lender" shall be deemed a Delinquent Lender until such time as such
delinquency is satisfied.
Distribution. The declaration or payment of any dividend on or in respect
of any shares of any class of capital stock of the Borrower, other than
dividends payable solely in shares of common stock of the Borrower; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of the Borrower, directly or indirectly through a Subsidiary of the
Borrower or otherwise; the return of capital by the Borrower to its shareholders
as such; or any other distribution on or in respect of any shares of any class
of capital stock of the Borrower.
Dollars or $. Dollars in lawful currency of the United States of America.
Eligible Assignee. Any of (i) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (ii)
any Affiliate or Related Fund of an Agent or Lender; (iii) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with Generally Accepted Accounting
Principles; (iv) a
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commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having total assets in excess of
$1,000,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the OECD; (v) the central bank of any country which is a member of
the OECD; and (vi) if, but only if, any Event of Default has occurred and is
continuing, any other bank, insurance company, commercial finance company or
other financial institution or other Person approved by the Administrative
Agent, such approval not to be unreasonably withheld.
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained of contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
Environmental Laws. See Section 7.18(a).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any Person which is treated as a single employer with the
Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Event of Default. See Section 13.1.
Exit Fee. The exit fee is four percent (4.00%) of the Total Commitment.
Foreign Subsidiary. See Section 8.19.
Fourth Amendment to the Senior Credit Agreement. That certain Waiver,
Consent, and Fourth Amendment to Second Amended and Restated Revolving Credit
and Gold Consignment Agreement, among the Borrower and the Senior Agents, dated
as of the date hereof.
Generally Accepted Accounting Principles or GAAP. (i) When used in Section
10, whether directly or indirectly through reference to a capitalized term used
therein, means (A) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(B) to the extent consistent with such principles, the accounting practice of
the Borrower reflected in its financial statements for the year ended on the
Balance Sheet Date; provided, however, that if any change in such principles
promulgated by the Financial Accounting Standards Board and its predecessors
following the Balance Sheet Date would affect (or would result in a change in
the method of calculation of) any of the covenants set forth in Section 10 or
any definition related thereto, then the Borrower, the Agents and the Lenders
will negotiate in good faith to amend all such covenants and definitions as
would be affected by such changes in such principles to the extent necessary to
maintain the economic terms of such covenants as in effect under this Credit
Agreement immediately prior to giving effect to such
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changes in such principles; provided further that until the amendment of such
covenants and definitions shall have been agreed upon by the Borrower, the
Agents and the Required Lenders, the covenants and definitions in effect
immediately prior to such amendment shall remain in effect and any determination
of compliance with any covenant set forth in Section 10 shall be construed in
accordance with Generally Accepted Accounting Principles as in effect
immediately prior to such amendment and consistently applied, and (ii) when used
in general, other than as provided above, means principles that are (A)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to time,
and (B) consistently applied with past financial statements of the Borrower
adopting the same principles, provided that in each case referred to in this
definition of "Generally Accepted Accounting Principles" a certified public
accountant would, insofar as the use of such accounting principles is pertinent,
be in a position to deliver an unqualified opinion (other than a qualification
regarding changes in Generally Accepted Accounting Principles) as to financial
statements in which such principles have been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guarantors. WH Inc. of Illinois, an Illinois corporation, and any other
Person who becomes a direct or indirect Subsidiary of the Borrower after the
Closing Date.
Guaranty. Each Guaranty Agreement executed by each Guarantor in favor of
the Collateral Agent, substantially in the form of Exhibit C, as each may be
amended, modified or restated from time to time.
Hazardous Substances. See Section 7.18(b).
Headquarters Landlord Consent. The Landlord Consent and Waiver, to be
given by the lessor with respect to the Borrower's leased real property located
in Chicago, Illinois at which the Borrower maintains its headquarters and
central warehouse, such Headquarters Landlord Consent being in form and
substance satisfactory to the Lenders and the Agents.
Indebtedness. As to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:
(i) every obligation of such Person for money borrowed,
(ii) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses,
(iii) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person,
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(iv) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities repurchase
agreements but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business which are not overdue or which are being
contested in good faith),
(v) every obligation of such Person under any Capitalized Lease,
(vi) every obligation of such Person under any lease (generally
referred to as being a "synthetic lease") treated as an operating lease under
Generally Accepted Accounting Principles and as a loan or financing for United
States income tax purposes and pursuant to which the lessee retains economic
risk with respect to the value of the residual interest in the leased property,
(vii) all sales by such Person of (A) accounts or general
intangibles for money due or to become due, (B) chattel paper, instruments or
documents creating or evidencing a right to payment of money or (C) other
receivables (collectively "receivables"), whether pursuant to a purchase
facility or otherwise, other than in connection with the disposition of the
business operations of such Person relating thereto or a disposition of
defaulted receivables for collection and not as a financing arrangement, and
together with any obligation of such Person to pay any discount, interest, fees,
indemnities, penalties, recourse, expenses or other amounts in connection
therewith,
(viii) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value any
shares of capital stock of any class issued by such Person, any warrants,
options or other rights to acquire any such shares, or any rights measured by
the value of such shares, warrants, options or other rights,
(ix) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar agreements),
the value of which is dependent upon interest rates, currency exchange rates,
commodities or other indices,
(x) every obligation in respect of Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent that such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity, except to the
extent that the terms of such Indebtedness provide that such Person is not
liable therefor and such terms are enforceable under applicable law,
(xi) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise acting
as surety for, any obligation of a type described in any of clauses (i) through
(x) (the "primary obligation") of another Person (the "primary obligor"), in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person (A) to purchase or pay (or advance or supply funds for
the purchase of) any security for the payment of such primary obligation, (B) to
purchase property, securities or services for the purpose of assuring the
payment of such primary obligation, or (C) to maintain working capital, equity
capital or other financial statement
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condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (w) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with Generally Accepted
Accounting Principles, (x) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (y) any sale of receivables shall be the amount of unrecovered capital
or principal investment of the purchaser (other than the Borrower or any of its
wholly-owned Subsidiaries) thereof, excluding amounts representative of yield or
interest earned on such investment, and (z) any equity related purchase
obligation shall be the maximum fixed redemption or purchase price thereof
inclusive of any accrued and unpaid dividends to be comprised in such redemption
or purchase price.
Intercreditor Agreement. That certain Intercreditor Agreement entered into
by and between the Collateral Agent, on behalf of the Lenders, and the Senior
Collateral Agent, on behalf of the Senior Lenders, dated October 3, 2005.
Interest Payment Date. See Section 2.3(b).
Interest Rate. See Section 2.3(a).
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (ii) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(iii) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (iv) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (ii) may be
deducted when paid; and (v) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
Landlord Waiver. Collectively, each waiver from the lessor or sublessor of
property leased by the Borrower as lessee, in substantially the form of Exhibit
D.
Lenders. Each of the lending institutions party hereto and any other
Person who becomes an assignee of any rights and obligations of a Lender
pursuant to Section 19.
Loan Account. See Section 5.2.1.
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Loan Documents. This Credit Agreement, the Notes, the Security Documents
and all other documents related thereto.
Loans. The Term Loan.
Majority Lenders. As of any date, the Lenders (other than Delinquent
Lenders) whose aggregate Commitments together constitute fifty-one percent (51%)
of the Total Commitment.
Mandatory Prepayments. Each of the Senior Facility Termination Prepayment,
Asset Disposition Prepayment, and New Issuance Prepayment, in each case pursuant
to Section 5.4.
Maturity Date. December 30, 2005; provided that if the Securities Purchase
Agreement has not been terminated on or prior to such date and the SEC reviews
the Borrower's preliminary proxy statement with respect to the special or annual
meeting seeking approval from the Borrower's stockholders as contemplated by
Section 4(n) of the Securities Purchase Agreement, then the Maturity Date shall
be January 31, 2006.
Monthly Inventory Report. A Monthly Inventory Report signed by the
Controller, Senior Vice President of Finance or principal financial or
accounting officer of the Borrower in substantially the form of Exhibit E
hereto.
Multiemployer Plan. Any multiemployer plan within the meaning of Section
3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
Net Proceeds. With respect to any sale or other disposition of any asset
by any Person or any issuance of Indebtedness or equity securities of such
Person, the excess of (i) the gross cash proceeds received by such Person from
such sale or disposition or, as the case may be, such issuance, plus, as and
when received, all cash payments received subsequent to such sale or disposition
or such issuance representing (A) any deferred purchase price therefor or (B)
any cash proceeds from the sale or other disposition of any cash equivalents (or
any deferred purchase price obligations) received therefor over (ii) the sum of
(A) a reasonable reserve for any liabilities payable incident to such sale or
disposition or such issuance, (B) reasonable direct costs and expenses incurred
by such Person in connection with such sale or disposition or such issuance
(including, without limitation, reasonable brokerage, legal, investment banking,
accounting, consulting, survey, title and recording fees and commissions), (C)
all payments actually made on any Indebtedness (other than the Obligations) or
other obligations which are secured by any assets subject to such sale or
disposition which are required to be repaid out of the proceeds from such
transaction and (D) actual tax payments made or to be made in connection
therewith.
New Issuance Prepayment. See Section 5.4.4.
Notes. The Term Loan Notes.
Obligations. All indebtedness, obligations and liabilities of any of the
Borrower and its Subsidiaries to any of the Lenders and the Agents, individually
or collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by
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contract, operation of law or otherwise, arising or incurred under this Credit
Agreement or any of the other Loan Documents or in respect of the Term Loans or
cash management services provided or any of the Notes or other instruments or
documents at any time evidencing any thereof.
Outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 of
ERISA and any successor entity or entities having similar responsibilities.
Perfection Certificate. The Perfection Certificate dated as of October 3,
2005 executed by Borrower in favor of Administrative Agent.
Permitted Inventory Locations. The retail stores and distribution centers
of the Borrower and its Subsidiaries located in the United States of America and
listed on Schedule 2 hereto, as such Schedule 2 may be supplemented from time to
time in accordance with the provisions of Section 8.4(j).
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 9.2.
Person. Any individual, corporation, partnership, limited liability
company, trust, unincorporated association, business, or other legal entity, and
any government or any governmental agency or political subdivision thereof.
Pledge Agreement. Each Pledge Agreement executed by the Borrower in favor
of the Collateral Agent, substantially in the form of Exhibit F, as each may be
amended, modified or restated from time to time.
Precious Metal. Gold measured in xxxx ounces having a fineness of not less
than .9995, without regard to whether such gold is alloyed or unalloyed, in
bullion form or contained in or processed into other materials which contain
elements other than gold.
Prentice. See preamble hereto.
Real Estate. All real property at any time owned or leased (as lessee or
sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Note, or the continuation of such grid, or
any other similar record, including computer records, maintained by any Lender
with respect to any Loan referred to in such Note.
Register. See Section 19.3.
Registration Rights Agreement. The Registration Rights Agreement pursuant
to which the Borrower will provide certain registration rights with respect to
the Warrant Shares, as defined under the Securities Purchase Agreement, and, if
issued, the Conversion Shares and the
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Interest Shares, as defined under the Securities Purchase Agreement, under the
1933 Act and the rules and regulations promulgated thereunder, and applicable
state securities laws.
Related Fund. With respect to any Lender or Agent which is a fund that
invests in loans, any other such fund managed by the same investment advisor as
such Lender or Agent or by an Affiliate of such Lender or Agent or such advisor.
Required Lenders. As of any date, the Lenders (other than Delinquent
Lenders) whose aggregate Commitments together constitute at least sixty-six and
two-thirds percent (66-2/3%) of the Total Commitment.
Secured Convertible Notes. The secured convertible notes to be issued by
the Borrower for an aggregate principal amount of $50,000,000 pursuant to the
Securities Purchase Agreement.
Secured Convertible Note Documents. Collectively, the documents entered
into in connection with the issuance of the Secured Convertible Notes pursuant
to the Securities Purchase Agreement, including without limitation the
Securities Purchase Agreement.
Securities Purchase Agreement. The Securities Purchase Agreement, dated as
of October 3, 2005, by and among the Borrower and the investors listed on the
Schedule of Buyers attached thereto.
Security Agreement. The Security Agreement of even date herewith, between
the Borrower and the Collateral Agent, as may be amended, modified or restated
from time to time, together with each other Security Agreement executed by each
Guarantor in favor of the Collateral Agent substantially in the form of Exhibit
G.
Security Documents. The Security Agreement, the Headquarters Landlord
Consent, the Landlord Waivers, the Security Interest Grant in Patents, the
Security Interest Grant in Trademarks, each Guaranty, each Pledge Agreement, and
all Blocked Account Agreements, as each may be amended, modified or restated
from time to time.
Senior Administrative Agent. LaSalle Bank National Association, in its
capacity as Administrative Agent for the Senior Lenders under the Senior Credit
Agreement.
Senior Agents. LaSalle Bank National Association (or any successor) in its
capacity as administrative agent and collateral agent under the Senior Credit
Agreement, ABN Amro Bank N.V. in its capacity as syndication agent under the
Senior Credit Agreement and JPMorgan Chase Bank in its capacity as documentation
agent under the Senior Credit Agreement.
Senior Collateral Agent. LaSalle Bank National Association, in its
capacity as Collateral Agent for the Senior Lenders under the Senior Credit
Agreement.
Senior Credit Agreement. The Second Amended and Restated Revolving Credit
and Gold Consignment Agreement, dated as of July 29, 2003, among the Borrower,
LaSalle Bank National Association, as administrative agent for the banks from
time to time party thereto, LaSalle Bank National Association, as Collateral
Agent for the Senior Lenders and the other
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agents and parties from time to time party thereto, as the same may be amended,
amended and restated, supplemented, refinanced or otherwise modified and in
effect from time to time.
Senior Lenders. The financial institutions from time to time party to the
Senior Credit Agreement.
Senior Loan Documents. In each case as the following terms are defined
under the Senior Credit Agreement: the Credit Agreement, the Notes, the Letter
of Credit Applications, the Letters of Credit, the Fee Letter and the Security
Documents.
Specified Lease. A lease by the Borrower as lessee of Real Estate at which
Inventory is held and as to which at any time either (a) the Borrower and the
Agents have not received a Landlord Waiver or (b) the Administrative Agent has
not received evidence, in form and substance satisfactory to the Administrative
Agent, that, based upon then existing law (as determined by the Administrative
Agent in the exercise of its reasonable discretion and on the advice of
counsel), the landlord of such property would not have a lien on inventory
superior to the security interest granted under the Security Agreement, securing
rent obligations more than thirty (30) days past due or securing future rent
obligations accruing after the Closing Date.
Store Accounts. Depository accounts in depository institutions for, or on
behalf of, the Borrower or any of its Subsidiaries and listed on Schedule 7.20
hereto (as such may be amended from time to time in accordance with the terms
hereof).
Subsidiary. Any corporation, association, trust, or other business entity
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
Supplier or Suppliers. Individually and collectively, one or more
suppliers of inventory to the Borrower and its Subsidiaries.
Term Loan Note Record. A Record with respect to a Term Loan Note.
Term Loan Notes. See Section 2.2.
Term Loan. The term loan made by the Lenders to the Borrower pursuant to
Section 2.
Termination Date. The earliest to occur of the (i) Maturity Date, or (ii)
the date on which the maturity of the Term Loan is accelerated in accordance
with Section 13.1 or (iii) the date of the occurrence of an Event of Default
pursuant to Sections 13.1(g) and (h).
Total Commitment. The sum of the Commitments of the Lenders, such amount
being equal to $30,000,000 as of the Closing Date.
Trade Vendor Extension Agreement. Collectively, that certain Trade Vendor
Extension Agreement to be entered into by and between the Borrower, Prentice
Capital Management LP or one of its Affiliates, and certain Suppliers, as
contemplated by the Trade Vendor Term Sheet, the Trade Vendor Term Sheet and any
notes or other documents and agreements entered into in connection therewith.
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Trade Vendor Intercreditor Agreement. That certain Intercreditor Agreement
to be entered into by and between the Collateral Agent, on behalf of the
Lenders, and the Collateral Trustee, on behalf of the Suppliers, in form and
substance acceptable to the Agents, in their sole discretion.
Trade Vendor Term Sheet. That certain binding term sheet entitled Terms
for Treatment of Trade Indebtedness of Whitehall Jewellers, Inc., entered into
by and among the Borrower, Prentice Capital Management LP and certain Suppliers
in September 2005.
Unanimous Lenders. As of any date, the Lenders (other than Delinquent
Lenders) whose aggregate Commitments together constitute One hundred percent
(100%) of the Total Commitment.
Voting Stock. Stock or similar interests, of any class or classes (however
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar functions) of the corporation, association, trust or other business
entity involved, whether or not the right so to vote exists by reason of the
happening of a contingency.
Warrants. The Series A Warrants to be issued to the "Buyers," as defined
under the Securities Purchase Agreement, pursuant to the terms of the Securities
Purchase Agreement.
1.2 Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by Generally Accepted Accounting Principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by Generally
Accepted Accounting Principles, which terms are defined in the Uniform
Commercial Code as in effect in the State of New York, as in effect from time to
time, have the meanings assigned to them therein.
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(h) Reference to a particular "Section" refers to that section of
this Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not to any particular
section or subdivision of this Credit Agreement.
2. TERM CREDIT LOANS.
2.1 Term Loan.
(a) Each Lender severally and not jointly with any other Lender,
agrees, upon the terms and subject to the conditions herein set forth, on the
Closing Date to make the Term Loan to the Borrower in a single drawing in an
aggregate principal amount not to exceed the amount of such Lender's Commitment;
provided that the aggregate principal amount of the Term Loan shall not exceed
$30,000,000. Any portion of the Term Loan that is repaid may not be reborrowed.
(b) The Term Loan shall be made by the Lenders simultaneously and in
accordance with their respective Commitments. The failure of any Lender to make
its portion of the Term Loan shall neither relieve any other Lender of its
obligation to fund its portion of the Term Loan in accordance with the
provisions of this Agreement nor increase the obligation of any such other
Lender.
(c) The Administrative Agent, without the request of the Borrower,
may advance any interest, fee, service charge, or other payment to which any
Agent or their Affiliates or any Lender is entitled from the Borrower pursuant
hereto or any other Loan Document and may charge the same to the Loan Account.
The Administrative Agent shall advise the Borrower of any such advance or charge
promptly after the making thereof. Any amount which is added to the principal
balance of the Loan Account as provided in this Section 2.1(c) shall bear
interest at the Interest Rate and shall be payable on the Maturity Date.
2.2 Notes; Repayment of Term Loan.
(a) The Term Loan shall be evidenced by this Agreement and/or one or
more Notes duly executed on behalf of the Borrower, dated the Closing Date, in
substantially the form attached hereto as Exhibit H, payable to the order of a
Lender in the aggregate principal amount equal to the principal amount of the
portion of the Term Loan advanced by such Lender plus the amount of interest
capitalized thereon in accordance with the terms of this Agreement. The
outstanding principal balance of all Obligations shall be payable on the
Termination Date (subject to earlier repayment as provided below). The Term Loan
(including, without limitation, any interest capitalized thereon and added to
the outstanding principal balance of the Term Loan in accordance with the terms
hereof) shall bear interest from the date hereof on the outstanding principal
balance thereof as set forth in this Section 2. Each Lender is hereby authorized
by the Borrower to endorse on a schedule attached to each Note delivered to such
Lender (or on a continuation of such schedule attached to such Note and made a
part thereof), or otherwise to record in such Lender's internal records, an
appropriate notation evidencing the date and amount of the Term Loan from such
Lender, each payment and prepayment of principal of such Term
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Loan, each payment of interest on the Term Loan and the other information
provided for on such schedule; provided, however, that the failure of any Lender
to make such a notation or any error therein shall not affect the obligation of
the Borrower to repay the Term Loan made by such Lender in accordance with the
terms of this Agreement and the applicable Notes.
(b) Upon receipt of indemnification reasonably satisfactory to the
Borrower, and an affidavit of a Lender as to the loss, theft, destruction or
mutilation of such Lender's Note and upon cancellation of such Note, the
Borrower will issue, in lieu thereof, a replacement Note in favor of such
Lender, in the same principal amount thereof and otherwise of like tenor.
2.3 Interest on Term Loan.
(a) The Term Loan shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) on the principal amount
thereof from time to time outstanding, from the date of the making of such Term
Loan until such principal amount is repaid in full, at a rate per annum equal to
18% (the "Interest Rate").
(b) Accrued interest on the Term Loan shall be payable monthly in
arrears, on the first Business Day of each month (each an "Interest Payment
Date"), commencing on November 1, 2005, at maturity (whether by acceleration or
otherwise), and after such maturity on demand.
(c) The Borrower shall repay the entire unpaid balance of the Term
Loan (including, without limitation, all capitalized interest thereon) and all
accrued and unpaid interest thereon on the Termination Date. If the Term Loan
shall be repaid from sources other than the proposed Secured Convertible Notes,
concurrently with such repayment, the Borrower shall pay the Exit Fee to the
Administrative Agent for the benefit of the Lenders.
2.4 Termination of Commitments.
The Total Commitment shall terminate at 5:00 p.m. (New York City
time) on the Closing Date.
2.5 Maturity. The Borrower promises to pay on the Maturity Date, and there
shall become absolutely due and payable on the Maturity Date, (a) all of the
Term Loans outstanding on such date, together with any and all accrued and
unpaid interest thereon and (b) the Exit Fee, to the extent (x) the Term Loans
are not paid at maturity for any reason other than the occurrence of an Event of
Default under Sections 13.1(g) and (h) hereof or (y) any repayment is funded
from sources other than the proposed Secured Convertible Notes.
2.6 Optional Repayments of Term Loans. The Borrower shall have the right,
at its election, to repay the outstanding Term Loans in accordance with the
provisions of Section 5.3 hereof.
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3. INTENTIONALLY OMITTED.
4. INTENTIONALLY OMITTED.
5. CERTAIN GENERAL PROVISIONS.
5.1 Default Interest. Effective upon the occurrence of any Event of
Default and at all times thereafter while such Event of Default is continuing,
at the option of the Administrative Agent or upon the direction of the Required
Lenders, interest shall accrue on the outstanding Term Loan (after as well as
before judgment, as and to the extent permitted by law) at a rate per annum
equal to the rate in effect from time to time plus 3% per annum, and such
interest shall be payable on demand.
5.2 Maintenance of Loan Account; Statement of Account.
5.2.1 The Administrative Agent shall maintain an account on its
books in the name of the Borrower (the "Loan Account") which will reflect the
Term Loan and any and all other Obligations that have become payable.
5.2.2 The Loan Account will be credited with all amounts received by
the Administrative Agent from the Borrower or otherwise for the Borrowers'
account, and the amounts so credited shall be applied as set forth in Section
2.2(a). After the end of each month, the Administrative Agent shall send to the
Lead Borrower a statement accounting for the charges, loans, advances and other
transactions occurring among and between the Administrative Agent, the Lenders
and the Borrowers during that month. The monthly statements shall, absent
manifest error, be final, conclusive and binding on the Borrower.
5.3 Optional Prepayment of Term Loan. The Borrower may upon at least five
(5) Business Days' prior written notice to the Administrative Agent, prepay,
without penalty or premium, all or any portion of the principal balance of the
Term Loan. Notwithstanding the preceding, if such prepayment is funded directly
or indirectly from sources other than the proposed Secured Convertible Notes,
the Borrower shall concurrently pay the Exit Fee to the Administration Agent for
the benefit of the Lenders. Each prepayment made pursuant to this Section 5.3
shall be accompanied by the payment of accrued interest to the date of such
payment on the amount prepaid.
5.4 Mandatory Prepayments of Loans.
5.4.1 Termination of Senior Loan Agreement. The Borrower shall
immediately prepay all Obligations (a "Senior Facility Termination Prepayment")
in the event that the Senior Credit Agreement is terminated for any reason and
either (i) the Senior Credit Agreement is not replaced with another credit
agreement and related transaction documentation, the terms and conditions of
which are no less favorable to the Borrower, the Agents and the Lenders than the
Senior Credit Agreement, including with respect to any intercreditor
arrangements (as determined by the Agents in their discretion) or (ii) the
lenders and agents party to such new credit agreement are not reasonably
acceptable to the Agents and the Required Lenders.
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5.4.2 Secured Convertible Notes. The Borrower shall immediately
prepay to the Administrative Agent, for the accounts of the Lenders, the
proceeds from the Secured Convertible Notes, in an amount equal to one hundred
percent (100%) of the Net Proceeds received by the Borrower in connection
therewith.
5.4.3 Asset Disposition Prepayment. Subject to the terms of the
Intercreditor Agreement, the Borrower shall pay to the Administrative Agent, for
the accounts of the Lenders (each, an "Asset Disposition Prepayment"),
immediately upon the receipt by the Borrower of the proceeds of any asset
dispositions, an amount equal to one hundred percent (100%) of the Net Proceeds
received by the Borrower in connection with such asset disposition.
5.4.4 New Issuance Prepayment. Subject to the terms of the
Intercreditor Agreement, the Borrower shall pay to the Agent, for the accounts
of the Lenders (each, a "New Issuance Prepayment"), immediately after the
completion by the Borrower of any issuance of (i) Indebtedness permitted
pursuant to Section 9.1(i) hereof or (ii) except as contemplated and/or required
by the Secured Convertible Note Documents, equity securities of the Borrower or
any of its Subsidiaries, including, without limitation, any issuance of
warrants, options or subscription rights (other than issuances of common stock
to employees of the Borrower), permitted pursuant to Section 9.13 hereof, an
amount equal to one hundred percent 100% of the Net Proceeds received by the
Borrower in connection with any such issuance.
5.4.5 Applications of Mandatory Prepayments. Each Mandatory
Prepayments received by the Administrative Agent shall be applied to the
Obligations as follows:
(A) first, to pay all fees and expenses then due and payable
under this Credit Agreement;
(B) second, to pay all accrued and unpaid interest on the Term
Loans until paid in full;
(C) third, to prepay the Term Loans until paid in full, and
(D) fourth, to repay all other Obligations due and owing to
the Agents and the Lenders;
5.5 Repayments of Loans and Distribution of Collateral Proceeds After
Event of Default. In the event that following the occurrence and during the
continuance of an Event of Default, the Collateral Agent, any other Agent or any
Lender, as the case may be, receives any monies, whether pursuant to Section
8.14 (as applicable) or Section 13.3 or otherwise with respect to the
realization upon any of the Collateral, such monies shall be distributed for
application as follows (the Borrower hereby authorizing and consenting to such
application):
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agents for or in respect of all reasonable costs, expenses,
disbursements and losses which shall have been incurred or sustained by the
Agents in connection with the collection of such monies by the Agents, for the
exercise, protection or enforcement by the Collateral Agent of all or any of the
rights, remedies, powers and privileges of the Collateral Agent, for the benefit
of the Agents and the Lenders, under this Credit Agreement or any of the other
Loan Documents or in respect
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of the Collateral, including, without limitation, the fees and expenses of
counsel to the Agents or in support of any provision of adequate indemnity to
the Agents against any taxes or liens which by law shall have, or may have,
priority over the rights of the Agents to such monies;
(b) Second, to pay all accrued and unpaid interest on the Term Loans
until paid in full;
(c) Third, to repay the Term Loans until paid in full;
(d) Fourth, to pay the Exit Fee, if any, until paid in full;
(e) Fifth, to repay all other Obligations due and owing to the
Agents and the Lenders under the Loan Documents until paid in full;
(f) Sixth, the excess, if any, shall be returned to the Borrower or
to such other Persons as are entitled thereto.
All distributions in respect of (i) such Obligations shall be made pari
passu among Obligations with respect to the Agents' fees payable pursuant to
Section 5.6, and all other Obligations and (ii) Obligations owing to the Lenders
with respect to each type of Obligation under each of the categories specified
above such as interest, principal, fees and expenses, shall be made among the
Lenders entitled thereto pro rata, in accordance with their respective
Commitment Percentages; and provided, further, that the Agents may in their
discretion make proper allowance to take into account any Obligations not then
due and payable.
5.6 Closing Fee. The Borrower shall pay to the Administrative Agent, for
the benefit of the Lenders, an upfront fee in the amount of the product of two
percent (2.00%) times the Total Commitment.
5.7 Funds for Payments.
5.7.1 Payments to Administrative Agent. All payments of principal,
interest, closing fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made to the Administrative Agent, for the
respective accounts of the Lenders and the Administrative Agent, at the
Administrative Agent's Head Office or at such other location that the
Administrative Agent may from time to time designate, in each case in
immediately available funds in Dollars.
5.7.2 No Offset, etc. All payments by the Borrower hereunder and
under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or levied by
any jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such deduction
or withholding. If any such obligation is imposed upon the Borrower with respect
to any amount payable by it hereunder or under any of the other Loan Documents,
the Borrower will pay to the Administrative Agent, for the account of the
Lenders or (as the case may be) the Agents, on the date on which such amount is
due and payable hereunder or under such other Loan Document,
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such additional amount in Dollars as shall be necessary to enable the Lenders or
the Agents to receive the same net amount which the Lenders or the Agents would
have received on such due date had no such obligation been imposed upon the
Borrower. The Borrower will deliver promptly to the Agents certificates or other
valid vouchers for all taxes or other charges deducted from or paid with respect
to payments made by the Borrower hereunder or under such other Loan Document.
5.8 Computations. All computations of interest on the Loans and of
commitment fees or other fees shall, unless otherwise expressly provided herein,
be based on 360-day year and paid for the actual number of days elapsed.
Whenever a payment hereunder or under any of the other Loan Documents becomes
due on a day that is not a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and interest shall accrue during
such extension. The outstanding amount of the Loans as reflected on the Term
Loan Note Records and the other records maintained by the Agents and each Lender
from time to time shall be considered correct and binding on the Borrower unless
within five (5) Business Days after receipt of any notice by any of the Agents
or the Lenders of such outstanding amount, such Agent or such Lender shall
notify the Borrower to the contrary.
5.9 Additional Costs, etc. If any present or future applicable law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to any Lender
or Agent by any central bank or other fiscal, monetary or other authority
(whether or not having the force of law), shall:
(a) subject any Lender or Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this Credit
Agreement, the other Loan Documents, such Lender's Commitment or the Loans
(other than taxes based upon or measured by the income or profits of such Lender
or Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Lender of the principal of or the
interest on any Loans or any other amounts payable to any Lender or Agent under
this Credit Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans by, or commitments of an office of
any Lender, or
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(d) impose on any Lender or Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan Documents,
such Lender's Commitment, or any class of loans, or commitments of which any of
the Loans or such Lender's Commitment forms a part, and the result of any of the
foregoing is
(i) to increase the cost to any Lender of making, funding,
issuing, renewing, extending or maintaining any of the Loans, or such
Lender's Commitment, or
(ii) to reduce the amount of principal, interest, or other
amount payable to such Lender or Agent hereunder on account of such
Lender's Commitment, or any of the Loans, or
(iii) to require such Lender or Agent to make any payment or
to forego any interest or other sum payable hereunder, the amount of which
payment or foregone interest or other sum is calculated by reference to
the gross amount of any sum receivable or deemed received by such Lender
or Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, upon demand made by such Lender
or (as the case may be) such Agent at any time and from time to time and as
often as the occasion therefor may arise, pay to such Lender or such Agent such
additional amounts as will be sufficient to compensate such Lender or such Agent
for such additional cost, reduction, payment or foregone interest or other sum.
5.10 Capital Adequacy. If after the date hereof any Lender or the
Administrative Agent determines that (a) the adoption of or change in any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) regarding capital requirements for banks or bank
holding companies or any change in the interpretation or application thereof by
a court or governmental authority with appropriate jurisdiction, or (b)
compliance by such Lender or such Agent or any corporation controlling such
Lender or such Agent with any law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) of any such
entity regarding capital adequacy, has the effect of reducing the return on such
Lender's or such Agent's commitment with respect to any Loans to a level below
that which such Lender or such Agent could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or such Agent's
then existing policies with respect to capital adequacy and assuming full
utilization of such entity's capital) by any amount deemed by such Lender or (as
the case may be) such Agent to be material, then such Lender or such Agent may
notify the Borrower of such fact. To the extent that the amount of such
reduction in the return on capital is not reflected in the Interest Rate, as
applicable, the Borrower agrees to pay such Lender or (as the case may be) such
Agent for the amount of such reduction in the return on capital as and when such
reduction is determined upon presentation by such Lender or (as the case may be)
such Agent of a certificate in accordance with Section 5.11 hereof. Each Lender
shall allocate such cost increases among its customers in good faith and on an
equitable basis.
5.11 Certificate. A certificate setting forth any additional amounts
payable pursuant to Sections 5.9 or 5.10 and a brief explanation of such amounts
which are due, submitted by any
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Lender or Agent to the Borrower, shall be conclusive, absent manifest error,
that such amounts are due and owing.
5.12 Indemnity. The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from and against any loss, cost or expense (including loss
of anticipated profits) that such Lender may sustain or incur as a consequence
of default by the Borrower in payment of the principal amount of or any interest
on Loans as and when due and payable.
5.13 Registration Rights. The Borrower will file to register the resale of
common stock issuable upon exercise of the Warrants referred to in Section 11.18
hereof on a registration statement on Form S-1 as soon as practicable but in no
event later than the Filing Deadline (as defined in the Registration Rights
Agreement) and be required to have the registration statement declared effective
by the Effectiveness Deadline (as defined in the Registration Rights Agreement),
subject to penalties for failure to file, have declared effective or maintain
effectiveness of the registration statement.
6. COLLATERAL SECURITY.
The Obligations shall be secured by a perfected security interest (subject
only to liens in favor of the Senior Collateral Agent, for the benefit of the
Senior Lenders and the Senior Agents and Permitted Liens entitled to priority
under applicable law) in all of the assets of the Borrower, whether now owned or
hereafter acquired, pursuant to the terms of the Security Documents to which the
Borrower is a party.
7. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Lenders and the Agents as
follows:
7.1 Corporate Authority.
7.1.1 Incorporation; Good Standing. Each of the Borrower and its
Subsidiaries (i) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, (ii) has all requisite
corporate power to own its property and conduct its business as now conducted
and as presently contemplated, and (iii) is in good standing as a foreign
corporation and is duly authorized to do business in each jurisdiction where
such qualification is necessary except where a failure to be so qualified would
not have a materially adverse effect on the business, assets or financial
condition of the Borrower or such Subsidiary.
7.1.2 Authorization. The execution, delivery and performance of this
Credit Agreement and the other Loan Documents to which the Borrower or any of
its Subsidiaries is or is to become a party and the transactions contemplated
hereby and thereby (i) are within the corporate authority of such Person, (ii)
have been duly authorized by all necessary corporate proceedings, (iii) do not
conflict with or result in any breach or contravention of any provision of law,
statute, rule or regulation to which the Borrower or any of its Subsidiaries is
subject or any judgment, order, writ, injunction, license or permit applicable
to the Borrower or any of its Subsidiaries and (iv) do not conflict with any
provision of the corporate charter or bylaws of, or any agreement or other
instrument binding upon, the Borrower or any of its Subsidiaries.
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7.1.3 Enforceability. The execution and delivery of this Credit
Agreement and the other Loan Documents to which the Borrower or any of its
Subsidiaries is or is to become a party will result in valid and legally binding
obligations of such Person enforceable against it in accordance with the
respective terms and provisions hereof and thereof, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors' rights and
except to the extent that 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.
7.2 Governmental Approvals. The execution, delivery and performance by the
Borrower and any of its Subsidiaries of this Credit Agreement and the other Loan
Documents to which the Borrower or any of its Subsidiaries is or is to become a
party and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or authority
other than those already obtained.
7.3 Title to Properties; Leases. Except as indicated on Schedule 7.3
hereto, the Borrower and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including any mortgages, leases, conditional
sales agreements, title retention agreements, liens or other encumbrances except
Permitted Liens.
7.4 Financial Statements and Projections.
7.4.1 Financial Statements. There has been furnished to each of the
Lenders a consolidated balance sheet of the Borrower and its Subsidiaries as at
December 31, 2004, and a consolidated statement of income of the Borrower and
its Subsidiaries for the fiscal year then ended, certified by
PricewaterhouseCoopers LLP. Such balance sheets and statement of income have
been prepared in accordance with Generally Accepted Accounting Principles and
fairly present the financial condition of the Borrower as at the close of
business on the date thereof and the results of operations for the fiscal year
then ended. There are no contingent liabilities of the Borrower or any of its
Subsidiaries as of such date involving material amounts, known to the officers
of the Borrower, which were not disclosed in such balance sheets and the notes
related thereto.
7.4.2 Projections. The projections of the operating budgets of the
Borrower and its Subsidiaries on a consolidated basis, balance sheets and cash
flow statements presented to the Agents as the Borrower's "Business Plan",
copies of which have been delivered to the Agents, are based on a variety of
assumptions with respect to general economic, financial and market conditions
used in formulating such projections which are believed by the Borrower to be
reasonable as of the date of the "Business Plan" but that are inherently subject
to significant economic and competitive uncertainties, all of which are
difficult to predict and many of which are beyond the control of the Borrower.
To the knowledge of the Borrower or any of its Subsidiaries, as of the Closing
Date no facts exist that (individually or in the aggregate) would result in any
material change in any of such projections. The "Business Plan" has been
prepared on the basis of the assumptions stated therein and reflect the current
estimates of the Borrower and its Subsidiaries of the results of operations and
other information projected therein.
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7.5 No Material Changes, etc.; Solvency.
7.5.1 No Material Changes, etc. Since the Balance Sheet Date, there
has occurred no materially adverse change in the financial condition or business
of the Borrower and its Subsidiaries as shown on or reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date, or the consolidated statement of income for the fiscal year
then ended, other than changes in the ordinary course of business that have not
had any materially adverse effect either individually or in the aggregate on the
business or financial condition of the Borrower or any of its Subsidiaries.
Except as expressly permitted by Section 9.4, since the Balance Sheet Date, the
Borrower has not made any Distribution.
7.5.2 Solvency. After the closing on, and consummation of the
transactions contemplated by the Secured Convertible Note Documents and
otherwise giving effect to the transactions contemplated by this Agreement, the
other Loan Documents and the Senior Credit Agreement, as amended by the Fourth
Amendment to the Senior Credit Agreement, the Borrower and its Subsidiaries on a
consolidated basis are Solvent. As used herein, "Solvent" shall mean that the
Borrower and its Subsidiaries (i) have assets having a fair value in excess of
their liabilities, (ii) have assets having a fair value in excess of the amount
required to pay their liabilities on existing debts as such debts become
absolute and matured, and (iii) have, and expect to continue to have, access to
adequate capital for the conduct of their business and the ability to pay their
debts from time to time incurred in connection with the operation of their
business as such debts mature.
7.6 Franchises, Patents, Copyrights, etc. Each of the Borrower and its
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without known
conflict with any rights of others.
7.7 Litigation. Except as set forth in Schedule 7.7 hereto, there are no
actions, suits, proceedings or investigations of any kind pending or threatened
against the Borrower or any of its Subsidiaries before any court, tribunal or
administrative agency or board that, if adversely determined, might, either in
any case or in the aggregate, reasonably be expected to materially adversely
affect the properties, assets, financial condition or business of the Borrower
and its Subsidiaries or materially impair the right of the Borrower and its
Subsidiaries, considered as a whole, to carry on business substantially as now
conducted by them, or result in any substantial liability not adequately covered
by insurance, or for which adequate reserves are not maintained on the
consolidated balance sheet of the Borrower and its Subsidiaries, or which
question the validity of this Credit Agreement or any of the other Loan
Documents, or might impair or prevent any action taken or to be taken pursuant
hereto or thereto.
7.8 No Materially Adverse Contracts, etc. Neither the Borrower nor any of
its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Borrower or any of its Subsidiaries.
Neither the Borrower nor any of its Subsidiaries is a party to any contract or
agreement that has or is expected, in the judgment of the Borrower's officers,
to have any materially adverse effect on the business of the Borrower or any of
its Subsidiaries.
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7.9 Compliance with Other Instruments, Laws, etc. Neither the Borrower nor
any of its Subsidiaries is in violation of any provision of its charter
documents, bylaws, or any agreement or instrument to which it may be subject or
by which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing cases in
a manner that could reasonably be expected to result in the imposition of
substantial penalties or materially and adversely affect the financial
condition, properties or business of the Borrower or any of its Subsidiaries.
7.10 Tax Status. The Borrower and its Subsidiaries (a) have made or filed
all federal and state income and sales and all other material tax returns,
reports and declarations required by any jurisdiction to which any of them is
subject, (b) have paid all taxes and other governmental assessments and charges
shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith and by appropriate proceedings and (c) have
set aside on their books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Borrower know of no basis for any such claim.
7.11 No Event of Default. No Default or Event of Default has occurred and
is continuing.
7.12 Holding Company and Investment Company Acts. Neither the Borrower nor
any of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940.
7.13 Absence of Financing Statements, etc. Except with respect to
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property of the Borrower or any of its Subsidiaries or any
rights relating thereto.
7.14 Perfection of Security Interest. All filings, assignments, pledges
and deposits of documents or instruments have been made and all other actions
have been taken that are necessary or advisable, under applicable law, to
establish and perfect the Collateral Agent's security interest in the
Collateral. The Collateral and the Collateral Agent's rights with respect to the
Collateral are not subject to any setoff, claims, withholdings or other
defenses. The Borrower is the owner of the Collateral free from any lien,
security interest, encumbrance and any other claim or demand, except for
Permitted Liens.
7.15 Certain Transactions. Except as set forth on Schedule 7.15 hereto and
except for arm's length transactions pursuant to which the Borrower or any of
its Subsidiaries makes payments in the ordinary course of business upon terms no
less favorable than the Borrower or such Subsidiary could obtain from third
parties, none of the officers, directors, or employees of
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the Borrower or any of its Subsidiaries is presently a party to any transaction
with the Borrower or any of its Subsidiaries (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Borrower, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
7.16 Employee Benefit Plans.
7.16.1 In General. Each Employee Benefit Plan has been maintained
and operated in compliance in all material respects with the provisions of ERISA
and, to the extent applicable, the Code, including but not limited to the
provisions thereunder respecting prohibited transactions. The Borrower has
heretofore delivered to the Agents the most recently completed annual report,
Form 5500, with all required attachments, and actuarial statement required to be
submitted under Section 103(d) of ERISA, with respect to each Guaranteed Pension
Plan.
7.16.2 Terminability of Welfare Plans. Under each Employee Benefit
Plan which is an employee welfare benefit plan within the meaning of Section
3(1) or Section 3(2)(B) of ERISA, no benefits are payable to employees (or their
dependents) after termination of employment (except as required by Title I, Part
6 of ERISA). The Borrower or an ERISA Affiliate, as appropriate, may terminate
each such Plan at any time (or at any time subsequent to the expiration of any
applicable bargaining agreement) in the discretion of the Borrower or such ERISA
Affiliate without liability to any Person.
7.16.3 Guaranteed Pension Plans. Each contribution required to be
made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien provisions
of Section 302(f) of ERISA, or otherwise, has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan. No liability to the PBGC
(other than required insurance premiums, all of which have been paid) has been
incurred by the Borrower or any ERISA Affiliate with respect to any Guaranteed
Pension Plan and there has not been any ERISA Reportable Event, or any other
event or condition which presents a material risk of termination of any
Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each
Guaranteed Pension Plan (which in each case occurred within twelve months of the
date of this representation), and on the actuarial methods and assumptions
employed for that valuation, the aggregate benefit liabilities of all such
Guaranteed Pension Plans within the meaning of Section 4001 of ERISA did not
exceed the aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefit liabilities, by more
than $500,000.00.
7.16.4 Multiemployer Plans. Neither the Borrower nor any ERISA
Affiliate has incurred any material liability (including secondary liability) to
any Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under Section 4201 of ERISA or as a result of a sale of
assets described in Section 4204 of ERISA. Neither the Borrower nor any ERISA
Affiliate has been notified that any Multiemployer Plan is in
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reorganization or insolvent under and within the meaning of Section 4241 or
Section 4245 of ERISA or is at risk of entering reorganization or becoming
insolvent, or that any Multiemployer Plan intends to terminate or has been
terminated under Section 4041A of ERISA.
7.17 Regulations U and X. The proceeds of the Loans shall be used for
working capital and general corporate purposes. No portion of any Loan is to be
used for the purpose of purchasing or carrying any "margin security" or "margin
stock" as such terms are used in Regulations U and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
7.18 Environmental Compliance. The Borrower has taken all necessary steps
to investigate the past and present condition and usage of the Real Estate and
the operations conducted thereon and, based upon such diligent investigation,
has determined that:
(a) none of the Borrower, its Subsidiaries or any operator of the
Real Estate or any operations thereon is in violation, or alleged violation, of
any judgment, decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("XXXX"), the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any
state or local statute, regulation, ordinance, order or decree relating to
health, safety or the environment (hereinafter "Environmental Laws"), which
violation would reasonably be expected to have a material adverse effect on the
environment or the business, assets or financial condition of the Borrower or
any of its Subsidiaries;
(b) neither the Borrower nor any of its Subsidiaries has received
notice from any third party including, without limitation, any federal, state or
local governmental authority, (i) that any one of them has been identified by
the United States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 000 Xxxxxxxx X; (ii) that any hazardous waste,
as defined by 42 U.S.C. Section 6903(5), any hazardous substances as defined by
42 U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42 U.S.C.
Section 9601(33) and any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which any one of them has generated, transported or disposed of has
been found at any site at which a federal, state or local agency or other third
party has conducted or has ordered that any Borrower or any of its Subsidiaries
conduct a remedial investigation, removal or other response action pursuant to
any Environmental Law; or (iii) that it is or shall be a named party to any
claim, action, cause of action, complaint, or legal or administrative proceeding
(in each case, contingent or otherwise) arising out of any third party's
incurrence of costs, expenses, losses or damages of any kind whatsoever in
connection with the release of Hazardous Substances;
(c) except as set forth on Schedule 7.18 attached hereto: (i) no
portion of the Real Estate has been used for the handling, processing, storage
or disposal of Hazardous Substances except in accordance with applicable
Environmental Laws; and no underground tank or other underground storage
receptacle for Hazardous Substances is located on any portion of
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the Real Estate; (ii) in the course of any activities conducted by the Borrower,
its Subsidiaries or operators of its properties, no Hazardous Substances have
been generated or are being used on the Real Estate except in accordance with
applicable Environmental Laws; (iii) there have been no releases (i.e. any past
or present releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping) or threatened releases
of Hazardous Substances on, upon, into or from the properties of the Borrower or
its Subsidiaries, which releases would have a material adverse effect on the
value of any of the Real Estate or adjacent properties or the environment; (iv)
to the best of the Borrower's knowledge, there have been no releases on, upon,
from or into any real property in the vicinity of any of the Real Estate which,
through soil or groundwater contamination, may have come to be located on, and
which would have a material adverse effect on the value of, the Real Estate; and
(v) in addition, any Hazardous Substances that have been generated on any of the
Real Estate have been transported offsite only by carriers having an
identification number issued by the EPA, treated or disposed of only by
treatment or disposal facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities have been and
are, to the best of the Borrower's knowledge, operating in compliance with such
permits and applicable Environmental Laws; and
(d) None of the Borrower and its Subsidiaries or any of the Real
Estate is subject to any applicable environmental law requiring the performance
of Hazardous Substances site assessments, or the removal or remediation of
Hazardous Substances, or the giving of notice to any governmental agency or the
recording or delivery to other Persons of an environmental disclosure document
or statement by virtue of the transactions set forth herein and contemplated
hereby, or as a condition to the effectiveness of any other transactions
contemplated hereby.
7.19 Subsidiaries, etc. Except as set forth on Schedule 7.19 hereto, the
Borrower has no Subsidiaries. Except as set forth on Schedule 7.19 hereto,
neither the Borrower nor any Subsidiary of the Borrower is engaged in any joint
venture or partnership with any other Person.
7.20 Bank Accounts. Schedule 7.20 (as such may be amended from time to
time in accordance with Section 9.9 hereof) sets forth the account numbers and
location of all bank accounts of the Borrower or any of its Subsidiaries.
8. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan is outstanding
or any Lender has any obligation to make any Loans.
8.1 Punctual Payment. The Borrower will duly and punctually pay or cause
to be paid the principal and interest on the Loans, and all other amounts
provided for in this Credit Agreement and the other Loan Documents to which the
Borrower or any of its Subsidiaries is a party, all in accordance with the terms
of this Credit Agreement and such other Loan Documents.
8.2 Maintenance of Office. The Borrower will maintain its chief executive
office in Chicago, Illinois, or at such other place in the United States of
America as the Borrower shall designate upon written notice to the Agents, where
notices, presentations and demands to or
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upon the Borrower in respect of the Loan Documents to which the Borrower is a
party may be given or made.
8.3 Records and Accounts. The Borrower will (a) keep, and cause each of
its Subsidiaries to keep, true and accurate records and books of account in
which full, true and correct entries will be made in accordance with Generally
Accepted Accounting Principles and (b) maintain adequate accounts and reserves
for all taxes (including income taxes), depreciation, depletion, obsolescence
and amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves in accordance with Generally Accepted
Accounting Principles.
8.4 Financial Statements, Certificates and Information. The Borrower will
deliver to each of the Lenders:
(a) as soon as practicable, but in any event not later than ninety
(90) days after the end of each fiscal year of the Borrower, the consolidated
balance sheet of the Borrower and its Subsidiaries and the consolidating balance
sheet of the Borrower and its Subsidiaries, each as at the end of such year, and
the related consolidated statement of income and consolidated statement of cash
flow and consolidating statement of income and consolidating statement of cash
flow for such year, each setting forth in comparative form the figures for the
previous fiscal year and all such consolidated and consolidating statements to
be in reasonable detail, prepared in accordance with Generally Accepted
Accounting Principles, and certified without qualification by
PricewaterhouseCoopers LLP or by another "big four" certified public accounting
firm or by other independent certified public accountants satisfactory to the
Administrative Agent, together with a written statement from such accountants to
the effect that they have read a copy of this Credit Agreement, and that, in
making the examination necessary to said certification, they have obtained no
knowledge of any Default or Event of Default, or, if such accountants shall have
obtained knowledge of any then existing Default or Event of Default they shall
disclose in such statement any such Default or Event of Default; provided that
such accountants shall not be liable to the Lenders for failure to obtain
knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the fiscal quarters of the
Borrower, copies of the unaudited consolidated balance sheet of the Borrower and
its Subsidiaries and the unaudited consolidating balance sheet of the Borrower
and its Subsidiaries, each as at the end of such quarter, and the related
consolidated statement of income and consolidated statement of cash flow and
consolidating statement of income and consolidating statement of cash flow for
the portion of the Borrower's fiscal year then elapsed, all in reasonable detail
and prepared in accordance with Generally Accepted Accounting Principles,
together with a certification by the principal financial or accounting officer
of the Borrower that the information contained in such financial statements
fairly presents the financial position of the Borrower and its Subsidiaries on
the date thereof (subject to year-end adjustments);
(c) as soon as practicable, but in any event within thirty (30) days
after the end of each month in each fiscal year of the Borrower, unaudited
monthly consolidated financial statements of the Borrower and its Subsidiaries
for such month and unaudited monthly consolidating financial statements of the
Borrower and its Subsidiaries for such month, each
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prepared in accordance with Generally Accepted Accounting Principles, together
with a certification by the Controller, Senior Vice President of Finance or
other principal financial or accounting officer of the Borrower that the
information contained in such financial statements fairly presents the financial
condition of the Borrower and its Subsidiaries on the date thereof (subject to
quarterly and year-end adjustments);
(d) Intentionally Omitted;
(e) contemporaneously with the filing or mailing thereof, copies of
all material of a financial nature filed with the Securities and Exchange
Commission or sent to the stockholders of the Borrower;
(f) Intentionally Omitted;
(g) Intentionally Omitted;
(h) on or prior to April 30 of each calendar year, projections of
the Borrower and its Subsidiaries updating those projections delivered to the
Lenders and referred to in Section 7.4.2 or, if applicable, updating any later
such projections delivered in response to a request pursuant to this Section
8.4(h);
(i) within thirty (30) days of the end of each fiscal quarter, a
report setting forth in reasonable detail all Capital Expenditures that each of
the Borrower and its Subsidiaries has become legally obligated to make,
including, without limitation, in respect of new leases, purchase contracts and
construction contracts entered into in connection with new or existing retail
stores or distribution centers, during the next twelve (12)-month period;
(j) prior to the opening by the Borrower of any new retail store or
distribution center at which Inventory is to be located, a supplement to
Schedule 2 hereto in the form of Exhibit L hereto, listing any additions or
deletions to the list of retail stores and distribution centers of the Borrower
and its Subsidiaries located in the United States, which supplement, together
with Schedule 2 hereto and any prior supplements, shall be deemed to constitute
Schedule 2 for all purposes of this Credit Agreement;
(k) within forty-five (45) days after the completion of each of the
Borrower's semi-annual central warehouse inventory counts (which inventory
counts may be observed by the Agents or by an independent party acceptable to
the Agents) (i) a report with respect to the results of such inventory count and
(ii) a report with respect to the results of the Borrower's inventory counts
with respect to its retail store locations conducted since the last such report
delivered to the Agents and the Lenders, each in form and detail satisfactory to
the Agents and the Lenders; and
(l) from time to time such other financial data and information
(including accountants and management letters) as any Agent or any Lender may
reasonably request.
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8.5 Notices.
8.5.1 Defaults. The Borrower will promptly notify the Administrative
Agent and each of the Lenders in writing of the occurrence of (a) any Default or
Event of Default hereunder, (b) any Default or Event of Default under and as
defined in the Senior Credit Agreement and (c) any Default or Event of Default
under and as defined in the Trade Vendor Extension Agreement. If any Person
shall give any notice or take any other action in respect of a claimed default
(whether or not constituting an Event of Default) under this Credit Agreement or
any other note, evidence of indebtedness, indenture or other obligation to which
or with respect to which the Borrower or any of its Subsidiaries is a party or
obligor, whether as principal, guarantor, surety or otherwise, the Borrower
shall forthwith give written notice thereof to each of the Agents and each of
the Lenders, describing the notice or action and the nature of the claimed
default.
8.5.2 Environmental Events. The Borrower will promptly give notice
to the Administrative Agent and each of the Lenders (a) of any violation of any
Environmental Law that the Borrower or any of its Subsidiaries reports in
writing or is reportable by such Person in writing (or for which any written
report supplemental to any oral report is made) to any federal, state or local
environmental agency and (b) upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action, including a notice from any agency
of potential environmental liability, of any federal, state or local
environmental agency or board, that has the potential to materially affect the
assets, liabilities, financial conditions or operations of the Borrower or any
of its Subsidiaries, or the Collateral Agent's mortgages, deeds of trust or
security interests pursuant to the Security Documents.
8.5.3 Notification of Claim against Collateral. The Borrower will,
immediately upon becoming aware thereof, notify the Administrative Agent and
each of the Lenders in writing of any setoff, claims (including, with respect to
the Real Estate, environmental claims), withholdings or other defenses to which
any of the Collateral, or the Collateral Agent's rights with respect to the
Collateral, are subject. The Borrower will, immediately upon becoming aware
thereof, notify the Administrative Agent and each of the Lenders in writing of
any proposed sale or transfer of any Permitted Inventory Location by the owner
thereof.
8.5.4 Notice of Litigation and Judgments. The Borrower will, and
will cause each of its Subsidiaries to, give notice to the Administrative Agent
and each of the Lenders in writing within fifteen (15) days of becoming aware of
any litigation or proceedings threatened in writing or any pending litigation
and proceedings affecting the Borrower or any of its Subsidiaries or to which
the Borrower or any of its Subsidiaries is or becomes a party involving an
uninsured claim against the Borrower or any of its Subsidiaries that could
reasonably be expected to have a materially adverse effect on the Borrower or
any of its Subsidiaries and stating the nature and status of such litigation or
proceedings. The Borrower will, and will cause each of its Subsidiaries to, give
notice to the Administrative Agent and each of the Lenders, in writing, in form
and detail satisfactory to the Administrative Agent, within ten (10) days of any
judgment not covered by insurance, final or otherwise, against the Borrower or
any of its Subsidiaries in an amount in excess of $500,000.00.
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8.6 Corporate Existence; Maintenance of Properties.
(a) The Borrower will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights and
franchises and those of its Subsidiaries and will not, and will not cause or
permit any of its Subsidiaries to, convert to any other entity.
(b) The Borrower (i) will cause all of its properties and those of
its Subsidiaries used or useful in the conduct of its business or the business
of its Subsidiaries to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment, (ii) will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Borrower may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times, and (iii) will, and will cause each of its Subsidiaries
to, continue to engage primarily in the businesses now conducted by them;
provided that nothing in this Section 8.6 shall prevent the Borrower from
discontinuing the operation and maintenance of any of its properties or any of
those of its Subsidiaries if such discontinuance is, in the judgment of the
Borrower, desirable in the conduct of its or their business and that do not in
the aggregate materially adversely affect the business of the Borrower and its
Subsidiaries on a consolidated basis.
8.7 Insurance.
(a) The Borrower will, and will cause each of its Subsidiaries to,
maintain with financially sound and reputable insurers insurance with respect to
its properties and business against such casualties and contingencies as shall
be in accordance with the general practices of businesses engaged in similar
activities in similar geographic areas and in amounts, containing such terms, in
such forms and for such periods as may be reasonable and prudent and in
accordance with the terms of the Security Agreement.
(b) Contemporaneously with the execution of this Credit Agreement,
and within fifteen (15) days of any date when any additional or replacement
insurance coverage is obtained, the Borrower shall, and will cause each of its
Subsidiaries to, deliver to the Administrative Agent true copies of certificates
of insurance with respect to such additional insurance or replacement policies
and, upon request and to the extent not previously delivered to the
Administrative Agent, copies of the original insurance policies evidencing such
additional or replacement insurance, which certificates and policies (i) in the
case of property and casualty policies, shall contain an endorsement or rider
naming the Collateral Agent, for the benefit of the Agents and the Lenders, as a
mortgagee, loss payee and additional insured, and (ii) in the case of liability
policies, shall contain an endorsement or rider naming the Collateral Agent, for
the benefit of the Agents and the Lenders, as an additional insured, with each
such policy providing that such insurance shall not be canceled or amended
without thirty (30) days prior written notice to the Collateral Agent.
8.8 Taxes. The Borrower will, and will cause each of its Subsidiaries to,
duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
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labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property; provided that any such tax, assessment, charge,
levy or claim need not be paid if the validity or amount thereof shall currently
be contested in good faith by appropriate proceedings and if the Borrower or
such Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and provided further that the Borrower and each Subsidiary of the
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor.
8.9 Inspection of Properties and Books, etc.
8.9.1 General. The Borrower shall permit the Lenders, through the
Agents or any of the Lenders' other designated representatives, to visit and
inspect any of the properties of the Borrower or any of its Subsidiaries, to
examine the books of account of the Borrower and its Subsidiaries (and to make
copies thereof and extracts therefrom), to discuss the affairs, finances and
accounts of the Borrower and its Subsidiaries with, and to be advised as to the
same by, its and their officers, and to conduct examinations and verifications
of the other assets of the Borrower and its Subsidiaries and all systems and
procedures of the Borrower and its Subsidiaries, including those relating to
cash management and those relating to gold tracking and valuation, all at such
reasonable times and intervals as either of the Agents or any Lender may
reasonably request.
8.9.2 Appraisals; Examinations. (a) No more frequently than once
each calendar year, or more frequently as determined by the Agents if an Event
of Default shall have occurred and be continuing, upon the request of the Agents
and, in each case, at the expense of the Borrower but subject to the limitations
set forth in Section 16, the Borrower will obtain and deliver to the
Administrative Agent such appraisals of the Collateral as the Administrative
Agent in its sole discretion, may deem are necessary or appropriate.
(b) No more frequently than once each calendar year, or more
frequently as determined by the Agents if an Event of Default shall have
occurred and be continuing, upon the request of the Agents and, in each case at
the expense of the Borrower but subject to the limitations set forth in Section
16, the Borrower will obtain and deliver to the Administrative Agent (which may
be affiliated with one of the Lenders) such commercial finance field
examinations of the Borrower's books and records as the Administrative Agent, in
its sole discretion, may deem necessary or appropriate.
8.9.3 Intentionally Omitted.
8.9.4 Communications with Accountants. The Borrower authorizes the
Agents and, if accompanied by the Agents, the Lenders to communicate directly
with the Borrower's independent certified public accountants and authorizes such
accountants to disclose to the Agents and the Lenders any and all financial
statements and other supporting financial documents and schedules including
copies of any management letter with respect to the business, financial
condition and other affairs of the Borrower or any of its Subsidiaries. At the
request of the Agents, the Borrower shall deliver a letter addressed to such
accountants instructing them to comply with the provisions of this Section 8.9.4
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8.10 Compliance with Laws, Contracts, Licenses, and Permits. The Borrower
will, and will cause each of its Subsidiaries to, comply with (a) the applicable
laws and regulations wherever its business is conducted, including all
Environmental Laws, except where the failure to so comply would not reasonably
be expected to have a materially adverse effect either individually or in the
aggregate upon the business, assets or financial condition of the Borrower or
any of its Subsidiaries, (b) the provisions of its charter documents and
by-laws, (c) all agreements and instruments by which it or any of its properties
may be bound, except where the failure to so comply would not reasonably be
expected to have a materially adverse effect either individually or in the
aggregate upon the business, assets or financial condition of the Borrower or
any of its Subsidiaries, and (d) all applicable decrees, orders, and judgments.
If any authorization, consent, approval, permit or license from any officer,
agency or instrumentality of any government shall become necessary or required
in order that the Borrower or any of its Subsidiaries may fulfill any of its
obligations hereunder or any of the other Loan Documents to which the Borrower
or such Subsidiary is a party, the Borrower will, or (as the case may be) will
cause such Subsidiary to, immediately take or cause to be taken all reasonable
steps within the power of the Borrower or such Subsidiary to obtain such
authorization, consent, approval, permit or license and furnish the Agents and
the Lenders with evidence thereof.
8.11 Employee Benefit Plans. The Borrower will (a) promptly upon filing
the same with the Department of Labor or Internal Revenue Service upon request
of the Agents, furnish to each of the Agents a copy of the most recent actuarial
statement required to be submitted under Section 103(d) of ERISA and Annual
Report, Form 5500, with all required attachments, in respect of each Guaranteed
Pension Plan and (b) promptly upon receipt or dispatch, furnish to each of the
Agents any notice, report or demand sent or received in respect of a Guaranteed
Pension Plan under Sections 302, 4041, 4042, 4043, 4063, 4066 and 4068 of ERISA,
or in respect of a Multiemployer Plan, under Sections 4041A, 4202, 4219, 4242,
or 4245 of ERISA.
8.12 Use of Proceeds. The Borrower will use the proceeds of the Term Loan
for working capital and general corporate purposes, including, without
limitation, that on the Closing Date, the proceeds of the Term Loan shall be
disbursed to pay professional fees and expenses, in an aggregate amount equal to
approximately $318,000, to Standard & Poor's Corporate Value Consulting for
services performed in connection with the transactions contemplated hereby, and
to pay other fees and expenses, in each case as provided in the payment
direction letter of even date herewith, executed by the Borrower and delivered
to the Administrative Agent.
8.13 Additional Mortgaged Property. If, after the Closing Date, the
Borrower or any of its Subsidiaries acquires or leases for a term in excess of
five (5) years real estate used as a manufacturing or warehouse facility, the
Borrower shall notify the Agents promptly thereof, and upon the request of the
Lenders, the Borrower shall, or shall cause such Subsidiary to, forthwith
deliver to the Collateral Agent a fully executed mortgage or deed of trust over
such real estate, in form and substance satisfactory to the Agents, together
with title insurance policies, surveys, evidences of insurances with the
Collateral Agent named as loss payee and additional insured, legal opinions and
other documents and certificates with respect to such real estate as shall be
reasonably satisfactory to the Agents. The Borrower further agrees that,
following the taking of such actions with respect to such real estate, the
Collateral Agent shall have for the benefit of the
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Lenders and the Agents a valid and enforceable mortgage or deed of trust over
such real estate, free and clear of all defects and encumbrances except for
Permitted Liens.
8.14 Bank Accounts. The Borrower shall, and shall cause each of its
Subsidiaries to, comply with the cash management provisions of the Senior Credit
Agreement (or any successor or replacement agreement acceptable to Agent),
including, without limitation, Section 8.14 of the Senior Credit Agreement (as
in effect on the date hereof); provided that, if the Senior Credit Agreement
shall have been terminated and the Borrower shall not have entered into a
successor or replacement agreement acceptable to the Agents, then the Borrower
shall, and shall cause each of its Subsidiaries to, enter into control
agreements, cash management agreements, lockbox agreements and other similar
agreements in form and substance and reasonably satisfactory to Agents.
8.15 Inventory Restrictions. The Borrower shall cause, and shall cause
each of its Subsidiaries to cause, Consigned Precious Metal and all Eligible
Inventory (in each case as such term, and each component definition thereof, is
defined in the Senior Credit Agreement) to be located at all times solely at
Permitted Inventory Locations, and to be sold or otherwise disposed of in the
ordinary course of the Borrower's or such Subsidiary's business, consistent with
past practices or as required pursuant to the terms of this Credit Agreement.
8.16 Private Label Credit Card Program. The Borrower will maintain in
effect at all times credit programs provided by Persons other than the Borrower
and its Subsidiaries which are non-recourse to the Borrower and its
Subsidiaries.
8.17 Operating Accounts. The Borrower will maintain all of its operating
accounts (other than Store Accounts subject to a Blocked Account Agreement) with
the Senior Administrative Agent.
8.18 Further Assurances. The Borrower will, and will cause each of its
Subsidiaries to, cooperate with the Lenders and the Agents and execute such
further instruments and documents as any of the Lenders or the Agents shall
reasonably request to carry out to their satisfaction the transactions
contemplated by this Credit Agreement and the other Loan Documents.
8.19 New Subsidiaries. The Borrower shall, immediately upon any Investment
in a new Subsidiary permitted by Section 9.3(f) hereof, pledge to the Collateral
Agent, for the benefit of the Lenders and the Agents, the capital stock of each
new Subsidiary in which the Borrower invests pursuant to a stock pledge
agreement in form and substance satisfactory to the Agents and the Lenders, and
such new Subsidiary shall grant to the Collateral Agent a perfected priority
security interest (subject only to liens in favor of the Senior Collateral
Agent, for the benefit of the Senior Lenders and the Senior Agents and Permitted
Liens entitled to priority under applicable law) in all of its personal property
assets (with such exceptions are as acceptable to the Required Lenders) pursuant
to an instrument of adherence to the Security Agreement in form and substance
satisfactory to the Agents and the Lenders. In addition, the Borrower shall
immediately upon such Investment, revise Schedule 7.19 hereto to reflect the
acquisition of each new Subsidiary. Each new Subsidiary in which the Borrower
invests shall, immediately upon such Investment, execute and deliver to the
Collateral Agent, for the benefit of the Lenders and the Agents, a guaranty of
the payment and performance of all of the Obligations, in form and
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substance satisfactory to the Agents and the Lenders, together with acceptable
security documents including without limitation, the aforementioned instrument
of adherence to the Security Agreement, legal opinions, and other documents and
instruments necessary to demonstrate the due authorization, execution and
delivery by such new Subsidiary of such guaranty and such security documents and
to perfect the Collateral Agent's security interest in all of such new
Subsidiary's assets, including (a) the resolutions of the Board of Directors or
equivalent body of such new Subsidiary and the charter and by-laws (or the
equivalent thereof) of such new Subsidiary, certified by an officer of such new
Subsidiary, (b) a good standing certificate of such new Subsidiary in its
jurisdiction of incorporation, (c) a certificate of the Secretary or an
Assistant Secretary of such new Subsidiary certifying the names and true
signatures of the officers of such new Subsidiary authorized to sign such
guaranty and such security documents, (d) UCC-1 financing statements, and (e)
such other documents as the Collateral Agent may reasonably request. Upon
delivery of the aforementioned documents, such new Subsidiary shall become a
guarantor of the Obligations hereunder and, except as otherwise agreed to by the
Required Lenders, shall comply with and be bound by all of the terms and
conditions of the Loan Documents as a Subsidiary of the Borrower thereunder, and
the Borrower shall cause such new Subsidiary to take all actions which it would
have been required to make or take had it been a Subsidiary of the Borrower on
the Closing Date, including making all representations and warranties as a
guarantor under each of the Loan Documents. Notwithstanding anything contained
in this Section 8.19 to the contrary and to the extent permitted pursuant to
Section 9.12, no Subsidiary which is incorporated or organized outside the
United States of America (a "Foreign Subsidiary") shall be required hereunder to
execute or deliver a guaranty or security agreement or otherwise pledge, or
grant a security interest in, any of its assets, and the Borrower and any
Subsidiary shall not be required to pledge more than sixty-five percent (65%) of
the outstanding capital stock, or other equity interest, of any Foreign
Subsidiary, in each case to the extent such guaranty, security agreement, pledge
or grant would cause a deemed repatriation of the accumulated earnings and
profits of such Foreign Subsidiary to its parent.
8.20 Landlord Waivers. To the extent required by the Administrative Agent
in its sole discretion upon written notice to the Borrower, the Borrower shall
exercise commercially reasonable best efforts to obtain Landlord Waivers with
respect to all Permitted Inventory Locations that are subject to Specified
Leases, including, without limitation, Landlord Waivers in connection with
leases extended, renegotiated or entered into after the Closing Date.
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Lender has any obligation to make any Loans:
9.1 Restrictions on Indebtedness. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness other
than:
(a) Indebtedness to the Senior Lenders arising under any of the
Senior Loan Documents and the Secured Convertible Note Documents;
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(b) Indebtedness to the Lenders and the Agents arising under any of
the Loan Documents;
(c) current liabilities of the Borrower or such Subsidiary incurred
in the ordinary course of business not incurred through (i) the borrowing of
money, or (ii) the obtaining of credit except for credit on an open account
basis customarily extended and in fact extended in connection with normal
purchases of goods and services;
(d) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the extent
that payment therefor shall not at the time be required to be made in accordance
with the provisions of Section 8.8;
(e) Indebtedness in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of which the Borrower or such
Subsidiary shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution shall have
been obtained pending such appeal or review;
(f) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary course
of business;
(g) Indebtedness existing on the date hereof and listed and
described on Schedule 9.1 hereto;
(h) Indebtedness owed by the Borrower or any of its Subsidiaries to
trade vendors, in the amount of the cost to the Borrower or such Subsidiary of
inventory held on consignment from such trade vendors, including in connection
with and pursuant to the Trade Vendor Extension Agreement; and
(i) Indebtedness of the Borrower and its Subsidiaries other than
that permitted elsewhere in this Section 9.1 in an aggregate principal amount
not to exceed $2,000,000 at any time outstanding; provided that (i) the Net
Proceeds from such Indebtedness are applied in accordance with Section 5.4.5
hereof and (ii) no Default or Event of Default has occurred and is continuing at
the time such Indebtedness is incurred and none would exist after giving effect
thereto;
provided, however, the Borrower will not, and will not permit any of its
Subsidiaries to, engage in any form of "off balance sheet" financing, including,
without limitation, the lease of any assets by the Borrower or any of its
Subsidiaries as lessee under any synthetic lease referred to in clause (vi) of
the definition of the term "Indebtedness."
9.2 Restrictions on Liens. The Borrower will not, and will not permit any
of its Subsidiaries to, (i) create or incur or suffer to be created or incurred
or to exist any lien, encumbrance, mortgage, pledge, charge, restriction or
other security interest of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or profits
therefrom; (ii) transfer any of such property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; (iii) acquire,
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or agree or have an option to acquire, any property or assets upon conditional
sale or other title retention or purchase money security agreement, device or
arrangement; (iv) suffer to exist for a period of more than thirty (30) days
after the same shall have been incurred any Indebtedness or claim or demand
against it that if unpaid might by law or upon bankruptcy or insolvency, or
otherwise, be given any priority whatsoever over its general creditors; or (v)
sell, assign, pledge or otherwise transfer any accounts, contract rights,
general intangibles, chattel paper or instruments, with or without recourse;
provided that the Borrower and any Subsidiary of the Borrower may create or
incur or suffer to be created or incurred or to exist (the "Permitted Liens"):
(a) liens in favor of the Borrower on all or part of the assets of
Subsidiaries of the Borrower securing Indebtedness owing by Subsidiaries of the
Borrower to the Borrower;
(b) liens to secure taxes, assessments and other government charges
in respect of obligations not overdue or liens on properties to secure claims
for labor, material or supplies in respect of obligations not overdue;
(c) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age pensions or
other social security obligations;
(d) liens on properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 9.1(e);
(e) liens of carriers, warehousemen, mechanics and materialmen, and
other like liens on properties, in existence less than 120 days from the date of
creation thereof in respect of obligations not overdue;
(f) encumbrances on Real Estate 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 the Borrower or a Subsidiary of the Borrower is a party, and
other minor liens or encumbrances none of which in the opinion of the Borrower
interferes materially with the use of the property affected in the ordinary
conduct of the business of the Borrower and its Subsidiaries, which defects do
not individually or in the aggregate have a materially adverse effect on the
business of the Borrower individually or of the Borrower and its Subsidiaries on
a consolidated basis;
(g) liens existing on the date hereof and listed on Schedule 9.2
hereto;
(h) purchase money security interests in or purchase money mortgages
on real or personal property acquired after the date hereof to secure purchase
money Indebtedness in an amount permitted by Section 9.1(i), incurred in
connection with the acquisition of such property, which security interests or
mortgages cover only the real or personal property so acquired;
(i) liens in favor of the Senior Collateral Agent, for the benefit
of the Senior Lenders and the Senior Agents, under the Senior Loan Documents;
provided that such liens are subject to the Intercreditor Agreement;
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(j) liens to secure obligations under the Secured Convertible Note
Documents;
(k) liens to secure obligations under any notes provided to the
trade vendors pursuant to the Trade Vendor Extension Agreement; provided that
such liens are subject to the Trade Vendor Intercreditor Agreement; and
(l) liens on inventory and proceeds thereof (up to the cost thereof
to the Borrower or such Subsidiary) held on consignment from trade vendors
securing obligations to return or pay the purchase price of such inventory.
9.3 Restrictions on Investments. The Borrower will not, and will not
permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United States
of America that mature within one (1) year from the date of purchase by the
Borrower or such Subsidiary;
(b) demand deposits, certificates of deposit, bankers acceptances
and time deposits of United States banks having total assets in excess of
$1,000,000,000;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated and
the ratings for which are not less than "P 1" if rated by Xxxxx'x Investors
Services, Inc., and not less than "A 1" if rated by Standard and Poor's;
(d) Investments existing on the date hereof and listed on Schedule
9.3 hereto;
(e) Investments consisting of loans, advances or guaranties to or
for the benefit of employees in the ordinary course of business not to exceed
$250,000.00 in the aggregate at any time outstanding; and
(f) Investments to the extent permitted under Section 9.4;
provided, however, that, with the exception of demand deposits referred to in
Section 9.3(b) and loans and advances referred to in Section 9.3(e), such
Investments will be considered Investments permitted by this Section 9.3 only if
all actions have been taken to the satisfaction of the Agents to provide to the
Collateral Agent, for the benefit of the Lenders and the Agents, a perfected
security interest in all of such Investments free of all encumbrances other than
Permitted Liens.
9.4 Distributions. Except as contemplated and/or required by the Secured
Convertible Note Documents and the Warrants, the Borrower will not make any
Distributions, except for (i) Distributions to existing shareholders to "cash
out" fractional shares and similar matters incidental to the Convertible Note
Documents, and (ii) either (x) Distributions to effect repurchases of any of the
Borrower's common stock, or (y) cash Distributions; provided that,
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with respect to either the Distributions to effect repurchases of the Borrower's
common stock or the cash Distributions described in this clause (ii): (A) such
Distributions may be made only once during any twelve (12) month period, and
then only within the sixty (60) day period after the delivery by the Borrower of
its year end audited financial statements, with the first such Distribution not
to be made until after the delivery of the fiscal year end January 31, 2007
audited financial statements; (B) at the time of the making the proposed
Distribution the Borrower is not then in Default and no Event of Default has
occurred or is continuing, nor would the making of the proposed Distribution
cause the Borrower to be in Default or cause an Event of Default; (C)
immediately after giving effect to the proposed Distribution, (1) the Borrower
would have excess Borrowing Availability (as such term, and each component
definition thereof, is defined in the Senior Credit Agreement) of at least
$22,000,000.00, and (2) the Borrower is projected to maintain excess Borrowing
Availability (as such term, and each component definition thereof, is defined in
the Senior Credit Agreement) of not less than $22,000,000.00 at all times on a
pro forma basis for the succeeding twelve (12) month period (as satisfactorily
established pursuant to projections reviewed and approved by the Agents, in
their sole and exclusive discretion); and (D) immediately after giving effect to
the proposed Distribution, the Borrower would have maintained a Fixed Charge
Coverage Ratio, as defined below, on a trailing 12 month basis, of not less than
1.2X (as satisfactorily established pursuant to a compliance certificate
executed by the Borrower's chief financial officer and submitted to, and
approved by the Agents, in their sole and exclusive discretion, including all
calculations relevant thereto). As used herein, the term "Fixed Charge Coverage
Ratio" shall be the result of (i) Consolidated EBITDA for the trailing 12 month
period minus Capital Expenditures and cash taxes divided by (ii) the sum of cash
interest expense, principal payments on Indebtedness, payments on Capital Leases
(without duplication), and Distributions otherwise permitted herein.
9.5 Merger, Consolidation; Disposition of Assets; Issuance of Equity
Securities.
9.5.1 Mergers and Acquisitions. The Borrower will not, and will not
permit any of its Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or stock acquisition
(other than the acquisition of assets in the ordinary course of business
consistent with past practices) except the merger or consolidation of one or
more of the Subsidiaries of the Borrower with and into the Borrower, or the
merger or consolidation of two or more Subsidiaries of the Borrower. The
Borrower will not, and will not permit any of its Subsidiaries to, agree to or
effect any asset acquisition or stock acquisition without the prior written
consent of the Required Lenders.
9.5.2 Disposition of Assets. The Borrower will not, and will not
permit any of its Subsidiaries to, become a party to or agree to or effect any
disposition of assets, other than the disposition of (a) inventory in the
ordinary course of business, consistent with past practices, (b) inventory,
equipment, fixtures and leasehold interests of the Borrower in connection with
the sale by the Borrower in the ordinary course of business of any retail store
locations, (c) obsolete equipment in connection with the replacement thereof
provided that such assets shall not have an aggregate value in excess of
$750,000.00 for all such sales occurring in any fiscal year, (d) retail
installment sales accounts so long as such sales (i) are without recourse to the
Borrower, (ii) are for cash in an amount equal to not less than 85% of the
amount of such accounts, (iii) are done within one month of the creation of such
accounts, and (iv) are otherwise consistent with past practices of the Borrower,
(e) other assets pursuant to sale transactions or sale and leaseback
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transactions provided that (i) the Borrower receives cash proceeds from such
transactions equal to the fair market value of such assets, (ii) the Net
Proceeds from such transactions are applied in accordance with Section 5.4.5
hereof and (iii) no Default or Event of Default has occurred and is continuing
at the time any such transaction is consummated and none would exist after
giving effect thereto, and (f) notwithstanding anything to the contrary
contained elsewhere in any Loan Documents, non-exclusive licenses of
intellectual property including trademarks and tradenames, and outside of the
United States, exclusive licenses of such intellectual property.
9.6 Sale and Leaseback. The Borrower will not, and will not permit any of
its Subsidiaries to, enter into any arrangement, directly or indirectly, whereby
the Borrower or any Subsidiary of the Borrower shall sell or transfer any
property owned by it in order then or thereafter to lease such property or lease
other property that the Borrower or any Subsidiary of the Borrower intends to
use for substantially the same purpose as the property being sold or
transferred.
9.7 Compliance with Environmental Laws. The Borrower will not, and will
not permit any of its Subsidiaries to, (a) use any of the Real Estate or any
portion thereof for the handling, processing, storage or disposal of Hazardous
Substances, (b) cause or permit to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous
Substances, (c) generate any Hazardous Substances on any of the Real Estate, (d)
conduct any activity at any Real Estate or use any Real Estate in any manner so
as to cause a release (i.e. releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping) or threatened release of Hazardous Substances on, upon or into the Real
Estate or (e) otherwise conduct any activity at any Real Estate or use any Real
Estate in any manner that would violate any Environmental Law or bring such Real
Estate in violation of any Environmental Law, where, in the case of any such
violation described in this clause (e), such violation could reasonably be
expected to have a materially adverse effect, either individually or in the
aggregate, upon the business, assets or financial condition of the Borrower or
any of its Subsidiaries.
9.8 Employee Benefit Plans. Neither the Borrower nor any ERISA Affiliate
will
(a) engage in any non-exempt "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code which could
reasonably be expected to result in a material liability for the Borrower or any
of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in Section 302 of ERISA, whether or
not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could
reasonably be expected to result in the imposition of a lien or encumbrance on
the assets of the Borrower or any of its Subsidiaries pursuant to Section 302(f)
or Section 4068 of ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of Section 4001 of ERISA) of all
Guaranteed Pension Plans
- 39 -
exceeding the value of the aggregate assets of such Plans, disregarding for this
purpose the benefit liabilities and assets of any such Plan with assets in
excess of benefit liabilities, by more than the amount set forth in Section
7.16.3.
9.9 Bank Accounts. The Borrower will not, and will not permit any of its
Subsidiaries to, (a) establish any bank accounts, including, without limitation,
any deposit accounts, other than those listed on Schedule 7.20 (as such may be
amended from time to time to include those depository institutions acceptable to
the Administrative Agent which have executed and delivered Blocked Account
Agreements in favor of the Senior Collateral Agent or, if required by Section
8.14, in favor of the Collateral Agent and substantially in the form of Exhibit
M hereto) without the Agents' prior written consent, (b) violate directly or
indirectly any bank agency or lock box agreement in favor of the Collateral
Agent for the benefit of the Lenders and the Agents with respect to such
account.
9.10 Consignment Transactions. Except pursuant to this Credit Agreement,
the Borrower will not, nor will the Borrower permit or suffer any of its
Subsidiaries to, enter into any consignment transactions, including consignments
of Precious Metal; provided, that the Borrower or its Subsidiaries may enter
into arrangements for consignments of inventory from vendors in the ordinary
course of business, consistent with past practices.
9.11 Transactions with Affiliates. Except for transactions which are
described on Schedule 7.15 hereto, the Borrower will not, nor will the Borrower
permit or suffer any of its Subsidiaries to, conduct any transactions among
themselves or with any Affiliates of the Borrower, other than transactions in
the ordinary course of the Borrower's or such Subsidiary's business, consistent
with past practices, and upon terms not materially less favorable to such
Borrower or Subsidiary than it could obtain in a comparable arm's-length
transaction with a party other than the Borrower, such Subsidiary or such
Affiliate.
9.12 Subsidiaries. The Borrower will not create any Foreign Subsidiary
without the prior written consent of the Administrative Agent. Other than
Whitehall Xxxxxxxx.xxx, LLC, which is a dormant Subsidiary, the Borrower will
not create any Subsidiaries unless the Borrower and such Subsidiary complies
with Section 8.19. The Borrower will not permit Whitehall Xxxxxxxx.xxx, LLC to
conduct any operations or own any assets until such Subsidiary complies with
Section 8.19.
9.13 Issuance of Equity Securities. Except as contemplated and/or required
by the Secured Convertible Note Documents, the Borrower will not, and will not
permit any of its Subsidiaries to, issue any equity securities, including,
without limitation, any issuance of warrants, options or subscription rights,
unless (i) the Borrower receives solely cash proceeds from each such issuance,
(ii) the Net Proceeds from such issuance are applied in accordance with Section
5.4.4 hereof and (iii) no Default or Event of Default has occurred and is
continuing at the time any such issuance is consummated and none would exist
after giving effect thereto.
9.14 Amendments of Senior Loan Documents. Unless the Lenders and the
Agents provide their prior written consent, the Borrower will not, and will not
permit any Subsidiary to, amend, modify, alter, increase, or change any of the
terms or conditions of (or permit the amendment, modification, alteration,
increase or other change in any manner of) any of the
- 40 -
Senior Loan Documents if such amendment, modification, alteration, increase or
other change would:
(a) cause the Obligations as defined in and under the Senior Credit
Agreement to exceed $155,000,000 plus bank product obligations;
(b) increase the interest rate applicable to any obligation in
respect of Indebtedness under the Senior Credit Agreement by more than 200 basis
points above the rate of interest applicable to such obligation under the Senior
Credit Agreement (as in effect on the date hereof) (except in connection with
(A) the imposition of a default rate of interest in accordance with the terms of
the Senior Loan Documents or (B) as expressly contemplated by the definitions of
the terms "Base Rate" and "LIBOR Rate", respectively, in each case as set forth
in the Senior Loan Documents (as in effect on the date hereof));
(c) release any Reserve (as such term is defined in the Senior
Credit Agreement);
(d) amend the definition (including each component thereof) of, or
change the methodology of calculating, the following terms, other than as
expressly permitted pursuant to the terms of the Intercreditor Agreement:
"Borrowing Availability", "Borrowing Base", "Collateral", "Outstanding Facility
Amounts", "Reserves" or "Revolving Loan Borrowing Base", or amend any provision
of the Security Documents (as defined in the Senior Credit Agreement) in any
manner adverse to the Agents or the Lenders.
10. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Lender has any obligation to make any Loans:
10.1 Availability. The Borrower shall maintain Borrowing Availability (as
such term, and each component definition thereof, is defined in the Senior
Credit Agreement) in an amount greater than $7,000,000.00 at all times.
10.2 Intentionally Omitted.
10.3 Business Plan. No sooner than Ninety (90) nor later than Thirty (30)
days prior to the end of each of the Borrower's fiscal years, the Borrower shall
have delivered to the Administrative Agent a business plan covering the
succeeding fiscal year, in form and substance acceptable to the Agents, in the
Agents' sole and exclusive discretion, demonstrating adequate liquidity for the
Borrower's business operations through the end of that succeeding fiscal year.
10.4 Intentionally Omitted.
11. CLOSING CONDITIONS.
The effectiveness of this Credit Agreement and the obligations of the
Lenders to make the Term Loan shall, except as otherwise agreed to in the Post
Closing Matters Agreement of
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even date herewith between Administrative Agent and Borrower, be subject to the
satisfaction of the following conditions precedent:
11.1 Loan Documents, etc. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to each of the
Lenders. The Registration Rights Agreement shall have been duly executed and
delivered by the respective parties thereto, shall be in full force and effect
and shall be in form and substance satisfactory to each of the Lenders. Each
Lender shall have received a fully executed copy of each such document and such
other documents and certificates as the Agents may request.
11.2 Certified Copies of Charter Documents. Each of the Lenders shall have
received from the Borrower and each of its Subsidiaries a copy, certified by a
duly authorized officer of such Person to be true and complete on the Closing
Date, of each of (a) its charter or other incorporation documents as in effect
on such date of certification, and (b) its by-laws as in effect on such date.
11.3 Corporate, Action. All corporate action necessary for the valid
execution, delivery and performance by the Borrower and each of its Subsidiaries
of this Credit Agreement and the other Loan Documents to which it is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Lenders shall have been provided to each of the Lenders.
11.4 Incumbency Certificate. Each of the Lenders shall have received from
the Borrower and each of its Subsidiaries an incumbency certificate, dated as of
the Closing Date, signed by a duly authorized officer of the Borrower or such
Subsidiary, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (a) to sign, in the name and on behalf of
each of the Borrower of such Subsidiary, each of the Loan Documents to which the
Borrower or such Subsidiary is or is to become a party and; (b) to give notices
and to take other action on its behalf under the Loan Documents.
11.5 Validity of Liens. The Security Documents shall be effective to
create in favor of the Collateral Agent a legal, valid and enforceable (except
for Permitted Liens entitled to priority under applicable law) security interest
in and lien upon the Collateral. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the opinion of the
Agents to protect and preserve such security interests shall have been duly
effected. The Collateral Agent shall have received evidence thereof in form and
substance satisfactory to the Agents and the Lenders.
11.6 Perfection Certificate and UCC Search Results. The Collateral Agent
shall have received from the Borrower a completed and fully executed Perfection
Certificate and the results of current UCC searches with respect to the
Collateral, indicating no liens other than Permitted Liens and otherwise in form
and substance satisfactory to the Agents and the Lenders.
11.7 Certificates of Insurance. The Agents shall have received (a) a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the
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insurance obtained in accordance with the provisions of the Security Agreement
and (b) certified copies of all policies evidencing such insurance (or
certificates therefore signed by the insurer or an agent authorized to bind the
insurer).
11.8 Borrowing Base Report; Consigned Precious Metal Report; Monthly
Inventory Report. The Agents shall have received from the Borrower a Borrowing
Base Report dated October 3, 2005, the initial Consigned Precious Metal Report
(as defined in, and as each component definitions is defined in the Senior
Credit Agreement), and the initial Monthly Inventory Report , in each case
prepared on the basis of the best available data, each dated as of the Closing
Date.
11.9 Accounts Payable Aging Report. The Agents shall have received from
the Borrower the most recent accounts payable aging report of the Borrower dated
as of a date which shall be no more than fifteen (15) days prior to the Closing
Date and the Borrower shall have notified the Agents in writing on the Closing
Date of any material deviation from the accounts payable values reflected in
such accounts payable aging report and shall have provided the Agents with such
supplementary documentation as the Agents may reasonably request.
11.10 Trade Vendor Term Sheet. No less than 90% of the Suppliers shall
have signed the Trade Vendor Term Sheet, on terms and conditions satisfactory to
the Lenders.
11.11 Intercreditor Agreement. The Senior Agents, on behalf of the Senior
Lenders and the Agents, on behalf of the Lenders shall have entered into the
Intercreditor Agreement, which shall be in form and substance satisfactory to
the Agents.
11.12 Opinion of Counsel. Each of the Lenders and the Agents shall have
received a favorable legal opinion addressed to the Lenders and the Agents,
dated as of the Closing Date, in form and substance satisfactory to the Lenders
and the Agents, from Sidley Xxxxxx Xxxxx & Xxxx LLP, counsel to the Borrower and
its Subsidiaries, and such other opinions as the Agents may request.
11.13 Payment of Fees. The Borrower shall have paid to the Lenders or the
Agents, as appropriate, the Closing Fee pursuant to Section 5.6 and all other
amounts due and payable under this Agreement.
11.14 Terms of Consignment. Each of the Agents and each of the Lenders
shall be satisfied with the terms of all consignment, leasing, "lay away" and
purchase and sale arrangements of the Borrower and each of its Subsidiaries.
11.15 Financial Statements. The Agents and the Lenders shall have received
the financial statements required to be delivered to them by Section 8.4.
11.16 Consents and Approvals. The Agents shall have received evidence that
there shall have been obtained by all of the parties to the transactions
contemplated hereby, and shall be in full force and effect all regulatory,
creditor, lessor and other third party consents and approvals necessary to
complete the transactions contemplated hereby.
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11.17 Capitalization of the Borrower. The Agents shall have reviewed all
of the documents relating to the capitalization of the Borrower, which documents
and capitalization shall be in form and substance satisfactory to each of the
Agents.
11.18 Warrants. The Borrower shall issue Warrants for a number of shares
equal to 19.9% of the total outstanding shares of the Borrower's common stock.
11.19 Inventory Appraisal. Borrower shall have delivered the results of
the inventory appraisal currently being conducted by Xxxxxx Xxxxxxxx and such
results shall be satisfactory to the Lenders.
11.20 Due Diligence. The Agents shall have completed their business and
legal due diligence with respect to the Borrower.
11.21 Senior Loan Documents. The Agents shall have received fully executed
copies of the Senior Credit Agreement and all related Loan Documents (as defined
therein), including, without limitation, an amendment and waiver, dated as of
the Closing Date, to the Senior Credit Agreement (and, to the extent required,
to any related Loan Documents (as defined therein)), in form and substance
satisfactory to the Agents, together with a certificate of an authorized officer
of the Borrower certifying that such Senior Loan Documents remain in full force
and effect and that no Default or Event of Default (as defined in the Senior
Credit Agreement) exists thereunder or will result from the transactions
contemplated herein.
11.22 Representations True; No Event of Default. Each of the
representations and warranties of the Borrower and its Subsidiaries contained in
this Credit Agreement, the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with this Credit Agreement shall be true
as of the Closing Date and no Default or Event of Default shall have occurred
and be continuing.
11.23 No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Lender would make it illegal for such Lender to make such Loan.
11.24 Governmental Regulation. Each Lender shall have received such
statements in substance and form reasonably satisfactory to such Lender as such
Lender shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System.
11.25 Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Lenders and to the Agents and the Administrative Agent's Special
Counsel, and the Lenders, the Agents and such counsel shall have received all
information and such counterpart originals or certified or other copies of such
documents as the Agents or such Lenders may reasonably request.
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12. INTENTIONALLY DELETED.
13. EVENTS OF DEFAULT; ACCELERATION; ETC.
13.1 Events of Default and Acceleration. If any of the following events
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans when
the same shall become due and payable or required, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;
(b) the Borrower or any of its Subsidiaries (i) shall fail to pay
any interest on the Loans (A) within one (1) day following the date when the
same shall become due and payable, other than at the stated date of maturity or
any accelerated date of maturity or (B) when the same shall become due and
payable at the stated date of maturity or any accelerated date of maturity or
(ii) shall fail to pay sums due hereunder or under any of the other Loan
Documents, when the same shall become due and payable, whether at the stated
date of maturity or any accelerated date of maturity or at any other date fixed
for payment;
(c) the Borrower shall fail to comply with any of its covenants
contained in Section 8 (other than Sections 8.6(b), 8.13 and 8.17), 9 or 10;
(d) the Borrower or any of its Subsidiaries shall fail to perform
any term, covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified elsewhere in this Section 13.1) for
fifteen (15) days after written notice of such failure has been given to the
Borrower by the Administrative Agent;
(e) any representation or warranty of the Borrower or any of its
Subsidiaries in this Credit Agreement or any of the other Loan Documents or in
any other document or instrument delivered pursuant to or in connection with
this Credit Agreement shall prove to have been false in any material respect
upon the date when made or deemed to have been made or repeated;
(f) the Borrower or any of its Subsidiaries shall (i) fail to pay at
maturity, or within any applicable period of grace, any obligation for borrowed
money or credit received or in respect of any Capitalized Leases, or (ii) fail
to observe or perform any material term, covenant, or agreement contained in any
agreement by which it is bound, evidencing or securing borrowed money or credit
received, or in respect of any Capitalized Leases, in each case under this
subparagraph (f) in excess of $1,000,000.00, including without limitation, under
the Senior Loan Documents or under the Trade Vendor Term Sheet or the Trade
Vendor Extension Agreement, for such period of time as would permit (assuming
the giving of appropriate notice if required) the holder or holders thereof or
of any obligations issued thereunder to accelerate the maturity thereof, whether
or not any such acceleration has taken place;
(g) the Borrower or any of its Subsidiaries shall make an assignment
for the benefit of creditors, or admit in writing its inability to pay or
generally fail to pay its debts as they mature or become due, or shall petition
or apply for the appointment of a trustee or other
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custodian, liquidator or receiver of the Borrower or any of its Subsidiaries or
of any substantial part of the assets of the Borrower or any of its Subsidiaries
or shall commence any case or other proceeding relating to the Borrower or any
of its Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law of
any jurisdiction, now or hereafter in effect, or shall take any action to
authorize or in furtherance of any of the foregoing, or if any such petition or
application shall be filed or any such case or other proceeding shall be
commenced against the Borrower or any of its Subsidiaries and the Borrower or
any of its Subsidiaries shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition or application shall not have been
dismissed within forty-five (45) days following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any of its
Subsidiaries bankrupt or insolvent, or approving a petition in any such case or
other proceeding, or a decree or order for relief is entered in respect of the
Borrower or any Subsidiary of the Borrower in an involuntary case under federal
bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive, any final
judgment against the Borrower or any of its Subsidiaries that, with other
outstanding final judgments, undischarged, against the Borrower or any of its
Subsidiaries exceeds in the aggregate $1,500,000.00;
(j) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded or the Collateral Agent's security interests, mortgages or
liens in a substantial portion of the Collateral shall cease to be perfected, or
shall cease to have the priority contemplated by the Security Documents, in each
case otherwise than in accordance with the terms thereof or with the express
prior written agreement, consent or approval of the Lenders, or any action at
law, suit or in equity or other legal proceeding to cancel, revoke or rescind
any of the Loan Documents shall be commenced by or on behalf of the Borrower or
any of its Subsidiaries party thereto or any of their respective stockholders,
or any court or any other governmental or regulatory authority or agency of
competent jurisdiction shall make a determination that, or issue a judgment,
order, decree or ruling to the effect that, any one or more of the Loan
Documents is illegal, invalid or unenforceable in accordance with the terms
thereof;
(k) with respect to any Guaranteed Pension Plan, an ERISA Reportable
Event shall have occurred and the Required Lenders shall have determined in
their reasonable discretion that such event reasonably could be expected to
result in liability of the Borrower or any of its Subsidiaries to the PBGC or
such Guaranteed Pension Plan in an aggregate amount exceeding $1,500,000.00 and
such event in the circumstances occurring reasonably could constitute grounds
for the termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Guaranteed Pension Plan; or a trustee shall have been appointed
by the United States District Court to administer such Plan; or the PBGC shall
have instituted proceedings to terminate such Guaranteed Pension Plan;
(l) the Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from
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conducting any material part of its business and such order shall continue in
effect for more than thirty (30) days;
(m) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike, lockout,
labor dispute, embargo, condemnation, act of God or public enemy, or other
casualty, which in any such case causes, for more than ten (10) consecutive
days, the cessation or substantial curtailment of revenue producing activities
at retail locations of the Borrower or any of its Subsidiaries constituting
twenty-five percent (25%) or more of the Borrower's and its Subsidiaries retail
locations if such event or circumstance is not covered by business interruption
insurance;
(n) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by the
Borrower or any of its Subsidiaries if such loss, suspension, revocation or
failure to renew would have a material adverse effect on the business or
financial condition of the Borrower or such Subsidiary;
(o) the Borrower or any of its Subsidiaries shall be indicted for a
state or federal crime, or any civil or criminal action shall otherwise have
been brought against the Borrower or any of its Subsidiaries, a punishment for
which in any such case could include the forfeiture of any assets of the
Borrower or such Subsidiary having a fair market value in excess of
$1,500,000.00; or
(p) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 30% or more of the
outstanding shares of common stock of the Borrower; or, during any period of
twelve consecutive calendar months, individuals who were directors of the
Borrower on the first day of such period shall cease to constitute a majority of
the board of directors of the Borrower;
then, and in any such event so long as the same may be continuing, the Agents
may, and upon the request of the Required Lenders shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Notes and the other Loan Documents to be, and they shall thereupon forthwith
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by the
Borrower; provided that in the event of any Event of Default specified in
Sections 13.1(g) or 13.1(h), all such amounts shall become immediately due and
payable automatically and without any requirement of notice from the Agents or
any Lenders.
13.2 Intentionally Omitted.
13.3 Remedies. In case any one or more of the Events of Default shall have
occurred and be continuing, and whether or not the Lenders shall have
accelerated the maturity of the Loans pursuant to Section 13.1, each Lender, if
owed any amount with respect to the Loans may, with the consent of the Required
Lenders but not otherwise, proceed to protect and enforce its rights by suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Credit Agreement and
the other
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Loan Documents or any instrument pursuant to which the Obligations to such
Lender are evidenced, including as permitted by applicable law the obtaining of
the ex parte appointment of a receiver, and, if such amount shall have become
due, by declaration or otherwise, proceed to enforce the payment thereof or any
other legal or equitable right of such Lender. No remedy herein conferred upon
any Lender or the Agents or the holder of any Note is intended to be exclusive
of any other remedy and each and every remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or now or hereafter existing
at law or in equity or by statute or any other provision of law.
14. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Lenders to the Borrower and any securities or other property of the Borrower
in the possession of any Lender may be applied to or set off by such Lenders
against the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Lender. Each of the Lenders agrees
with each other Lenders that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Lenders, other than Indebtedness evidenced
by the Notes held by such Lender, such amount shall be applied ratably to such
other Indebtedness and to the Indebtedness evidenced by all such Notes held by
such Lenders, and (b) if such Lenders shall receive from the Borrower, whether
by voluntary payment, exercise of the right of setoff, counterclaim, cross
action, enforcement of the claim evidenced by the Notes held by, such Lenders by
proceedings against the Borrower at law or in equity or by proof thereof in
bankruptcy, reorganization, liquidation, receivership or similar proceedings, or
otherwise, and shall retain and apply to the payment of the Note or Notes held
by, such Lenders any amount in excess of its ratable portion of the payments
received by all of the Lenders with respect to the Notes held by all of the
Lenders, such Lenders will make such disposition and arrangements with the other
Lenders with respect to such excess, either by way of distribution, pro tanto
assignment of claims, subrogation or otherwise as shall result in each Lender
receiving in respect of the Notes held by it, its proportionate payment as
contemplated by this Credit Agreement; provided that if all or any part of such
excess payment is thereafter recovered from such Lender, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.
15. THE AGENTS.
15.1 Appointment of the Agents.
(a) Each Lender appoints and designates PWJ Lending LLC as the
"Administrative Agent" and as "Collateral Agent" hereunder and under the Loan
Documents.
(b) Each Lender authorizes the Agents:
(i) To execute those of the Loan Documents and all other
instruments relating thereto to which the Agents are a party.
(ii) To take such action on behalf of the Lenders and to
exercise all such powers as are expressly delegated to the Agents
hereunder and in the Loan
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Documents and all related documents, together with such other powers as
are reasonably incidental thereto.
15.2 Responsibilities of Agents.
(a) The Agents shall not have any duties or responsibilities to, or
any fiduciary relationship with, any Lender except for those expressly set forth
in this Agreement.
(b) Neither the Agents nor any of their Affiliates or Related Funds
shall be responsible to any Lender for any of the following:
(i) Any recitals, statements, representations or warranties
made by the Borrower or any other Person.
(ii) Any appraisals or other assessments of the assets of the
Borrower or of any other Person responsible for or on account of the
Obligations.
(iii) The value, validity, effectiveness, genuineness,
enforceability, or sufficiency of this Agreement, the Loan Documents, or
any other document referred to or provided for therein.
(iv) Any failure by the Borrower or any other Person (other
than that Agent) to perform its obligations under the Loan Documents.
(c) The Agents 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 Agents 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.
(d) Neither the Agents, nor any of their 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 its 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.
(e) The Agents shall not have any responsibility in any event for
more funds than the Agents actually receive and collect.
(f) The Agents, in their separate capacity as a Lender, shall have
the same rights and powers hereunder as any other Lender.
15.3 Concerning Distributions By the Agents.
(a) The Agents in the Agents' reasonable discretion based upon the
Agents' determination of the likelihood that additional payments will be
received, expenses incurred,
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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 Obligations.
(b) The Agents may disburse funds prior to determining that the sums
which the Agents expect to receive have been finally and unconditionally paid to
the Agents. If and to the extent that the Agents do disburse funds and it later
becomes apparent that the Agents did not then receive a payment in an amount
equal to the sum paid out, then any Lender to whom the Agents made the funds
available, on demand from the Agents, shall refund to the Agents the sum paid to
that person.
(c) If, in the opinion of the Agents, the distribution of any amount
received by the Agents might involve the Agents in liability, or might be
prohibited hereby, or might be questioned by any Person, then the Agents may
refrain from making distribution until the Agents' 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 this Agreement.
(e) In the event that (x) a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Agents is to be repaid
or disgorged or (y) those Lenders adversely affected thereby determine to effect
such repayment or disgorgement, then each Lender to which any such distribution
shall have been made shall repay, to the Agents 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 Distributions of Notices and Other Documents. Each Agent will forward
to each Lender, promptly after that Agent's receipt thereof, a copy of each
notice or other document furnished to the Agents pursuant to this Agreement,
including Borrowing Base Reports, and annual financial statements received from
the Borrower pursuant to this Agreement, other than any of the following:
(a) Routine or nonmaterial communications.
(b) Any notice or document required by any of the Loan Documents to
be furnished to the Lenders by the Borrower.
(c) Any notice or document of which any Agents has knowledge that
such notice or document had been forwarded to the Lenders other than by the
Agents.
15.5 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 Agents in the administration of the
credit facility contemplated by this Agreement.
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(ii) Proprietary forms and formats utilized by the Agents in
providing reports to the Lenders pursuant hereto, which forms or formats
are not of general currency.
(iii) The results of financial examinations, reviews,
inventories, analysis, appraisals, and other information concerning,
relating to, or in respect of the Borrower and prepared by or at the
request of, or furnished to any of, the Lenders by or on behalf of the
Agents.
(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.
15.6 Reliance by Agents. The Agents shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telex, or
facsimile) reasonably believed by the Agents 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 the Agents. As to any matters not expressly provided for in this Agreement,
any Loan Document, or in any other document referred to therein, the Agents
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.
15.7 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 Agents 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 Borrower 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 the Agents 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
Borrower when determining whether to take or not to take any discretionary
action under this Agreement.
(c) The Agents, in the discharge of that Agents' duties hereunder,
shall not
(i) Be required to make inquiry of, or to inspect the
properties or books of, any Person.
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(ii) Have any responsibility for the accuracy or completeness
of any financial examination, review, inventory, analysis, appraisal, and
other information concerning, relating to, or in respect of the Borrower
and prepared by or at the request of, or furnished to any of, the Lenders
by or on behalf of the Agents.
(d) Except for notices, reports, and other documents and information
expressly required to be furnished to the Lenders by the Agents hereunder, 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 the
Agents.
(e) Each Lender, at such Lender's request, shall have reasonable
access to all non-privileged documents in the possession of the Agents, which
documents relate to the Agents' performance of their duties hereunder.
15.8 Indemnification.
Without limiting the liabilities of the Borrower under any this or
any of the other Loan Documents, each Lender shall indemnify the Agents, 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 the Agents 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
Agents as to which a final judicial determination has been or is made (in a
proceeding in which each Agent has had an opportunity to be heard) that the
Agents had acted in a grossly negligent manner, in actual bad faith, or in
willful misconduct.
15.9 Resignation of Agents.
(a) Any Agent may resign at any time by giving sixty (60) days prior
written notice thereof to the Lenders and the Borrower. Upon receipt of any such
notice of resignation, the Majority 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 Borrower, not to be unreasonably withheld and, in any event,
deemed given by the Borrower if no written objection is provided by the Borrower
to the (resigning) Agent within seven (7) Business Days notice of such proposed
appointment). If there is no Majority Lenders or 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 in
consultation with the Borrower so long as no Event of Default is then continuing
may appoint a successor Agent, which shall be a financial institution having a
combined capital and surplus in excess of $200 Million. The consent of the
Borrower otherwise required by this Section (a) shall not be required if an
Event of Default has occurred.
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(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)
Agents 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 in bad faith or in
willful misconduct.
(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
15.10 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, provided,
however, no 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) Except as otherwise specifically provided in this Agreement,
whenever a Loan Document or this Agreement provides that action may be taken or
omitted to be taken in an Agent's discretion, the Agents shall have the sole
right in their reasonable judgment to take, or refrain from taking, such action
without, and notwithstanding, any vote of the Lenders. The rights granted to the
Lenders with respect to any consent shall not otherwise limit or impair the
Agents' exercise of their discretion under the Loan Documents.
(c) Notwithstanding any other provision of this Agreement or any
Loan Document, including without limitation, any other provision of this Section
15, any matter that requires the consent of the Required Lenders, Majority
Lenders, or Unanimous Lenders shall also require the consent of each of the
Agents.
15.11 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.
(a) The Majority Lenders may undertake the following if an Event of
Default has occurred and not been duly waived:
(i) Require the Agents to declare all Obligations to be
immediately payable in full.
(ii) Direct the Agents to increase the rate of interest to the
default rate of interest as provided in, and to the extent permitted by,
this Agreement.
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15.12 Action Requiring Certain Consent. The consent or direction of the
following is required for the following actions:
(a) Any forgiveness of all or any portion of any payment Obligation:
All Lenders whose payment Obligation is being so forgiven (other than any
Delinquent Lender).
(b) Any decrease in any interest rate or fee payable under any of
the Loan Documents (other than any fee payable to the Agents (for which the
consent of the Agents shall be required): All Lenders adversely affected thereby
(other than any Delinquent Lender).
(c) Any waiver, amendment, or modification which has the effect of
increasing any Commitment shall be subject to the consent of the Unanimous
Lenders (other than any Delinquent Lender).
15.13 Actions Requiring or Directed By Unanimous Lenders. None of the
following may take place except with Unanimous Lenders:
(a) Any release of a material portion of the Collateral, other than
a release of Collateral otherwise required or provided for in the Loan
Documents, unless such release is being made to facilitate a liquidation which
has been previously authorized, or is otherwise permitted hereunder, in which
case no such Unanimous Consent is required.
(b) Any release of any Person obligated on account of the
Obligations.
(c) Any amendment of this Section 15.
(d) Amendment of any of the following Definitions:
"Majority Lenders"
"Unanimous Lenders"
(e) Any amendment of the Maturity Date.
(f) Any amendment of Sections 5.4, 5.5 8.14 or 13.
15.14 Actions Requiring Agents's Consent.
(a) No action, amendment, or waiver of compliance with, any
provision of the Loan Documents or of this Agreement which affects any Agent in
their respective capacity as an Agent may be undertaken without the written
consent of such Agent.
(b) No action referenced herein which affects the rights, duties,
obligations, or liabilities of any Agent shall be effective without the written
consent of such Agent.
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15.15 Miscellaneous Actions.
(a) Notwithstanding any other provision of this Agreement, no single
Lender (other than any Agent, as applicable) independently may exercise any
right of action or enforcement against or with respect to the Borrower.
(b) The Agents shall be fully justified in failing or refusing to
take action under this Agreement or any Loan Document on behalf of any Lender
unless the Agents shall first:
(i) receive such clear, unambiguous, written instructions as
the Agents deem 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) The Agents may establish reasonable procedures for the providing
of direction and instructions from the Lenders to the Agents, including their
reliance on multiple counterparts, facsimile transmissions, and time limits
within which such directions and instructions must be received in order to be
included in a determination of whether the requisite Lenders have provided their
direction, consent, or instructions.
(d) No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon. No course of dealing or delay or
omission on the part of either of the Agents or any Lender in exercising any
right shall operate as a waiver thereof or otherwise be prejudicial thereto. No
notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances.
16. EXPENSES.
The Borrower agrees to pay (a) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by any of the Agents or any
of the Lenders (other than taxes based upon any Agent's or any Lender's net
income) on or with respect to the transactions contemplated by this Credit
Agreement (the Borrower hereby agreeing to indemnify each of the Agents and each
Lender with respect thereto), (c) the reasonable fees, expenses and
disbursements of the Administrative Agent's Special Counsel or any local counsel
to any of the Agents incurred in connection with the preparation,
administration, interpretation or enforcement of the Loan Documents and other
instruments mentioned herein, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, (d) the fees,
expenses and disbursements of each of the Agents incurred by such Agent in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, including all title insurance
premiums and surveyor, engineering and appraisal charges, (e) any fees, costs,
expenses and bank charges, including bank charges for returned checks, incurred
by the Agents or any Lender in establishing, maintaining or handling agency
accounts, lock box accounts and
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other accounts for the collection of any of the Collateral; (f) all reasonable
out-of pocket expenses incurred by the Agents, or, after the occurrence and
during the continuance of a Default or an Event of Default, any Lender, in
connection with periodic field examinations, fixed asset appraisals,
environmental review, monitoring of Collateral and other assets and otherwise in
maintaining and monitoring the transactions contemplated hereby, and in each
case in accordance with the terms of this Credit Agreement; (g) all reasonable
out-of-pocket expenses (including without limitation reasonable attorneys' fees
and costs, which attorneys may be employees of any Lender or any of the Agents,
and reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by any Lender or any Agent in connection
with (i) the enforcement of or preservation of rights under any of the Loan
Documents against the Borrower or any of its Subsidiaries or the administration
thereof after the occurrence of a Default or Event of Default and (ii) any
litigation, proceeding or dispute whether arising hereunder or otherwise, in any
way related to any Lender's or any Agent's relationship with the Borrower or any
of its Subsidiaries and (h) all reasonable fees, expenses and disbursements of
the Agents incurred in connection with UCC searches, UCC filings or mortgage
recordings. The covenants of this Section 16 shall survive payment or
satisfaction of all other Obligations.
17. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless each of the Agents and
the Lenders from and against any and all claims, actions and suits whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Credit
Agreement or any of the other Loan Documents or the transactions contemplated
hereby including, without limitation, (a) any actual or proposed use by the
Borrower or any of its Subsidiaries of the proceeds of any of the Loans, (b) the
reversal or withdrawal of any provisional credits granted by the Administrative
Agent upon the transfer of funds to the Concentration Account(s) from bank
agency or lock box accounts or in connection with the provisional honoring of
checks or other items, (c) any actual or alleged infringement of any patent,
copyright, trademark, service xxxx or similar right of the Borrower or any of
its Subsidiaries comprised in the Collateral, (d) the Borrower or any of its
Subsidiaries entering into or performing this Credit Agreement or any of the
other Loan Documents, (e) with respect to the Borrower and its Subsidiaries and
their respective properties and assets, the violation of any Environmental Law,
the presence, disposal, escape, seepage, leakage, spillage, discharge, emission,
release or threatened release of any Hazardous Substances or any action, suit,
proceeding or investigation brought or threatened with respect to any Hazardous
Substances (including, but not limited to, claims with respect to wrongful
death, personal injury or damage to property), or (f) any sales, use, transfer,
documentary and stamp taxes (but excluding any taxes based upon or measured by
the income or profits of any Lender or any Agent) and any recording and filing
fees paid by the Agents or the Lenders and which arise by reason of the
transactions contemplated hereby, or by any of the Loan Documents, in each case
including, without limitation, the reasonable fees and disbursements of counsel
and allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding. In litigation, or the preparation
therefor, the Lenders and the Agents shall be entitled to select their own
counsel and, in addition to the foregoing indemnity, the Borrower agrees to pay
promptly the reasonable fees and expenses of such counsel. If, and to the extent
that the obligations of the Borrower under this Section 17 are unenforceable for
any reason, the Borrower
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hereby agrees to make the maximum contribution to the payment in satisfaction of
such obligations which is permissible under applicable law. The covenants
contained in this Section 17 shall survive payment or satisfaction in full of
all other Obligations.
18. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein, in
the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Lenders and each
of the Agents, notwithstanding any investigation heretofore or hereafter made by
any of them, and shall survive the making by the Lenders or the Administrative
Agent of any of the Loans, as herein contemplated, and shall continue in full
force and effect so long as any amount due under this Credit Agreement or the
Notes or any of the other Loan Documents remains outstanding or any Lender has
any obligation to make any Loans. All statements contained in any certificate or
other paper delivered to any Lender or any of the Agents at any time by or on
behalf of the Borrower or any of its Subsidiaries pursuant hereto or in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower or such Subsidiary hereunder.
19. ASSIGNMENT AND PARTICIPATION.
19.1 Conditions to Assignment by Lenders. Except as provided herein, each
Lender may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment, and the same portion of
the Loans at the time owing to it, the Notes held by it; provided that (a) each
of the Agents and, unless a Default or an Event of Default shall have occurred
and be continuing, the Borrower, shall have given its prior written consent to
such assignment, which consent, in the case of the Borrower, will not be
unreasonably withheld, (b) each such assignment shall be of a constant, and not
a varying, percentage of all the assigning Lender's rights and obligations
hereunder, (c) each assignment shall be in an amount that is at least equal to
$5,000,000, and (d) the parties to such assignment shall execute and deliver to
the Agents, for recording in the Register (as hereinafter defined), an
Assignment and Acceptance, substantially in the form of Exhibit N hereto (an
"Assignment and Acceptance"), together with any Notes subject to such
assignment. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, (i) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder, and (ii) the assigning Lender shall, to the extent provided in
such assignment and upon payment to the Agents of the registration fee referred
to in Section 19.3, be released from its obligations under this Credit
Agreement. Notwithstanding the foregoing, no consent shall be required hereunder
for any assignment resulting from the acquisition of any Lender by another
financial institution.
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19.2 Certain Representations and Warranties; Limitations; Covenants. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear of
any adverse claim, the assigning Lender makes no representation or warranty,
express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or mortgage;
(b) the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower and its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance or observance by
the Borrower and its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations of any of their obligations under
this Credit Agreement or any of the other Loan Documents or any other instrument
or document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial statements
referred to in Section 7.4 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon the
assigning Lender, the Agents or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Credit Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agents to take such
action as agents on its behalf and to exercise such powers under this Credit
Agreement and the other Loan Documents as are delegated to the Agents by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto;
(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Credit Agreement
are required to be performed by it as a Lender; and
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance.
19.3 Register. The Agents shall maintain a copy of each Assignment and
Acceptance delivered to them and a register or similar list (the "Register") for
the recordation of the names and addresses of the Lenders and as applicable, the
Commitment
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Percentage or the Commitment Percentage of, and principal amount of the Loans,
owing to the Lenders from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the Agents and
the Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Credit Agreement. The Register shall
be available for inspection by the Borrower and the Lenders at any reasonable
time and from time to time upon reasonable prior notice. Upon each such
recordation, the assignee Lender agrees to pay to the Administrative Agent a
registration fee in the sum of $3,500.
19.4 New Notes. Upon their receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Agents shall (a) record the information contained therein
in the Register, and (b) give prompt notice thereof to the Borrower and the
Lenders (other than the assigning Lender). Within five (5) Business Days after
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Agents, in exchange for each surrendered Note, a new Note or
Notes to the order of such Eligible Assignee in an amount equal to the amount
assumed by such Eligible Assignee pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained some portion of its obligations
hereunder, a new Note or Notes to the order of the assigning Lender in an amount
equal to the amount retained by it hereunder. Such new Notes shall provide that
they are replacements for the surrendered Notes, shall be in an aggregate
principal amount equal to the aggregate principal amount of the surrendered
Notes, shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be substantially in the form of the assigned Notes. Within five
(5) days of issuance of any new Notes pursuant to this Section 19.4, the
Borrower shall deliver an opinion of counsel, addressed to the Lenders and the
Agents, relating to the due authorization, execution and delivery of such new
Notes and the legality, validity and binding effect thereof, in form and
substance satisfactory to the Lenders. The surrendered Notes shall be canceled
and returned to the Borrower.
19.5 Participations. Each Lender may sell participations to one or more
banks or other entities in all or a portion of such Lender's rights and
obligations under this Credit Agreement and the other Loan Documents; provided
that (a) each such participation shall be in an amount of not less than
$1,000,000.00, (b) any such sale or participation shall not affect the rights
and duties of the selling Lender hereunder to the Borrower and (c) the only
rights granted to the participant pursuant to such participation arrangements
with respect to waivers, amendments or modifications of the Loan Documents shall
be the rights to approve waivers, amendments or modifications that would reduce
the principal of or the interest rate on any Loans, extend the term or increase
the amount of the Commitment of such Lender as it relates to such participant or
extend any regularly scheduled payment date for principal or interest or any
scheduled payment.
19.6 Disclosure. The Borrower agrees that, in addition to disclosures made
in accordance with standard and customary banking practices, any Lender may
disclose information obtained by such Lender pursuant to this Credit Agreement
to assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
participants shall agree (a) to treat in confidence such information unless it
otherwise becomes public knowledge, (b) not to disclose such information to a
third party, except as required by law or legal process, and (c) not to make use
of such information for purposes of transactions unrelated to such contemplated
assignment or participation.
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19.7 Assignee or Participant Affiliated with the Borrower. If any assignee
Lender is an Affiliate of the Borrower, then any such assignee Lender shall have
no right to vote as a Lender hereunder or under any of the other Loan Documents
for purposes of granting consents or waivers or for purposes of agreeing to
amendments or other modifications to any of the Loan Documents or for purposes
of making requests to the Agents pursuant to Section 13.1 or Section 13.2, and
the determination of the Required Lenders shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to such assignee
Lender's interest in any of the Loans. If any Lender sells a participating
interest in any of the Loans to a participant, and such participant is the
Borrower or an Affiliate of the Borrower, then such transferor Lender shall
promptly notify the Agents of the sale of such participation. A transferor
Lender shall have no right to vote as a Lender hereunder or under any of the
other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or modifications to any of the Loan Documents
or for purposes of making requests to the Agents pursuant to Section 13.1 or
Section 13.2 to the extent that such participation is beneficially owned by the
Borrower or any Affiliate of the Borrower, and the determination of the Required
Lenders shall for all purposes of this Credit Agreement and the other Loan
Documents be made without regard to the interest of such transferor Lender in
the Loans.
19.8 Miscellaneous Assignment Provisions. Any assigning Lender shall
retain its rights to be indemnified pursuant to Section 17 with respect to any
claims or actions arising prior to the date of such assignment. If any assignee
Lender is not incorporated under the laws of the United States of America or any
state thereof, it shall, prior to the date on which any interest or fees are
payable hereunder or under any of the other Loan Documents for its account,
deliver to the Borrower and the Agents certification as to its exemption from
deduction or withholding of any United States federal income taxes. Anything
contained in this Section 19 to the contrary notwithstanding, any Lender may at
any time pledge all or any portion of its interest and rights under this Credit
Agreement (including all or any portion of its Notes) to any of the twelve
Federal Reserve Lenders organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341. No such pledge or the enforcement thereof shall release the
pledgor Lender from its obligations hereunder or under any of the other Loan
Documents.
19.9 Assignment by Borrower. The Borrower shall not assign or transfer any
of its rights or obligations under any of the Loan Documents without the prior
written consent of each of the Lenders.
20. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes shall be in writing and shall be delivered in
hand, mailed by United States registered or certified first class mail, postage
prepaid, sent by overnight courier, or sent by telegraph, telecopy, facsimile or
telex and confirmed by delivery via courier or postal service, addressed as
follows:
(a) if to the Borrower, at 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000-0000, Attention: Xxxx X. Xxxxxxxxxx, Chief Financial
Officer, or at such other address for notice as the Borrower shall last have
furnished in writing to the Person giving the notice;
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(b) if to the Administrative Agent or the Collateral Agent, to it
c/o Prentice Capital Management, LP, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxxxx Xxxxx, or such other address for notice as the
Administrative Agent or the Collateral Agent shall last have furnished in
writing to the Person giving the notice;
(c) if to any Lender, at such Lender's address set forth on the
signature pages hereto, or such other address for notice as such Lender shall
have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (i) if delivered by hand, overnight courier or facsimile
to a responsible officer of the party to which it is directed, at the time of
the receipt thereof by such officer or the sending of such facsimile and (ii) if
sent by registered or certified first-class mail, postage prepaid, on the third
Business Day following the mailing thereof.
21. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SAID STATE OF NEW YORK. THE BORROWER AGREES THAT ANY
SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL
COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH
COURT AND TO THE EXTENT PERMITTED BY APPLICABLE LAW SERVICE OF PROCESS IN ANY
SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN
SECTION 20. THE BORROWER HEREBY WAIVES TO THE EXTENT PERMITTED BY APPLICABLE LAW
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR
ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
22. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
23. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
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24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection herewith
or therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
Section 15.
25. WAIVER OF JURY TRIAL.
THE BORROWER, EACH AGENT AND EACH LENDER HEREBY WAIVES ITS RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS CREDIT AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE
OF WHICH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, THE BORROWER, EACH
AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. THE BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY BANK OR EITHER OF THE AGENTS HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH LENDER OR SUCH AGENT WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE AGENTS AND
THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT, THE OTHER
LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.
26. INTENTIONALLY OMITTED.
27. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
28. INTERCREDITOR AGREEMENT.
The liens and security interests securing the indebtedness and other
obligations incurred or arising under or evidenced by this instrument and the
rights and obligations evidenced hereby with respect to such liens are
subordinate in the manner and to the extent set forth in the Intercreditor
Agreement (as the same may be amended or otherwise modified from time to time
pursuant to the terms thereof) dated as of October 3, 2005 among the Agent, the
Borrower, and the Senior Agent, as "Administrative Agent" and "Collateral Agent"
for all of the Senior Lenders under the Senior Credit Agreement to the liens and
security interests securing indebtedness
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(including interest) owed by the Borrower and its Subsidiaries pursuant to the
Senior Credit Agreement, and certain guarantees of the indebtedness evidenced
thereby, as such Senior Credit Agreement and such guarantees have been and
hereafter may be amended, restated, supplemented or otherwise modified from time
to time as permitted under the Intercreditor Agreement and to the liens and
security interests securing indebtedness refinancing the indebtedness under such
agreements as permitted by the Intercreditor Agreement; and each holder of this
instrument, by its acceptance hereof, irrevocably agrees to be bound by the
provisions of the Intercreditor Agreement.
SIGNATURE PAGES FOLLOW
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(SIGNATURE PAGE TO
BRIDGE TERM LOAN CREDIT AGREEMENT)
IN WITNESS WHEREOF, the undersigned have duly executed this Bridge Term
Loan Credit Agreement as of the date first set forth above.
BORROWER:
WHITEHALL JEWELLERS, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Executive Vice President & CFO
(SIGNATURE PAGE TO BRIDGE TERM LOAN CREDIT AGREEMENT)
AGENTS:
PWJ LENDING LLC, as Administrative
Agent and as Collateral Agent
By: /s/ Xxxxxxxx Xxxxxx
------------------------
Name: Xxxxxxxx Xxxxxx
Title: Managing Director
(SIGNATURE PAGE TO BRIDGE TERM LOAN CREDIT AGREEMENT)
LENDERS:
PWJ LENDING LLC, as a Lender
By: /s/ Xxxxxxxx Xxxxxx
-------------------------
Name: Xxxxxxxx Xxxxxx
Title: Managing Director
(SIGNATURE PAGE TO BRIDGE TERM LOAN CREDIT AGREEMENT)
XXXXXXXX OPPORTUNITY FUND,
L.P., as a Lender
By: Xxxxxxxx Financial Advisors, LLC, its
General Partner
By: SH Independence, LLC, its Managing
Member
By: /s/ Xxxxxxx Xxxxxxxx
--------------------
Name: Xxxxxxx Xxxxxxxx
Title: Sole Member
EXHIBIT H
FORM OF
TERM LOAN NOTE
$_________ _________, 200__
FOR VALUE RECEIVED, the undersigned WHITEHALL JEWELLERS, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
_____________ (the "Lender") at the Lender's Head Office at
__________________________:
(a) prior to or on the Maturity Date the principal amount of
___________ Dollars ($________) or, if less, the aggregate unpaid
principal amount of the Term Loan advanced by the Lender to the Borrower
pursuant to the Bridge Term Loan Credit Agreement, dated as of October 3,
2005 (as amended and in effect from time to time, the "Credit Agreement"),
among the Borrower, the Lender and the other parties thereto;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided
in the Credit Agreement.
This Note evidences borrowings under and has been issued by the Borrower
in accordance with the terms of the Credit Agreement. The Lender and any holder
hereof is entitled to the benefits of the Credit Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrower contained therein, and any holder hereof may exercise the respective
remedies provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in this
Note and not otherwise defined herein shall have the same meanings herein as in
the Credit Agreement.
The Borrower irrevocably authorizes the Lender to make or cause to be
made, on the Closing Date and at the time of receipt of any payment of principal
of this Note, an appropriate notation on the grid attached to this Note, or the
continuation of such grid, or any other similar record, including computer
records, reflecting the making of such Term Loan or (as the case may be) the
receipt of such payment. The outstanding amount of the Term Loan set forth on
the grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by the Lender with
respect to the Term Loan shall be prima facie evidence of the principal amount
thereof owing and unpaid to the Lender, but the failure to record, or any error
in so recording, any such amount on any such grid, continuation or other record
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
Exh H - 1
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE
BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE MAY BE BROUGHT IN
THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS
SPECIFIED IN SECTION 20 OF THE CREDIT AGREEMENT. THE BORROWER HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
Exh H - 2
IN WITNESS WHEREOF, the undersigned has caused this Term Loan Note to be
signed in its corporate name by its duly authorized officer as of the day and
year first above written.
WHITEHALL JEWELLERS, INC.
By: _______________________________
Name: _________________________
Title: ________________________
Exh H - 3
Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made By:
---- ------- -------------- ----------- --------
_______ _________ ________________ _____________ __________
_______ _________ ________________ _____________ __________
_______ _________ ________________ _____________ __________
_______ _________ ________________ _____________ __________
_______ _________ ________________ _____________ __________
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_______ _________ ________________ _____________ __________
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_______ _________ ________________ _____________ __________
_______ _________ ________________ _____________ __________
_______ _________ ________________ _____________ __________
SCHEDULE 1
Commitment Percentages, Lending Offices and Notice Address
Lenders and their respective Commitment Percentage of the Total Revolver
Commitment are as follows:
COMMITMENT PERCENTAGE
LENDER TOTAL COMMITMENT (PRO RATA SHARE)
------ ---------------- ---------------------
PWJ Lending LLC $ 22,500,000 75%
Xxxxxxxx Opportunity Fund, L.P. $ 7,500,000 25%
TOTALS $ 30,000,000 100%
Lenders and their respective Address for Notices are as follows:
LENDER
PWJ Lending LLC
c/o Prentice Capital Management, LP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
LENDER
Xxxxxxxx Opportunity Fund, L.P.
000 Xxxxx Xxxxxx-Xxxxx Xxxx.
0xx Xxxxx
Xxxxxx-Xxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Telephone: 000-000-0000, ext. 18
Facsimile: 000-000-0000
