LOAN AND SECURITY AGREEMENT
by and among
BIG DOG HOLDINGS, INC.,
as Parent,
BIG DOG USA, INC.
and
CSI ACQUISITION CORPORATION,
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO,
as the Lenders,
and
XXXXX FARGO RETAIL FINANCE, LLC,
as the Arranger and Administrative Agent
Dated as of October 23, 2001
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is
entered into as of October 23, 2001, between and among, on the one hand, the
lenders identified on the signature pages hereof (such lenders, together with
their respective successors and assigns, are referred to hereinafter each
individually as a "Lender" and collectively as the "Lenders"), XXXXX FARGO
RETAIL FINANCE, LLC, a Delaware limited liability company, as the arranger and
administrative agent for the Lenders ("Agent"), and, on the other hand, BIG DOG
HOLDINGS, INC., a Delaware corporation ("Parent"), BIG DOG USA, INC., a
California corporation ("Big Dog"), and CSI Acquisition Corporation, a
California corporation ("CSI"; CSI, together with Big Dog, are referred to
hereinafter each individually as a "Borrower", and individually and
collectively, jointly and severally, as the "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall
have the following definitions:
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"ACH Transactions" means any cash management or related
services (including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system) provided by Xxxxx
Fargo or its Affiliates for the account of Borrower or its Subsidiaries.
"Acquisition" means any purchase or other acquisition by
Parent or a Subsidiary of Parent of the Stock or substantially all of the assets
of any other Person.
"Additional Documents" has the meaning set forth in Section
4.4.
"Adjusted Letter of Credit Usage" means, as of the date of
determination, the sum of (a) the Big Dog Adjusted Letter of Credit Usage, plus
(b) the CSI Adjusted Letter of Credit Usage.
"Adjusted Revolver Usage" means, as of any date of
determination, the sum of (a) the then extant amount of outstanding Advances,
plus (b) the then extant amount of the Adjusted Letter of Credit Usage.
"Advances" means advances made to Big Dog or CSI, as
applicable, pursuant to the provisions of Section 2.1.
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for purposes of Section 7.14 hereof: (a) any
Person which owns directly or indirectly 10% or more of the securities having
ordinary voting power for the election of directors or other members of the
governing body of a Person or 10% or more of the partnership or other ownership
interests of a Person (other than as a limited partner of such Person) shall be
deemed to control such Person, (b) each director (or comparable manager) of a
Person shall be deemed to be an Affiliate of such Person, and (c) each
partnership or joint venture in which a Person is a partner or joint venturer
shall be deemed to be an Affiliate of such Person.
"Agent" means WFRF, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.
"Agent's Account" means an account at a bank designated by
Agent from time to time as the account into which Borrowers shall make all
payments to Agent for the benefit of the Lender Group and into which the Lender
Group shall make all payments to Agent under this Agreement and the other Loan
Documents; unless and until Agent notifies Borrowers and the Lender Group to the
contrary, Agent's Account shall be that certain deposit account listed on
Schedule A-1.
"Agent Advances" has the meaning set forth in Section
2.3(e)(i).
"Agent's Liens" means the Liens granted by Borrowers to Agent
for the benefit of the Lender Group under this Agreement or the other Loan
Documents.
"Agent-Related Persons" means Agent together with its
Affiliates, officers, directors, employees, and agents.
"Aggregate Availability" means the sum of (a) the Big Dog
Availability, and (b) the CSI Availability.
"Aggregate Borrowing Base" means the sum of (a) the Big Dog
Borrowing Base, and (b) the CSI Borrowing Base.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period of time from and after
the date of the execution and delivery of this Agreement up to the date that is
the first anniversary of the Closing Date, 2% times the Maximum Revolver Amount,
(b) during the period of time from and including the date that is the first
anniversary of the Closing Date up to the date that is the second anniversary of
the Closing Date, 1% times the Maximum Revolver Amount, and (c) during the
period of time from and including the date that is the second anniversary of the
Closing Date up to the Maturity Date, zero (0).
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance
in the form of Exhibit A-1.
"Authorized Person" means any officer or other employee of any
Borrower.
"Availability" means, as of any date of determination, Big Dog
Availability or CSI Availability, as the context requires.
"Average Excess Availability" means the average daily Excess
Availability for the monthly period ending the last day of each month.
"Bank Product Agreements" means those certain cash management
service agreements entered into from time to time by Borrowers or its
Subsidiaries in connection with any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Borrowers or
their Subsidiaries to Xxxxx Fargo or its Affiliates pursuant to or evidenced by
the Bank Product Agreements and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all such amounts that Borrowers
are obligated to reimburse to Agent or any member of the Lender Group as a
result of Agent or such member of the Lender Group purchasing participations or
executing indemnities or reimbursement obligations with respect to the Bank
Products provided to Borrowers or their Subsidiaries pursuant to the Bank
Product Agreements.
"Bank Products" means any one or more of the following types
of services or facilities extended to Borrowers or their Subsidiaries by Xxxxx
Fargo or any Affiliate of Xxxxx Fargo: (a) credit cards, (ii) debit cards, (iii)
purchase cards, (iv) ACH Transactions, (v) cash management, including controlled
disbursement, accounts or services, and (vi) Hedge Agreements.
"Bank Product Reserves" means, as of any date of
determination, the amount of reserves that Agent has established (based upon
Xxxxx Fargo's or its Affiliate's reasonable determination of the credit exposure
in respect of then extant Bank Products) for Bank Products then provided or
outstanding.
"Bankruptcy Code" means the United States Bankruptcy Code, as
in effect from time to time.
"Base LIBOR Rate" means the rate per annum, determined by
Agent in accordance with its customary procedures, and utilizing such electronic
or other quotation sources as it considers appropriate (rounded upwards, if
necessary, to the next 1/16%), on the basis of the rates at which Dollar
deposits are offered to major banks in the London interbank market on or about
11:00 a.m. (California time) 2 Business Days prior to the commencement of the
applicable Interest Period, for a term and in amounts comparable to the Interest
Period and amount of the LIBOR Rate Loan requested by the applicable Borrower in
accordance with this Agreement, which determination shall be conclusive in the
absence of manifest error.
"Base Rate" means, the rate of interest announced within Xxxxx
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Xxxxx Fargo may designate.
"Base Rate Seasonal Advance" means each portion of a Seasonal
Advance that bears interest at a rate determined by reference to the Base Rate.
"Base Rate Seasonal Margin" means 200 basis points.
"Base Rate Standard Advance" means each portion of a Standard
Advance that bears interest at a rate determined by reference to the Base Rate.
"Base Rate Standard Margin" means 25 basis points, provided,
however, that if, on the first day of each month after April 30, 2002, Average
Excess Availability for the immediately preceding month is greater than
$5,000,000, Base Rate Standard Margin shall mean 0 basis points.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA
Affiliate of any Borrower has been an "employer" (as defined in Section 3(5) of
ERISA) within the past six years.
"Big Dog" has the meaning set forth in the preamble to this
Agreement.
"Big Dog Adjusted Letter of Credit Usage" means, as of the
date of determination, the sum of (a) 15% of the Net Liquidation Percentage of
book value of Big Dog's Eligible Inventory that is the subject of undrawn
Qualified Import Letters of Credit issued for the purpose of purchasing such
Inventory, plus (b) 100% of the undrawn amount of all other outstanding Letters
of Credit issued for the account of Big Dog, plus (c) 100% of the amount of
outstanding time drafts accepted by an Underlying Issuer as a result of drawings
under Underlying Letters of Credit issued for the account of Big Dog.
"Big Dog Adjusted Revolver Usage" means, as of any date of
determination, the sum of (a) the then extant amount of outstanding Big Dog
Revolver Advances, plus (b) the then extant amount of the Big Dog Adjusted
Letter of Credit Usage.
"Big Dog Availability" means, as of any date of determination,
if such date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Big Dog is entitled to borrow as Big Dog Revolver
Advances under Section 2.1(a) (after giving effect to all then outstanding
Obligations and all sublimits and reserves applicable hereunder).
"Big Dog Borrowing Base", as of any date of determination,
shall mean the result of:
(a) the lesser of:
(i) $28,000,000, and
(ii) 85% times Big Dog's then extant Net
Liquidation Percentage times the value of Big Dog's Eligible Inventory, plus
(b) during the Seasonal Period, the lesser of
(i) $2,000,000, and
(ii) 5% times Big Dog's then extant Net
Liquidation Percentage times the value of Big Dog's Eligible Inventory, minus
(c) the sum of (i) the Bank Product Reserve, (ii) the portion
of the Contractor Reserve attributable to Inventory of Big Dog, and (iii) the
aggregate amount of reserves, if any, established by Agent under Section
2.1(a)(ii).
"Big Dog Designated Account" means that certain account
designated as such on Schedule B-1.
"Big Dog Designated Account Bank" means Bank of America, whose
office is located at Warner Center Commercial Banking Office, 0000 Xxxxxx
Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000, and whose ABA number is 000000000.
"Big Dog Letter of Credit Usage" means, as of any date of
determination thereof, the aggregate undrawn amount of all outstanding Letters
of Credit issued for the account of Big Dog plus 100% of the amount of
outstanding time drafts accepted by an Underlying Issuer as a result of drawings
under Underlying Letters of Credit issued for the account of Big Dog.
"Big Dog Loan Account" means the Loan Account respecting Big
Dog maintained on the books of Agent pursuant to Section 2.10.
"Big Dog Maximum Revolver Amount" means $30,000,000.
"Big Dog Overadvance" means the amount, if any, by which (a)
the outstanding principal amount of the Big Dog Revolver Usage exceeds (b) the
least of (i) the Big Dog Borrowing Base, (ii) the Big Dog Maximum Revolver
Amount, or (iii) the Maximum Revolver Amount minus the CSI Revolver Usage.
"Big Dog Revolver Advances" means an Advance made pursuant to
Section 2.1(a).
"Big Dog Revolver Usage" means, as of any date of
determination thereof, the sum of (a) the principal amount of Big Dog Revolver
Advances then outstanding, plus (b) the Big Dog Letter of Credit Usage.
"Books" means each Borrower's and its Subsidiaries now owned
or hereafter acquired books and records (including all of its Records
indicating, summarizing, or evidencing its assets (including the Collateral) or
liabilities, all of each Borrower's or its Subsidiaries' Records relating to its
or their business operations or financial condition, and all of its or their
goods or General Intangibles related to such information).
"Borrower" and "Borrowers" have the respective meanings set
forth in the preamble to this Agreement.
"Borrowers Collateral" means all of each Borrower's now owned
or hereafter acquired right, title, and interest in and to each of the
following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) money or other assets of each such Borrower that now or hereafter
come into the possession, custody, or control of any member of the Lender
Group, and
(i) the proceeds and products, whether tangible or intangible, of any of the
foregoing, including proceeds of insurance covering any or all of the foregoing,
and any and all Accounts, Books, Equipment, General Intangibles, Inventory,
Investment Property, Negotiable Collateral, real property, money, deposit
accounts, or other tangible or intangible property resulting from the sale,
exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
"Borrowing" means a borrowing hereunder consisting of Advances
made on the same day by the Lenders (or Agent on behalf thereof), or by Swing
Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance,
in each case to the applicable Borrower.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close, except
that, if a determination of a Business Day shall relate to a LIBOR Rate Loan,
the term "Business Day" also shall exclude any day on which banks are closed for
dealings in Dollar deposits in the London interbank market.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Xxxxx'x,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or Xxxxx'x, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
Xxxxx'x, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"Cash Management Bank" has the meaning set forth in Section
2.7(a).
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash
management service agreements, in form and substance satisfactory to Agent, each
of which is among each Borrower, Agent, and one of the Cash Management Banks.
"Change of Control" means (a) any Person, other than Permitted
Holders, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 50%, or more, of the Stock of Parent
having the right to vote for the election of members of the Board of Directors,
or (b) Parent ceases to directly own and control 100% of the outstanding capital
Stock of each Subsidiary of Parent extant as of the Closing Date.
"Closing Date" means the date of the making of the initial
Advance (or other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of
Parent for the 1 year period following the Closing Date (on a yearly and month
by month basis), in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent.
"Code" means the California Uniform Commercial Code, as in
effect from time to time.
"Collateral" means any and all assets and rights and interests
in or to property pledged from time to time as security for the Obligations
pursuant to any pledge or security agreement that constitutes a Loan Document.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, contractor letter, or acknowledgement agreement of any lessor,
warehouseman, processor, consignee, contractor, or other Person in possession
of, having a Lien upon, or having rights or interests in the Equipment or
Inventory, in each case, in form and substance satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrowers.
"Commitment" means, with respect to each Lender, its
Commitment and, with respect to all Lenders, their Commitments, in each case as
such Dollar amounts are set forth beside such Lender's name on Schedule C-1 or
on the signature page of the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of Section
14.1.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-1 delivered by the chief financial officer of Parent to
Agent.
"Contractor Reserve" shall mean a reserve in the amount of
$50,000 or such higher amount as Agent in its Permitted Discretion shall
determine to be the amount of claims owed by Borrowers to contractors in respect
of Eligible Landed Inventory.
"Control Agreement" means a control agreement, in form and
substance satisfactory to Agent, executed and delivered by the applicable
Borrower, Agent, and the applicable securities intermediary with respect to a
Securities Account or bank with respect to a deposit account.
"copyright" shall have the meaning ascribed to such term in
the United States Copyright Act of 1976, as amended, and includes unregistered
copyrights.
"Copyright Security Agreement" means a copyright security
agreement executed and delivered by Parent and the Borrowers, as applicable, and
Agent, the form and substance of which is satisfactory to Agent.
"Crazy Shirt Acquisition" means the acquisition of the Crazy
Shirt Assets by Parent or CSI pursuant to (a) the Crazy Shirt Acquisition
Documents, or (b) an auction proceeding conducted by the United States
Bankruptcy Court for the District of Hawaii, or (c) a foreclosure and sale
conducted by the principal secured creditors of Crazy Shirts, Inc.
"Crazy Shirt Acquisition Agreement" means that certain Asset
Purchase Agreement, dated as of September 7, 2001, by and among Parent, CSI, and
Crazy Shirts, Inc., as amended by an amendment satisfactory to Agent in its
Permitted Discretion.
"Crazy Shirt Acquisition Documents" means, individually and
collectively, the Crazy Shirt Acquisition Agreement, and all other agreements,
documents and instruments executed or delivered in connection therewith.
"Crazy Shirt Acquisition Orders" means, collectively, (a) an
order from the United States Bankruptcy Court for the District of Hawaii (i)
authorizing, pursuant to the Crazy Shirt Acquisition Agreement, the sale of the
Crazy Shirt Assets free and clear of all liens and encumbrances pursuant to
Section 363 of the Bankruptcy Code and finding that Parent or CSI, as
applicable, is a bona fide purchaser pursuant to Section 363(m) of the
Bankruptcy Code, or (ii) authorizing, pursuant to an auction proceeding, the
sale of the Crazy Shirt Assets free and clear of all liens and encumbrances
pursuant to Section 363 of the Bankruptcy Code and finding that Parent or CSI,
as applicable, is a bona fide purchaser pursuant to Section 363(m) of the
Bankruptcy Code, or (iii) lifting the automatic stay, pursuant to Section 362(d)
of the Bankruptcy Code, to allow the principal secured creditors of Crazy
Shirts, Inc. to foreclose on and sell the Crazy Shirt Assets, and (b) all other
orders of the United States Bankruptcy Court for the District of Hawaii required
for the consummation of the Crazy Shirt Acquisition.
"Crazy Shirt Assets" means all of the property and assets
(tangible and intangible) of Crazy Shirts, Inc. proposed to be purchased by
Parent or CSI that (i) are operating assets that prior to the Closing Date were
identified to Agent, or (ii) are acceptable to Agent in its Permitted
Discretion.
"CSI" has the meaning set forth in the preamble to this
Agreement.
"CSI Adjusted Letter of Credit Usage" means, as of the date of
determination, the sum of (a) 15% of the Net Liquidation Percentage of book
value of CSI's Eligible Inventory that is the subject of undrawn Qualified
Import Letters of Credit issued for the purpose of purchasing such Inventory,
plus (b) 100% of the undrawn amount of all other outstanding Letters of Credit
issued for the account of CSI, plus (c) 100% of the amount of outstanding time
drafts accepted by an Underlying Issuer as a result of drawings under Underlying
Letters of Credit issued for the account of CSI.
"CSI Adjusted Revolver Usage" means, as of any date of
determination, the sum of (a) the then extant amount of outstanding CSI Revolver
Advances, plus (b) the then extant amount of the CSI Adjusted Letter of Credit
Usage.
"CSI Availability" means, as of any date of determination, if
such date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that CSI is entitled to borrow as CSI Revolver Advances
under Section 2.1(b) (after giving effect to all then outstanding Obligations
and all sublimits and reserves applicable hereunder).
"CSI Borrowing Base", as of any date of determination, shall
mean the result of:
(a) the lesser of:
(i) $8,000,000, and
(ii) 85% times CSI's then extant Net
Liquidation Percentage times the value of CSI's Eligible Inventory, minus
(b) the sum of (i) the Bank Product Reserve, (ii) the portion
of the Contractor Reserve attributable to Inventory of CSI, and (iii) the
aggregate amount of reserves, if any, established by Agent under Section
2.1(a)(ii).
"CSI Designated Account" means that certain account of CSI to
be maintained with the CSI Designated Account Bank that has been designated, in
writing, by CSI to Agent upon its establishment.
"CSI Designated Account Bank" means Xxxxx Fargo Bank, whose
office is located at 0000 Xxxxxxx Xx., Xxxxx Xxxxxxx, Xxxxxxxxxx 00000, and
whose ABA number is 000000000.
"CSI Funding Conditions" means that Agent shall have received
(a) duly executed originals of all documents evidencing the Crazy Shirt
Acquisition certified as true, correct, and complete by an appropriate officer
of Parent, the form and substance of which shall be satisfactory to Agent in its
Permitted Discretion; (b) evidence satisfactory to Agent in its Permitted
Discretion that all documents evidencing the Crazy Shirt Acquisition have been
duly executed and delivered by each of the parties thereto and, in each case,
remain in full force and effect; (c) evidence satisfactory to Agent in its
Permitted Discretion that the Crazy Shirt Acquisition Orders have been entered
and are final; (d) evidence satisfactory to Agent in its Permitted Discretion
that the security interests granted in favor of Agent pursuant hereto have been
duly perfected and are senior in priority to all other liens, claims, security
interests, or encumbrances, except for Permitted Liens; (e) evidence
satisfactory to Agent in its Permitted Discretion that Parent has contributed
the Net Issuance Proceeds from the Qualifying Offering to CSI; (f) evidence
satisfactory to Agent in its Permitted Discretion that, concurrently with the
initial funding of CSI, the Crazy Shirt Acquisition will be consummated
substantially in accordance with the terms and provisions of the (i) documents
evidencing the Crazy Shirt Asset Acquisition and (ii) the Crazy Shirt
Acquisition Orders; and (g) evidence satisfactory to Agent, in its Permitted
Discretion, that the CSI Designated Account has been established.
"CSI Letter of Credit Usage" means, as of any date of
determination thereof, the aggregate undrawn amount of all outstanding Letters
of Credit issued for the account of CSI plus 100% of the amount of outstanding
time drafts accepted by an Underlying Issuer as a result of drawings under
Underlying Letters of Credit issued for the account of CSI.
"CSI Loan Account" means the Loan Account respecting CSI
maintained on the books of Agent pursuant to Section 2.10.
"CSI Maximum Revolver Amount" means $8,000,000.
"CSI Overadvance" means the amount, if any, by which (a) the
outstanding principal amount of the CSI Revolver Usage exceeds (b) the least of
(i) the CSI Borrowing Base, (ii) the CSI Maximum Revolver Amount, or (iii) the
Maximum Revolver Amount minus the Big Dog Revolver Usage.
"CSI Revolver Advances" means an Advance made pursuant to
Section 2.1(b).
"CSI Revolver Usage" means, as of any date of determination
thereof, the sum of (a) the principal amount of CSI Revolver Advances then
outstanding, plus (b) the CSI Letter of Credit Usage.
"Daily Balance" means, with respect to each day during the
term of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
maintained by Parent or any Borrower.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first
3 days from and after the date the relevant payment is due, and (b) thereafter,
at the interest rate then applicable to Advances that are Base Rate Seasonal
Advances.
"Designated Account" means the Big Dog Designated Account or
the CSI Designated Account, as the context requires.
"Designated Account Bank" means the Big Dog Designated Account
Bank or the CSI Designated Account Bank, as the context requires.
"Disbursement Letter" means an instructional letter executed
and delivered by each Borrower to Agent regarding the extensions of credit to be
made on the Closing Date, the form and substance of which is satisfactory to
Agent.
"Distribution" means, with respect to any Person, (a) the
declaration or payment of any dividend on or in respect of any shares of any
class of capital Stock of such Person, other than dividends payable solely in
shares of common Stock of such Person, (b) the purchase, redemption, or other
retirement of any shares of any class of capital Stock of such Person, directly
or indirectly, (c) the return of capital by such Person to its shareholders or
other interest holders, or (d) any other distribution on or in respect of any
shares of any class of capital Stock of such Person.
"Dollars" or "$" means United States dollars.
"EBITDA" means, with respect to any fiscal period, Parent's
and its Subsidiaries consolidated net earnings (or loss), minus extraordinary
gains, plus interest expense, income taxes, and depreciation and amortization
for such period, as determined in accordance with GAAP.
"Eligible In-Transit Inventory" means those items of Inventory
that do not qualify as Eligible Landed Inventory solely because they are not
Landed Goods, but as to which (a) such Inventory was the subject of a Qualified
Import Letter of Credit (other than such Inventory that, in the aggregate, has a
value on any date of determination of $500,000 or less), (b) such Inventory
currently is in transit (whether by vessel, air, or land) from a location
outside of the continental United States to a location set forth on Schedule E-1
that is the subject of a Collateral Access Agreement, (c) title to such
Inventory has passed to the applicable Borrower and, as of the date of
determination, title did not pass to the applicable Borrower more than 50 days
prior to such date, (d) such Inventory is insured against types of loss, damage,
hazards, and risks, and in amounts, satisfactory to Agent in its Permitted
Discretion, (e) such Inventory either (1) is the subject of a negotiable xxxx of
lading (x) that is consigned to Agent (either directly or by means of
endorsements), (y) that was issued by the carrier respecting the subject
Inventory, and (z) that either is (I) in the possession of Agent or a customs
broker (in each case in the State of California), or (II) the subject of a
telefacsimile copy that Agent has received from the Underlying Issuer which
issued the Underlying Letter of Credit and as to which Agent also has received a
confirmation from such Underlying Issuer that such document is in-transit by
air-courier to Agent or a customs broker (in each case, in the State of
California), or (2) is the subject of a negotiable cargo receipt and is not the
subject of a xxxx of lading (other than a negotiable xxxx of lading consigned
to, and in the possession of, a consolidator or Agent, or their respective
agents) and such negotiable cargo receipt is (x) consigned to Agent (either
directly or by means of endorsements), (y) that was issued by a consolidator
respecting the subject Inventory, (z) that either is (I) in the possession of
Agent or a customs broker (in each case in the State of California), or (II) the
subject of a telefacsimile copy that Agent has received from the Underlying
Issuer which issued the Underlying Letter of Credit and as to which Agent also
has received a confirmation from such Underlying Issuer that such document is
in-transit by air-courier to Agent or a customs broker (in each case, in the
State of California), (f) the applicable Borrower has provided a certificate to
Agent that certifies that, to the best knowledge of the applicable Borrower,
such Inventory meets all of the applicable Borrower's representations and
warranties contained in the Loan Documents concerning Eligible Inventory, that
it knows of no reason why such Inventory would not be accepted by the applicable
Borrower when it arrives in California, and that the shipment as evidenced by
the documents conforms to the related order documents, and (g) the Underlying
Letter of Credit has been drawn upon in full and the Underlying Issuer has
honored such drawing and Agent has honored its obligations to the Underlying
Issuer under the applicable Qualified Import Letter of Credit.
"Eligible Inventory" means Eligible Landed Inventory or
Eligible In-Transit Inventory.
"Eligible Landed Inventory" means Inventory of the applicable
Borrower that consists of first quality Landed Goods and complies with each of
the representations and warranties respecting Eligible Inventory made under the
Loan Documents, and that is not excluded as ineligible by virtue of one or more
of the criteria set forth below; provided, however, that such criteria may be
fixed and revised from time to time by Agent in Agent's Permitted Discretion to
address the results of any audit or appraisal performed by Agent from time to
time after the Closing Date. In determining the amount to be so included,
Inventory shall be valued at the lower of cost or market on a basis consistent
with the applicable Borrower's historical accounting practices. An item of
Inventory shall not be included in Eligible Landed Inventory if:
(a) the applicable Borrower does not have good,
valid, and marketable title thereto,
(b) it is not subject to a valid and perfected
first priority Agent's Lien,
(c) it consists of goods returned or rejected
by the applicable Borrower's customers, or
(d) it consists of goods that are
obsolete or slow moving, restrictive or custom items, work-in-process,
raw materials, or goods that constitute spare parts, packaging and shipping
materials, supplies used or consumed in the applicable Borrower's business,
xxxx and hold goods, defective goods, "seconds," or Inventory acquired on
consignment.
"Eligible Transferee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of
a Lender that was party hereto as of the Closing Date, (e) so long as no Event
of Default has occurred and is continuing, any other Person approved by Agent
and Borrowers, and (f) during the continuation of an Event of Default, any other
Person approved by Agent.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by any Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal,
state, provincial, foreign or local statute, law, rule, regulation,
ordinance, code, binding and enforceable guideline, binding and enforceable
written policy, or rule of common law now or hereafter in effect and in each
case as amended, or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
to the extent binding on Borrowers, relating to the environment, employee
health and safety, or Hazardous Materials, including CERCLA; RCRA; the
Federal Water Pollution Control Act, 33 USCss.1251 et seq; the Toxic Substances
Control Act, 15 USC,ss. 2601 et seq; the Clean Air Act, 42 USCss. 7401 et seq.;
the Safe Drinking Water Act, 42 USC.ss.3803 et seq.; the Oil Pollution Act of
1990, 33 XXX.xx. 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 XXX.xx. 11001 et seq.; the Hazardous Material
Transportation Act, 49 USCss. 1801 et seq.; and the Occupational Safety and
Health Act, 29 USC.ss.651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles), tools, parts, goods (other than consumer goods, farm products,
or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with a Borrower and whose employees are aggregated with the employees of a
Borrower under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Aggregate Availability minus the
aggregate amount, if any, of all trade payables of Borrowers aged in excess of
their historical levels with respect thereto and all book overdrafts in excess
of their historical practices with respect thereto, in each case as determined
by Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as
in effect from time to time.
"Exempt Copyright" means any Incipient Copyright or any
Obsolete Copyright.
"Existing Lender" means Bank of America.
"Family Member" means, with respect to any individual, any
other individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
"Family Trusts" means, with respect to any individual, trusts
or other estate planning vehicles established for the benefit of Family Members
of such individual and in respect of which such individual serves as trustee or
in a similar capacity.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, between Borrowers and Agent, in form and substance satisfactory
to Agent.
"FEIN" means Federal Employer Identification Number.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section
2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Guarantor Security Agreement" means that certain Guarantor
Security Agreement executed and delivered by Parent and Agent, the form and
substance of which is satisfactory to Agent.
"Guaranty" means that certain general continuing guaranty
executed and delivered by Parent in favor of Agent, for the benefit of the
Lender Group, in form and substance satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all transactions, agreements,
or documents now existing or hereafter entered into between any Borrower or its
Subsidiaries and Xxxxx Fargo or its Affiliates, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging any Borrower's or its Subsidiaries' exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.
"Inactive Subsidiary" means Big Dog International, Inc., a
California corporation.
"Incipient Copyright" means any copyright of a Person that (a)
is under development (whether in the form of a new pictorial work, a new version
of a pre-existing pictorial work, an add-on or modification to a pre-existing
pictorial work, or otherwise) and that has not yet become a completed pictorial
work, version, add-on, or modification which is ready to be marketed by or on
behalf of such Person, or (b) is not the subject of licenses or other
dispositions giving rise to accounts, general intangibles, or other forms of
obligations.
"Indebtedness" means (a) all obligations for borrowed money,
(b) all obligations evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations under Capital Leases, (d) all obligations or liabilities of
others secured by a Lien on any asset of any Borrower or its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations for the deferred purchase price of assets (other than trade debt
incurred in the ordinary course of business and repayable in accordance with
customary trade practices), and (f) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section
11.3.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Interest Period" means, with respect to each LIBOR Rate Loan,
a period commencing on the date of the making of such LIBOR Rate Loan and ending
1, 2, or 3 months thereafter; provided, however, that (a) if any Interest Period
would end on a day that is not a Business Day, such Interest Period shall be
extended (subject to clauses (c)-(e) below) to the next succeeding Business Day,
(b) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (c) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, or 3 months
after the date on which the Interest Period began, as applicable, and (e) no
Borrower may elect an Interest Period which will end after the Maturity Date.
"Intercompany Advances" means loans or advances (i) from one
Borrower to another Borrower, or (ii) from Parent to a Borrower.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Parent, Borrowers, and Agent, the form and
substance of which is satisfactory to Agent.
"Inventory" means all Borrowers' now owned or hereafter
acquired right, title, and interest with respect to inventory, including goods
held for sale or lease or to be furnished under a contract of service, goods
that are leased by a Borrower as lessor, goods that are furnished by a Borrower
under a contract of service, and raw materials, work in process, or materials
used or consumed in a Borrower's business.
"Inventory Reserves" means reserves (determined from time to
time by Agent in its Permitted Discretion) for (a) the estimated costs relating
to unpaid freight charges, warehousing or storage charges, taxes, duties, and
other similar unpaid costs associated with the acquisition of Eligible
In-Transit Inventory by any Borrower, plus (b) the estimated reclamation claims
of unpaid sellers of Eligible In-Transit Inventory, which is not the subject of
a Qualified Import Letter of Credit, sold to any Borrower.
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Property" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"Issuing Lender" means WFRF or any other Lender that, at the
request of any Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or
L/C Undertakings pursuant to Section 2.12.
"Landed Goods" means (a) embellished articles of apparel held
for sale in the ordinary course of the applicable Borrower's business located at
one of the business locations set forth on Schedule E-1 (or in transit between
any such locations), (b) unembellished articles of apparel that are readily
saleable in their current condition and that are either at one of the business
locations set forth on Schedule E-1 (or in transit between such locations) or
with a contractor who has executed a Collateral Access Agreement (or in transit
between such contractor and one of the business locations set forth on Schedule
E-1), or (c) embellished articles of apparel that are readily saleable in their
current condition and that are with a contractor who has executed a Collateral
Access Agreement (or in transit between such contractor and one of the business
locations set forth on Schedule E-1).
"Landlord Reserve" means with respect to each leased location
(i) at which each Borrower stores Inventory in a state that has a landlord lien
or similar statute with respect to commercial property, including without
limitation, as of the Closing Date, the states of Alabama, Arizona, Florida,
Georgia, Illinois, Iowa, Kentucky, Louisiana, Maryland, Mississippi, Nevada, New
Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, South Carolina, Texas,
Utah, Virginia, Washington, and West Virginia, and in the District of Columbia,
and (ii) for which either (I) a Collateral Access Agreement has not been
received by Agent, or (II) the underlying lease agreement does not contain a
provision that waives the Lien rights that the landlord may have in and to the
Inventory, including without limitation all rights of levy or distraint for
rent; a reserve in an amount equal to the greater of (a) the number of months
rent for which a landlord will have, under the applicable statutory lien, a Lien
in the assets of the applicable Borrower to secure the payment of rent or other
amounts under a lease, or (b) 2 months rent under the lease.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section
2.12(a).
"Leasehold Threshold" shall mean, as of the date of
determination, a default by Parent or any of its Subsidiaries extant as of the
Closing Date under (a) any lease related to a distribution center or warehouse,
or (b) 3 or more leases related to retail stores.
"Lender" and "Lenders" have the respective meanings set forth
in the preamble to this Agreement, and shall include any other Person made a
party to this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of
the Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by any Borrower
under any of the Loan Documents that are paid or incurred by the Lender Group,
(b) fees or charges paid or incurred by Agent in connection with the Lender
Group's transactions with Borrowers, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC searches and including
searches with the patent and trademark office, the copyright office, or the
department of motor vehicles), filing, recording, publication, appraisal
(including periodic Collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement), real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) costs and expenses incurred by Agent
in the disbursement of funds to or for the account of Borrowers (by wire
transfer or otherwise), (d) charges paid or incurred by Agent resulting from the
dishonor of checks, (e) reasonable costs and expenses paid or incurred by the
Lender Group to correct any default or enforce any provision of the Loan
Documents, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of Agent related to audit examinations
of the Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by the Lender Group in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or the Lender Group's relationship with any
Borrower or any guarantor of the Obligations, (h) Agent's and each Lender's
reasonable fees and expenses (including attorneys fees) incurred in advising,
structuring, drafting, reviewing, administering, or amending the Loan Documents,
and (i) Agent's and each Lender's reasonable fees and expenses (including
attorneys fees) incurred in terminating, enforcing (including attorneys fees and
expenses incurred in connection with a "workout," a "restructuring," or an
Insolvency Proceeding concerning any Borrower or in exercising rights or
remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender,
such Lender, together with such Lender's Affiliates, and the officers,
directors, employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of
determination, the sum of (a) the Big Dog Letter of Credit Usage, and (b) the
CSI Letter of Credit Usage.
"LIBOR Deadline" has the meaning set forth in Section
2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit
L-1.
"LIBOR Rate" means, for each Interest Period for each LIBOR
Rate Loan, the rate per annum determined by Agent (rounded upwards, if
necessary, to the next 1/16%) by dividing (a) the Base LIBOR Rate for such
Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
"LIBOR Rate Loan" means each portion of a Standard Advance
that bears interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means 175 basis points, provided, however,
that if, on the first day of each month after April 30, 2002, Average Excess
Availability for the immediately preceding month is greater than $5,000,000,
LIBOR Rate Margin shall mean 150 basis points.
"License" has the meaning set forth in Section 4.1
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting real property.
"Loan Account" and "Loan Accounts" have the respective
meanings set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product
Agreements, the Cash Management Agreements, the Control Agreements, the
Copyright Security Agreement, the Disbursement Letter, the Fee Letter, the
Guarantor Security Agreement, the Guaranty, the Intercompany Subordination
Agreement, the Letters of Credit, the Officers' Certificate, the Stock Pledge
Agreement, the Trademark Security Agreement, any note or notes executed by a
Borrower in connection with this Agreement and payable to a member of the Lender
Group, and any other agreement entered into, now or in the future, by any
Borrower and the Lender Group in connection with this Agreement.
"Marks" has the meaning set forth in Section 4.1.
"Material Adverse Change" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Parent and Borrowers, taken
as a whole, (b) a material impairment of Parent's or a Borrower's ability to
perform its respective obligations under the Loan Documents to which it is a
party or of the Lender Group's ability to enforce the Obligations or realize
upon the Collateral, or (c) a material impairment of the enforceability or
priority of the Agent's Liens with respect to the Collateral as a result of an
action or failure to act on the part of Parent or a Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $30,000,000.
"Motorcycles" means Big Dog Motorcycles L.L.C.
"Negotiable Collateral" means all of Borrowers' now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Net Issuance Proceeds" means, in respect of any issuance of
common equity or preferred equity (so long as the redemption and mandatory
dividend provisions are satisfactory to Agent), cash proceeds received in
connection therewith, net of reasonable out-of-pocket costs and expenses paid or
incurred in connection therewith in favor of any Person not an Affiliate of
Parent or any Borrower, such costs and expenses to be consistent with standard
investment practices for similar issuances.
"Net Liquidation Percentage" means the percentage of the book
value of the applicable Borrower's Inventory that is estimated to be recoverable
in an orderly liquidation of such Inventory, such percentage to be as determined
from time to time by a qualified appraisal company selected by Agent.
"Obligations" means (a) all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), contingent reimbursement obligations with respect to
outstanding Letters of Credit, premiums, liabilities (including all amounts
charged to Borrowers' Loan Accounts pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), lease payments, guaranties, covenants,
and duties of any kind and description owing by Borrowers to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that Borrowers are required to pay
or reimburse by the Loan Documents, by law, or otherwise, and (b) all Bank
Product Obligations. Any reference in this Agreement or in the Loan Documents to
the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
"Obsolete Copyright" means any copyright of a Person that, in
such Person's good faith determination (a) is no longer sold or marketed by such
Person, (b) is not generating any material amount of revenues of such Person, or
(c) does not have a material fair market value.
"Officers' Certificate" means the representations and
warranties of officers form submitted by Agent to Borrowers, together with
Borrowers' completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"Originating Lender" has the meaning set forth in Section
14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
"Pay-Off Letter" means a letter, in form and substance
satisfactory to Agent, from Existing Lender to Agent respecting the amount
necessary to repay in full all of the obligations of Big Dog owing to Existing
Lender and obtain a release of all of the Liens existing in favor of Existing
Lender in and to the assets of Big Dog.
"Permitted Acquisitions" means, during the term of this
Agreement, one or more Acquisitions so long as:
(a) no Default or Event of Default shall have occurred and be
continuing or would result from the consummation of such proposed Acquisition,
(b) the assets being acquired or the Person whose Stock is
being acquired is engaged in the business of the Borrowers or a business
reasonably related thereto,
(c) the consideration payable in respect of such Acquisition
shall be composed solely of (i) common Stock of Parent, warrants for common
Stock of Parent, preferred Stock of Parent (so long as such preferred Stock does
not require any current cash payment until, at the earliest, the date that is
360 days from the Closing Date), any other Stock of Parent that does not require
any current cash payment until, at the earliest, the date that is 360 days from
the Closing Date, or Subordinated Indebtedness, (ii) payments made with Net
Issuance Proceeds or with the proceeds of Subordinated Indebtedness, (iii) the
assumption of Purchase Money Indebtedness, (iv) the assumption of liabilities of
the Person whose Stock or assets are being acquired in respect of operating
leases, (v) $1,000,000, in the aggregate, during any fiscal year whether in the
form of payments or assumption of liabilities, for all such Acquisitions, or
(vi) any combination of the foregoing.
(or the balance thereof that has not previously been expended)
(d) Parent has provided to Agent written notice thereof not
less than 15 days prior to the anticipated closing date of such subject
Acquisition together with such documentation that Agent may require
demonstrating that after giving effect to such subject Acquisition, Parent and
its Subsidiaries (taken as a whole) would not suffer a Material Adverse Change
as a result of such proposed Acquisition,
(e) the subject Stock is being acquired in such Acquisition
directly by Parent, or the subject assets are being acquired in such Acquisition
directly by a Borrower or a new Subsidiary formed for the purposes of such
Acquisition, and
(f) Parent shall have caused such acquired Person to execute
and deliver a guaranty of the Obligations hereunder, together with any and all
security agreements, UCC-1 financing statements, fixture filings, and other
documentation reasonably requested by Agent to cause such acquired Person to be
obligated with respect to the Obligations and to include the assets of the
acquired Person within the Collateral.
"Permitted Bond Financing" means Indebtedness incurred by
Parent or any Borrower in connection with the purchase of Cash Equivalents where
such Borrower has simultaneously entered into an agreement to sell such Cash
Equivalents and where the economic risk of loss of such transaction does not
exceed $250,000.
"Permitted Discretion" means a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions
by Borrowers or their Subsidiaries of Equipment that is substantially worn,
damaged, or obsolete in the ordinary course of the applicable Borrower's
business, (b) sales by Borrowers or their Subsidiaries of Inventory to buyers in
the ordinary course of business, (c) the use or transfer of money or Cash
Equivalents by Borrowers or their Subsidiaries in a manner that is not
prohibited by the terms of this Agreement or the other Loan Documents, (d) the
licensing by Parent or its Subsidiaries, on an exclusive or non-exclusive basis,
and for fair market value, of patents, trademarks, copyrights, and other
intellectual property rights in the ordinary course of their business, provided,
however, that Parent or its Subsidiaries, as applicable, must retain or obtain
sufficient rights to use the subject intellectual property as to enable Parent
or its Subsidiaries, as applicable, to continue to conduct its business in the
ordinary course and such rights shall be assignable to Agent, for the benefit of
the Lender Group, (e) charitable donations by Borrowers of Inventory that is old
or obsolete and has a retail value of not more than $500,000, in the aggregate,
during any fiscal year, and (f) sales of Cash Equivalents in a Permitted Bond
Financing.
"Permitted Distributions" means (a) so long as no Default or
Event of Default has occurred and is continuing or would result therefrom, cash
Distributions by Borrowers to Parent for the sole purpose of permitting Parent
to pay, and Parent shall pay, federal and state income taxes solely attributable
to its ownership of Borrowers, (b) so long as no Event of Default has occurred
and is continuing or would result therefrom, cash Distributions by Subsidiaries
of Parent to Parent, and (c) so long as no Default or Event of Default has
occurred and is continuing or would result therefrom and so long as Borrowers
have Aggregate Availability of not less than $2,000,000 after giving effect
thereto, redemptions of Parent's outstanding Stock in an aggregate amount not to
exceed $500,000 in any fiscal year.
"Permitted Holder" means Xxxx Xxxxx, Xxxxxx Xxxxxxxx, and
their Family Members and Family Trusts.
"Permitted Intercompany Advances" means Intercompany Advances
so long as (a) no Default or Event of Default exists at the time of the making
of any Intercompany Advance or would exist after giving effect thereto, (b) if
the Borrower is acting as the lender, after giving effect to the making of such
Intercompany Advance, the Borrower that is acting as the lender with respect
thereto (i) has Availability of not less than $2,000,000 and (ii) is Solvent,
(c) the Intercompany Subordination Agreement is in full force and effect with
respect to the proposed Intercompany Advance, and (d) after giving effect to the
making of such Intercompany Advance, the Borrower that is acting as the borrower
with respect thereto is Solvent.
"Permitted Investments" means (a) investments in Cash
Equivalents, (b) investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) investments resulting from Permitted Intercompany
Advances, and (e) Permitted Acquisitions.
"Permitted Liens" means (a) Liens held by Agent for the
benefit of Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are
not yet delinquent, or (ii) do not constitute an Event of Default hereunder and
are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d)
the interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of Borrowers' business and not in connection with the borrowing of money, and
which Liens either (i) are for sums not yet delinquent, or (ii) are the subject
of Permitted Protests, (g) Liens arising from deposits made in connection with
obtaining worker's compensation or other unemployment insurance, (h) Liens or
deposits to secure performance of bids, tenders, or leases incurred in the
ordinary course of Borrowers' business and not in connection with the borrowing
of money, (i) Liens granted as security for surety or appeal bonds in connection
with obtaining such bonds in the ordinary course of Borrowers' business, (j)
Liens resulting from any judgment or award that is not an Event of Default
hereunder, (k) with respect to any real property, easements, rights of way, and
zoning restrictions that do not materially interfere with or impair the use or
operation thereof by Borrowers, and (l) Liens on Cash Equivalents in a Permitted
Bond Financing.
"Permitted Protest" means the right of Parent or the
applicable Borrower or their Subsidiaries to protest any Lien (other than any
such Lien that secures the Obligations), taxes (other than payroll taxes or
taxes that are the subject of a United States federal tax lien), or rental
payment, provided that (a) a reserve with respect to such obligation is
established on the Books in such amount as is required under GAAP, (b) any such
protest is instituted promptly and prosecuted diligently by Parent or the
applicable Borrower or their Subsidiary, as applicable, in good faith, and (c)
Agent is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Agent's
Liens.
"Permitted Purchase Money Indebtedness" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate principal amount outstanding at any one time not in excess of
$1,500,000.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Projections" means Parent's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation
to make Advances and receive payments of principal, interest, fees, costs,
and expenses with respect thereto, the percentage obtained by dividing (i) such
Lender's Commitment, by (ii) the aggregate Revolver of all Lenders,
(b) with respect to a Lender's obligation to
participate in Letters of Credit, to reimburse the Issuing Lender, and to
receive payments of fees with respect thereto, the percentage obtained by
dividing (i) such Lender's Commitment, by (ii) the aggregate Commitments of all
Lenders,
(c) with respect to all other matters
(including the indemnification obligations arising under Section 16.7), the
percentage obtained by dividing (i) such Lender's Commitment, by (ii) the
aggregate amount of Commitments of all Lenders; provided, however, that, in
each case, in the event all Commitments have been terminated, Pro Rata Share
shall be determined according to the Commitments in effect immediately prior to
such termination.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"Qualified Import Letter of Credit" means a Letter of Credit
that (a) is issued to facilitate the purchase by Borrowers of Eligible
Inventory, (b) is in form and substance acceptable to Agent, and (c) is issued
to support an Underlying Letter of Credit that only is drawable by the
beneficiary thereof by the presentation of, among other documents, either (i) a
negotiable xxxx of lading that is consigned to Agent (either directly or by
means of endorsements) and that was issued by the carrier respecting the subject
Eligible Inventory, or (ii) a negotiable cargo receipt that is consigned to
Agent (either directly or by means of endorsements) and that was issued by a
consolidator respecting the subject Eligible Inventory; provided, however, that,
in the latter case, no xxxx of lading shall have been issued by the carrier
(other than a xxxx of lading consigned to the consolidator or to Agent).
"Qualifying Offering" shall mean one or more public offerings,
or private placements by Parent of equity securities or subordinated
Indebtedness (the subordination terms of any such Indebtedness being
satisfactory to Agent in its sole discretion) pursuant to which CSI receives not
less than an amount equal to 30% times the cash purchase price payable by CSI
for the Crazy Shirt Assets.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"Report" has the meaning set forth in Section 16.17.
"Required Availability" means Excess Availability and
unrestricted cash and Cash Equivalents in an amount of not less than $2,000,000.
"Required Lenders" means, at any time, (a) Agent, and (b)
Lenders whose Pro Rata Shares aggregate 50.1% of the Commitments, or if the
Commitments have been terminated irrevocably, 50.1% of the Obligations (other
than Bank Product Obligations) then outstanding.
"Required Library" means, as of any date of determination,
those copyrights of Parent and Borrowers relating to pictorial works of Parent
and Borrowers that were among the ten highest sellers in adult T-shirt sales (by
unit) for the three month period immediately preceding the date of
determination.
"Reserve Percentage" means, on any day, for any Lender, the
maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Revolver Usage" means, as of any date of determination, the
sum of (a) the then extant amount of outstanding Advances, plus (b) the then
extant amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of
Credit, all reimbursement obligations of the applicable Borrower to the Issuing
Lender with respect to an L/C Undertaking, consisting of (a) the amount
available to be drawn or which may become available to be drawn, (b) all amounts
that have been paid by the Issuing Lender to the Underlying Issuer to the extent
not reimbursed by the applicable Borrower, whether by the making of an Advance
or otherwise, and (c) all accrued and unpaid interest, fees, and expenses
payable with respect thereto.
"Seasonal Advance" means an Advance made by Lenders to Big Dog
based upon the credit availability created under subsection (b) of the
definition of Big Dog Borrowing Base.
"Seasonal Period" means, during each year, the period from and
after March 1 up to and including May 31 and from and after September 1 up to
and including October 31.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as that
term is defined in the Code.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section
2.3(f)(i).
"Solvent" means, with respect to any Person on a particular
date, that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Standard Advance" means an Advance made by Lenders to a
Borrower based upon the credit availability created under subsection (a) of the
definitions of Big Dog Borrowing Base and CSI Borrowing Base, as applicable.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Stock Pledge Agreement" means a stock pledge agreement, in
form and substance satisfactory to Agent, executed and delivered by Parent and
Borrowers to Agent with respect to the pledge of the Stock owned by Parent and
Borrowers.
"Subordinated Indebtedness" means any Indebtedness of Parent
or a Borrower that contains terms and conditions (including subordination terms)
acceptable to Agent in the exercise of its Permitted Discretion.
"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"Swing Lender" means WFRF or any other Lender that, at the
request of a Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11.
"Trademark Security Agreement" means a trademark security
agreement executed and delivered by Parent, each Borrower, and Agent, the form
and substance of which is satisfactory to Agent.
"Underlying Issuer" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrowers and, in the case of a
proposed Qualified Import Letter of Credit, has agreed, in writing, to hold
documents of title as agent for Agent.
"Underlying Letter of Credit" means a letter of credit that
has been issued by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a
national banking association.
"WFRF" means Xxxxx Fargo Retail Finance, LLC, a Delaware
limited liability company.
1.2 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP. When used herein, the term "financial
statements" shall include the notes and schedules thereto. Whenever the term
"Borrowers" or the term "Parent" is used in respect of a financial covenant or a
related definition, it shall be understood to mean Parent and its Subsidiaries
on a consolidated basis unless the context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein.
1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
(a) Big Dog Revolver Advances.
(i) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender agrees
(severally, not jointly or jointly and severally) to make
advances to Big Dog in an amount at any one time outstanding
not to exceed such Lender's Pro Rata Share of an amount equal
to the least of (A) the Maximum Revolver Amount less the then
extant CSI Revolver Usage, (B) the Big Dog Maximum Revolver
Amount less the Big Dog Letter of Credit Usage, or (C) the Big
Dog Borrowing Base less the Big Dog Adjusted Letter of Credit
Usage and the aggregate amount of the Inventory Reserves (but
without duplication of the Inventory Reserves imposed under
Section 2.1(b)(i)).
(ii) Anything to the contrary in this Section 2.1(a)
notwithstanding, Agent shall have the right to establish
Landlord Reserves and such other reserves in such amounts,
and with respect to such matters, as Agent in its Permitted
Discretion shall deem necessary or appropriate, against the
Big Dog Borrowing Base, including reserves with respect to
(i) sums that Big Dog is required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased
assets, rents or other amounts payable under such leases)
and has failed to pay under any Section of this Agreement or
anyn other Loan Document, and (ii) amounts owing by Big
Dog to any Person to the extent secured by a Lien on, or
trust over, any of its Collateral (other than any existing
Permitted Lien set forth on Schedule P-1 which is specifically
identified thereon as entitled to have priority over the
Agent's Liens), which Lien or trust, in the Permitted
Discretion of Agent likely would have a priority superior
to the Agent's Liens (such as Liens or trusts in favor of
landlords, warehousemen, carriers, mechanics,
materialmen, laborers, or suppliers, or Liens or trusts
for ad valorem, excise, sales, or other taxes where given
priority under applicable law) in and to such item of the
Collateral. In addition to the foregoing and subject to
Section 2.11(c), Agent shall have the right to have Big
Dog's Inventory reappraised by a qualified appraisal
company selected by Agent from time to time after the Closing
Date for the purpose of redetermining the Net Liquidation
Percentage of Big Dog's Eligible Inventory portion of its
Collateral and, as a result, redetermining the Big Dog
Borrowing Base.
(b) CSI Revolver Advances.
(i) After satisfaction of the CSI Funding Conditions and subject
to the terms and conditions of this Agreement, and during the
term of this Agreement, each Lender agrees (severally, not
jointly or jointly and severally) to make advances to CSI in
an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal to the least of (A)
the Maximum Revolver Amount less the then extant Big Dog
Revolver Usage, (B) the CSI Maximum Revolver Amount less the
CSI Letter of Credit Usage, or (C) the CSI Borrowing Base less
CSI Adjusted Letter of Credit Usage and the aggregate amount
of the Inventory Reserves (but without duplication of the
Inventory Reserves imposed under Section 2.1(a)(i)).
(ii) Anything to the contrary in this Section 2.1(b)
notwithstanding, Agent shall have the right to establish
Landlord Reserves and such other reserves in such amounts,
and with respect to such matters, as Agent in its Permitted
Discretion shall deem necessary or appropriate, against the
CSI Borrowing Base, including reserves with respect to (i)
sums that CSI is required to pay (such as taxes, assessments,
insurance premiums, or, in the case of leased assets, rents
or other amounts payable under such leases) and has failed
to pay under any Section of this Agreement or any other
Loan Document, and (ii) amounts owing by CSI to any Person to
the extent secured by a Lien on, or trust over, any of
its Collateral (other than any existing Permitted Lien set
forth on Schedule P-1 which is specifically identified
thereon as entitled to have priority over the Agent's Liens),
which Lien or trust, in the Permitted Discretion of
Agent likely would have a priority superior to the Agent's
Liens (such as Liens or trusts in favor of landlords,
warehousemen, carriers, mechanics, materialmen, laborers,
or suppliers, or Liens or trusts for ad valorem, excise,
sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral. In addition
to the foregoing and subject to Section 2.11(c), Agent shall
have the right to have CSI's Inventory reappraised by a
qualified appraisal company selected by Agent from time
to time after the Closing Date for the purpose of
redetermining the Net Liquidation Percentage of CSI's
Eligible Inventory portion of its Collateral and, as a result,
redetermining the CSI Borrowing Base.
(c) The Lenders shall have no obligation to make additional Advances hereunder
to the extent such additional Advances would cause the Revolver Usage to exceed
the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid and, subject to the
terms and conditions of this Agreement, reborrowed at any time during the term
of this Agreement.
2.2 [Intentionally Omitted]
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made by an irrevocable
written request by an Authorized Person delivered to Agent (which notice must be
received by Agent no later than 10:00 a.m. (California time) on the Business Day
prior to the date that is the requested Funding Date in the case of a request
for an Advance specifying (i) the amount of such Borrowing, and (ii) the
requested Funding Date, which shall be a Business Day; provided, however, that
in the case of a request for Swing Loan in an amount of $2,000,000, or less,
such notice will be timely received if it is received by Agent no later than
10:00 a.m. (California time) on the Business Day that is the requested Funding
Date) specifying (i) the amount of such Borrowing, and (ii) the requested
Funding Date, which shall be a Business Day. At Agent's election, in lieu of
delivering the above-described written request, any Authorized Person may give
Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving of
such notice.
(b) Agent's Election. Promptly after receipt of a request for a Borrowing
pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i) to have
the terms of Section 2.3(c) apply to such requested Borrowing, or (ii) if the
Borrowing is for a Base Rate Seasonal Advance or a Base Rate Standard Advance,
to request Swing Lender to make a Swing Loan pursuant to the terms of Section
2.3(d) in the amount of the requested Borrowing; provided, however, that if
Swing Lender declines in its sole discretion to make a Swing Loan pursuant to
Section 2.3(d), Agent shall elect to have the terms of Section 2.3(c) apply to
such requested Borrowing.
(c) Making of Advances.
(i) In the event that Agent shall elect to have the terms of this
Section 2.3(c) apply to a requested Borrowing as described
in Section 2.3(b), then promptly after receipt of a request
for a Borrowing pursuant to Section 2.3(a), Agent shall
notify the Lenders, not later than 1:00 p.m.(California time)
on the Business Day immediately preceding the Funding
Date applicable thereto, by telecopy, telephone, or other
similar form of transmission, of the requested Borrowing.
Each Lender shall make the amount of such Lender's Pro Rata
Share of the requested Borrowing available to Agent in
immediately available funds, to Agent's Account, not later
than 10:00 a.m. (California time) on the Funding Date
applicable thereto. After Agent's receipt of the proceeds
of such Advances, upon satisfaction of the applicable
conditions precedent set forth in Section 3 hereof, Agent
shall make the proceeds thereof available to the
applicable Borrower on the applicable Funding Date by
transferring immediately available funds equal to such
proceeds received by Agent to such Borrower's Designated
Account; provided, however, that, subject to the provisions
of Section 2.3(i), Agent shall not request any Lender to
make, and no Lender shall have the obligation to make, any
Advance if Agent shall have actual knowledge that (1) one or
more of the applicable conditions precedent set forth in
Section 3 will not be satisfied on the requested Funding Date
for the applicable Borrowing unless such condition has been
waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after
the Closing Date, at least 1 Business Day prior to the date
of such Borrowing, that such Lender will not make available
as and when required hereunder to Agent for the account of
the applicable Borrower the amount of that Lender's Pro
Rata Share of the Borrowing, Agent may assume that each
Lender has made or will make such amount available to Agent
in immediately available funds on the Funding Date and
Agent may (but shall not be so required), in reliance upon
such assumption, make available to such Borrower on such
date a corresponding amount. If and to the extent any
Lender shall not have made its full amount available to
Agent in immediately available funds and Agent in such
circumstances has made available to the applicable
Borrower such amount, that Lender shall on the Business Day
following such Funding Date make such amount available to
Agent, together with interest at the Defaulting Lender
Rate for each day during such period. A notice submitted by
Agent to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest
error. If such amount is so made available, such payment to
Agent shall constitute such Lender's Advance on the date of
Borrowing for all purposes of this Agreement. If such
amount is not made available to Agent on the Business Day
following the Funding Date, Agent will notify the
applicable Borrower of such failure to fund and, upon demand
by Agent, such Borrower shall pay such amount to Agent
for Agent's account, together with interest thereon for each
day elapsed since the date of such Borrowing, at a rate
per annum equal to the interest rate applicable at the time
to the Advances composing such Borrowing. The failure
of any Lender to make any Advance on any Funding Date shall
not relieve any other Lender of any obligation hereunder
to make an Advance on such Funding Date, but no Lender shall
be responsible for the failure of any other Lender to
make the Advance to be made by such other Lender on any
Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by a Borrower to Agent for the
Defaulting Lender's benefit, and, in the absence of such
transfer to the Defaulting Lender, Agent shall transfer
any such payments to each other non-Defaulting Lender member
of the Lender Group ratably in accordance with their
Commitments (but only to the extent that such Defaulting
Lender's Advance was funded by the other members of the
Lender Group) or, if so directed by a Borrower and if no
Default or Event of Default had occurred and is continuing
(and to the extent such Defaulting Lender's Advance was not
funded by the Lender Group), retain same to be re-advanced to
such Borrower as if such Defaulting Lender had made Advances
to such Borrower. Subject to the foregoing, Agent may hold
and, in its Permitted Discretion, re-lend to a Borrower for
the account of such Defaulting Lender the amount of all
such payments received and retained by it for the account
of such Defaulting Lender. Solely for the purposes of
voting or consenting to matters with respect to the Loan
Documents, such Defaulting Lender shall be deemed not to be
a "Lender" and such Lender's Commitment shall be deemed to
be zero. This Section shall remain effective with
respect to such Lender until (x) the Obligations under this
Agreement shall have been declared or shall have become
immediately due and payable, (y) the non-Defaulting Lenders,
Agent, and the applicable Borrower shall have waived
such Defaulting Lender's default in writing, or (z) the
Defaulting Lender makes its Pro Rata Share of the applicable
Advance and pays to Agent all amounts owing by Defaulting
Lender in respect thereof. The operation of this Section
shall not be construed to increase or otherwise affect
the Commitment of any Lender, to relieve or excuse the
performance by such Defaulting Lender or any other Lender of
its duties and obligations hereunder, or to relieve or
excuse the performance by Borrowers of their duties and
obligations hereunder to Agent or to the Lenders other than
such Defaulting Lender. Any such failure to fund by any
Defaulting Lender shall constitute a material breach by
such Defaulting Lender of this Agreement and shall entitle
Borrower at its option, upon written notice to Agent, to
arrange for a substitute Lender to assume the Commitment of
such Defaulting Lender, such substitute Lender to be
acceptable to Agent. In connection with the arrangement of
such a substitute Lender, the Defaulting Lender shall
have no right to refuse to be replaced hereunder, and agrees
to execute and deliver a completed form of Assignment
and Acceptance Agreement in favor of the substitute Lender
(and agrees that it shall be deemed to have executed and
delivered such document if it fails to do so) subject only to
being repaid its share of the outstanding Obligations
(other than Bank Product Obligations) (including an
assumption of its Pro Rata Share of the Risk Participation
Liability) without any premium or penalty of any kind
whatsoever; provided further, however, that any such
assumption of the Commitment of such Defaulting Lender
shall not be deemed to constitute a waiver of any of the
Lender Groups' or Borrowers' rights or remedies against any
such Defaulting Lender arising out of or in relation to
such failure to fund.
(d) Making of Swing Loans.
(i) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this Section
2.3(d) apply to a requested Borrowing as described in Section
2.3(b), Swing Lender as a Lender shall make such Advance in
the amount of such Borrowing (any such Advance made solely
by Swing Lender as a Lender pursuant to this Section
2.3(d) being referred to as a "Swing Loan" and such
Advances being referred to collectively as "Swing Loans")
available to the applicable Borrower on the Funding Date
applicable thereto by transferring immediately available
funds to Borrower's Designated Account. Each Swing Loan is
an Advance hereunder and shall be subject to all the
terms and conditions applicable to other Advances, except
that no such Swing Loan shall be eligible for the LIBOR
Option and all payments on any Swing Loan shall be payable
to Swing Lender as a Lender solely for its own account
(and for the account of the holder of any participation
interest with respect to such Swing Loan). Subject to the
provisions of Section 2.3(i), Agent shall not request Swing
Lender as a Lender to make, and Swing Lender as a Lender
shall not make, any Swing Loan if Agent has actual
knowledge that (i) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing
unless such condition has been waived, or (ii) the requested
Borrowing would exceed the Availability on such Funding
Date. Swing Lender as a Lender shall not otherwise be
required to determine whether the applicable conditions
precedent set forth in Section 3 have been satisfied on the
Funding Date applicable thereto prior to making, in its
sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens, shall
constitute Advances and Obligations hereunder, and shall bear
interest at the rate applicable from time to time to Advances
that are Base Rate Seasonal Advances.
(e) Agent Advances.
(i) Agent hereby is authorized by each Borrower and the
Lenders, from time to time in Agent's sole discretion,
(1) after the occurrence and during the continuance of a
Default or an Event of Default, or (2) at any time that any
of the other applicable conditions precedent set forth in
Section 3 have not been satisfied, to make Advances to each
Borrower on behalf of the Lenders that Agent, in its
Permitted Discretion deems necessary or desirable (A)
to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of repayment of the
Obligations (other than the Bank Product Obligations), or
(C) to pay any other amount chargeable to each Borrower
pursuant to the terms of this Agreement, including Lender
Group Expenses and the costs, fees, and expenses described in
Section 10 (any of the Advances described in this Section
2.3(e) shall be referred to as "Agent Advances"). Each Agent
Advance is an Advance hereunder and shall be subject to all
the terms and conditions applicable to other Advances,
except that no such Agent Advance shall be eligible for the
LIBOR Option and all payments thereon shall be payable to
Agent solely for its own account (and for the account of the
holder of any participation interest with respect to such
Agent Advance).
(ii) The Agent Advances shall be repayable on demand and secured by
the Agent's Liens granted to Agent under the Loan Documents,
shall constitute Advances and Obligations hereunder, and shall
bear interest at the rate applicable from time to time to
Advances that are Base Rate Seasonal Advances.
(f) Settlement. It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not
be for the benefit of or enforceable by any Borrower) that in order to
facilitate the administration of this Agreement and the other Loan Documents,
settlement among them as to the Advances, the Swing Loans, and the Agent
Advances shall take place on a periodic basis in accordance with the following
provisions:
(i) Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if
so determined by Agent, (1) on behalf of Swing Lender, with
respect to each outstanding Swing Loan, (2) for itself,
with respect to each Agent Advance, and (3) with respect to
Collections received, as to each by notifying the
Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than
2:00 p.m. (California time) on the Business Day immediately
prior to the date of such requested Settlement (the date
of such requested Settlement being the "Settlement Date").
Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Advances, Swing
Loans, and Agent Advances for the period since the prior
Settlement Date. Subject to the terms and conditions
contained herein (including Section 2.3(c)(iii)):(y) if a
Lender's balance of the Advances, Swing Loans, and Agent
Advances exceeds such Lender's Pro Rata Share of the
Advances, Swing Loans, and Agent Advances as of a Settlement
Date, then Agent shall, by no later than 12:00 p.m.
(California time) on the Settlement Date, transfer in
immediately available funds to the account of such Lender as
such Lender may designate, an amount such that each such
Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Swing
Loans, and Agent Advances, and (z) if a Lender's balance
of the Advances, Swing Loans, and Agent Advances is less
than such Lender's Pro Rata Share of the Advances, Swing
Loans, and Agent Advances as of a Settlement Date, such
Lender shall no later than 12:00 p.m. (California time) on
the Settlement Date transfer in immediately available funds
to the Agent's Account, an amount such that each such
Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances,
Swing Loans, and Agent Advances. Such amounts made available
to Agent under clause (z) of the immediately preceding
sentence shall be applied against the amounts of the
applicable Swing Loan or Agent Advance and, together with
the portion of such Swing Loan or Agent Advance representing
Swing Lender's Pro Rata Share thereof, shall constitute
Advances of such Lenders. If any such amount is not made
available to Agent by any Lender on the Settlement Date
applicable thereto to the extent required by the terms
hereof, Agent shall be entitled to recover for its account
such amount on demand from such Lender together with interest
thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the Advances,
Swing Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances,
Swing Loans, and Agent Advances as of a Settlement Date, Agent
shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good
funds by Agent with respect to principal, interest, fees
payable by each Borrower and allocable to the Lenders
hereunder, and proceeds of Collateral. To the extent that a
net amount is owed to any such Lender after such application,
such net amount shall be distributed by Agent to that Lender
as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to
Swing Lender any payments received by Agent, that in
accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application to
Swing Lender's Pro Rata Share of the Advances. If, as of
any Settlement Date, Collections received since the then
immediately preceding Settlement Date have been applied to
Swing Lender's Pro Rata Share of the Advances other than to
Swing Loans, as provided for in the previous sentence,
Swing Lender shall pay to Agent for the accounts of the
Lenders, and Agent shall pay to the Lenders, to be applied
to the outstanding Advances of such Lenders, an amount such
that each Lender shall, upon receipt of such amount,
have, as of such Settlement Date, its Pro Rata Share of the
Advances. During the period between Settlement Dates,
Swing Lender with respect to Swing Loans, Agent with
respect to Agent Advances, and each Lender (subject to the
effect of letter agreements between Agent and individual
Lenders) with respect to the Advances other than Swing
Loans and Agent Advances, shall be entitled to interest at
the applicable rate or rates payable under this Agreement
on the daily amount of funds employed by Swing Lender, Agent,
or the Lenders, as applicable.
(g) Notation. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including
computer records.
(h) Lenders' Failure to Perform. All Advances (other than Swing
Loans and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
(i) Optional Overadvances. Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable, and Agent or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally, continue to make Advances (including Swing
Loans) to Borrowers notwithstanding that an Overadvance exists or thereby would
be created, so long as (i) after giving effect to such Advances (including a
Swing Loan), the outstanding Adjusted Revolver Usage does not exceed the
Aggregate Borrowing Base by more than $500,000, (ii) after giving effect to such
Advances (including a Swing Loan), the outstanding Revolver Usage (except for
and excluding amounts charged to the Loan Accounts for interest, fees, or Lender
Group Expenses) does not exceed the Maximum Revolver Amount, and (iii) at the
time of the making of any such Advance (including any Swing Loan), Agent does
not believe, in good faith, that the Overadvance created by such Advance will be
outstanding for more than 90 days. The foregoing provisions are for the
exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended
to benefit Borrowers in any way. The Advances and Swing Loans, as applicable,
that are made pursuant to this Section 2.3(i) shall be subject to the same terms
and conditions as any other Advance or Swing Loan, as applicable, except that
they shall not be eligible for the LIBOR Option and the rate of interest
applicable thereto shall be the rate applicable to Advances that are Base Rate
Seasonal Advances under Section 2.6(c) hereof without regard to the presence or
absence of a Default or Event of Default.
(i) In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the
preceding paragraph, regardless of the amount of, or
reason for, such excess, Agent shall notify Lenders as
soon as practicable (and prior to making any (or any
additional) intentional Overadvances (except for and
excluding amounts charged to the Loan Accounts for interest,
fees, or Lender Group Expenses) unless Agent determines that
prior notice would result in imminent harm to the
Collateral or its value), and the Lenders thereupon shall,
together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrower
intended to reduce, within a reasonable time, the
outstanding principal amount of the Advances to Borrower
to an amount permitted by the preceding paragraph. In the
event Agent or any Lender disagrees over the terms of
reduction or repayment of any Overadvance, the terms of
reduction or repayment thereof shall be implemented according
to the determination of the Required Lenders.
(ii) Each Lender shall be obligated to settle with Agent as
provided in Section 2.3(f) for the amount of such Lender's Pro
Rata Share of any unintentional Overadvances by Agent reported
to such Lender, any intentional Overadvances made as permitted
under this Section 2.3(i), and any Overadvances resulting from
the charging to the Loan Accounts of interest, fees, or Lender
Group Expenses.
2.4 Payments.
(a) Payments by Borrowers.
(i) Except as otherwise expressly provided herein, all payments by
Borrowers shall be made to Agent's Account for the account of
the Lender Group and shall be made in immediately available
funds, no later than 11:00 a.m. (California time) on the date
specified herein. Any payment received by Agent later than
11:00 a.m. (California time) shall be deemed to have been
received on the following Business Day and any applicable
interest or fee shall continue to accrue until such following
Business Day.
(ii) Unless Agent receives notice from the applicable Borrower
prior to the date on which any payment is due to the Lenders
that such Borrower will not make such payment in full as and
when required, Agent may assume that such Borrower has made
(or will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall
not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to
the amount then due such Lender. If and to the extent a
Borrower does not make such payment in full to Agent on the
date when due, each Lender severally shall repay to Agent on
demand such amount distributed to such Lender, together
with interest thereon at the Defaulting Lender Rate for
each day from the date such amount is distributed to such
Lender until the date repaid.
(b) Apportionment and Application of Payments.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan
Documents (including letter agreements between Agent and
individual Lenders), aggregate principal and interest
payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Obligations
to which such payments relate held by each Lender) and
payments of fees and expenses (other than fees or expenses
that are for Agent's separate account, after giving effect to
any letter agreements between Agent and individual Lenders)
shall be apportioned ratably among the Lenders having a Pro
Rata Share of the type of Commitment or Obligation to which a
particular fee relates. All payments shall be remitted to
Agent and all such payments (other than payments received
while no Event of Default has occurred and is continuing and
which relate to the payment of principal or interest of
specific Obligations or which relate to the payment of
specific fees), and all proceeds of Accounts or other
Collateral received by Agent, shall be applied as follows:
(A) first, to pay any Lender Group Expenses then due to
Agent under the Loan Documents, until paid in full,
(B) second, to pay any Lender Group Expenses then due to
the Lenders under the Loan Documents, on a ratable basis,
until paid in full,
(C) third, to pay any fees then due to Agent (for its
separate accounts, after giving effect to any letter
agreements between Agent and individual Lenders) under the
Loan Documents until paid in full,
(D) fourth, to pay any fees then due to any or all of the
Lenders (after giving effect to any letter agreements between
Agent and individual Lenders) under the Loan Documents, on a
ratable basis, until paid in full,
(E) fifth, to pay interest due in respect of all Agent
Advances, until paid in full,
(F) sixth, to pay interest due in respect of the Seasonal
Advances until paid in full,
(G) seventh, ratably to pay interest due in respect of
all other Advances (other than Agent Advances) and the Swing
Loans until paid in full,
(H) eighth, to pay the principal of all Agent Advances
until paid in full,
(I) ninth, to pay the principal of all Swing Loans until
paid in full,
(J) tenth, so long as no Event of Default has occurred
and is continuing, and at Agent's election (which election
Agent agrees will not be made if an Overadvance would be
created thereby), to pay amounts then due and owing by
Borrowers or their Subsidiaries in respect of Bank Products,
until paid in full,
(K) eleventh, so long as no Event of Default has occurred
and is continuing, to pay the principal of all Seasonal
Advances until paid in full,
(L) twelfth, so long as no Event of Default has occurred
and is continuing, to pay the principal of all other
Advances until paid in full,
(M) thirteenth, if an Event of Default has occurred and
is continuing, ratably (i) to pay the principal of all Seasonal
Advances until paid in full, and (ii) to Agent, to be held by
Agent, for the benefit of Xxxxx Fargo or its Affiliates, as
applicable, as cash collateral in an amount up to the amount of
the Bank Products Reserve established prior to the occurrence
of, and not in contemplation of, the subject Event of Default
until Borrowers' and their Subsidiaries' obligations in respect
of the then extant Bank Products have been paid in full or the
cash collateral amount has been exhausted,
(N) fourteenth, to pay the principal of all other Advances
until paid in full,
(O) fifteenth, if an Event of Default has occurred and is
continuing, to Agent, to be held by Agent, for the ratable
benefit of Issuing Lender and the Lenders, as cash collateral in
an amount up to 105% of the then extant Letter of Credit Usage
until paid in full,
(P) sixteenth, to pay any other Obligations (including Bank
Product Obligations) until paid in full, and
(Q) seventeenth, to Borrowers (to be wired to the
applicable Borrower's Designated Account) or such other Person
entitled thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender,
pursuant to the applicable wire instructions received from each
Lender in writing, such funds as it may be entitled to receive,
subject to a Settlement delay as provided in Section 2.3(h).
(iii) In each instance, so long as no Event of Default has
occurred and is continuing, Section 2.4(b) shall not be deemed to
apply to any payment by Borrowers specified by Borrowers to be for
the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to the
terms thereof, including loan fees, service fees, professional fees,
interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest,
interest on interest, and expense reimbursements, whether or not
the same would be or is allowed or disallowed in whole or in part in
any Insolvency Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each
other. In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
2.5 Overadvances. If, at any time or for any reason, (a) the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group pursuant to Sections 2.1 and 2.12 is greater than either the Dollar
or percentage limitations set forth in Sections 2.1 or 2.12, or (b) the
Obligations (other than Bank Product Obligations) exceed 90% of the then extant
Net Liquidation Percentage times the book value of Borrowers' Inventory (in each
case, an "Overadvance"), Borrowers immediately shall pay to Agent, in cash, the
amount of such excess, which amount shall be used by Agent to reduce the
Obligations in accordance with the priorities set forth in Section 2.4(b). In
addition, Borrowers, jointly and severally, hereby promises to pay the
Obligations (including principal, interest, fees, costs, and expenses) in
Dollars in full to Agent, on behalf of the Lender Group, as and when due and
payable under the terms of this Agreement and the other Loan Documents.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.
(a) Interest Rates. Except as provided in clause (c) below, all Obligations
(except for undrawn Letters of Credit and except for Bank Product Obligations)
that have been charged to the Loan Accounts pursuant to the terms hereof shall
bear interest on the Daily Balance thereof as follows (i) if the relevant
Obligation is a Standard Advance that is a LIBOR Rate Loan, at a per annum rate
equal to the LIBOR Rate plus the LIBOR Rate Margin, (ii) if the relevant
Obligation is a Standard Advance that is a Base Rate Standard Advance, at a per
annum rate equal to the Base Rate plus the Base Rate Standard Margin, (iii) if
the obligation is a Seasonal Advance, at a per annum rate equal to the Base Rate
plus the Base Rate Seasonal Margin, and (iv) otherwise, at a per annum rate
equal to the Base Rate plus the Base Rate Standard Margin.
(b) Letter of Credit Fees. Borrowers shall pay Agent (for the ratable
benefit of the Lenders, subject to any letter agreement between Agent and
individual Lenders), (i) a Letter of Credit fee (in addition to the charges,
commissions, fees, and costs set forth in Section 2.12(e)), which shall accrue
at a rate equal to 0.70% per annum times the Daily Balance of the undrawn
amount of all outstanding Qualified Import Letters of Credit, and (ii) a
Letter of Credit fee (in addition to the charges, commissions, fees, and costs
set forth in Section 2.12(e)) which shall accrue at a rate equal to 1.75% per
annum times the Daily Balance of the undrawn amount of all outstanding Letters
of Credit (other than Qualified Import Letters of Credit).
(c) Default Rate. Upon the occurrence and during the continuation
of an Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit
and except for Bank Product Obligations) that have
been charged to the Loan Accounts pursuant to the
terms hereof shall bear interest on the Daily Balance
thereof at a per annum rate equal to 2 percentage
points above the per annum rate otherwise applicable
hereunder, and
(ii) the Letter of Credit fee provided for above shall be
increased to 2 percentage points above the per annum
rate otherwise applicable hereunder.
(d) Payment. Interest, Letter of Credit fees, and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations or Commitments are outstanding. Borrowers hereby
authorizes Agent, from time to time without prior notice to Borrowers, to charge
such interest and fees, all Lender Group Expenses (as and when incurred), the
charges, commissions, fees, and costs provided for in Section 2.12(e) (as and
when accrued or incurred), the fees and costs provided for in Section 2.11 (as
and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document (including any amounts due and payable to Xxxxx
Fargo or its Affiliates in respect of Bank Products up to the amount of the then
extant Bank Products Reserve) to the Loan Accounts, which amounts thereafter
shall constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances hereunder. Any interest not paid when due shall be
compounded by being charged to Borrowers' Loan Accounts and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to either Base Rate Seasonal Advances or Base Rate Standard Advances,
as applicable.
(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount
equal to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrowers
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.
2.7 Cash Management.
(a) Borrowers shall (i) establish and maintain cash management services
of a type and on terms satisfactory to Agent at one or more of the banks set
forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and shall request in
writing and otherwise take such reasonable steps to ensure that all of its
Account Debtors forward payment of the amounts owed by them directly to such
Cash Management Bank, and (ii) deposit or cause to be deposited promptly, and
in any event no later than the first Business Day after the date of receipt
thereof, all Collections (including those sent directly by Account Debtors to a
Cash Management Bank) into a bank account in Agent's name (a "Cash Management
Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain Cash Management
Agreements with Agent and Borrowers, in form and substance acceptable to Agent.
Each such Cash Management Agreement shall provide, among other things, that (i)
all items of payment deposited in such Cash Management Account and proceeds
thereof are held by such Cash Management Bank as agent or bailee-in-possession
for Agent, (ii) the Cash Management Bank has no rights of setoff or recoupment
or any other claim against the applicable Cash Management Account other than for
payment of its service fees and other charges directly related to the
administration of such Cash Management Account and for returned checks or other
items of payment, and (iii) it immediately will forward by daily sweep all
amounts in the applicable Cash Management Account to the Agent's Account.
(c) So long as no Default or Event of Default has occurred and is
continuing, Borrowers may amend Schedule 2.7(a) to add or replace a Cash
Management Bank or Cash Management Account; provided, however, that (i) such
prospective Cash Management Bank shall be satisfactory to Agent and Agent shall
have consented in writing in advance to the opening of such Cash Management
Account with the prospective Cash Management Bank, and (ii) prior to the time
of the opening of such Cash Management Account, Borrowers and such prospective
Cash Management Bank shall have executed and delivered to Agent a Cash
Management Agreement. Borrowers shall close any of their Cash Management
Accounts (and establish replacement cash management accounts in accordance with
the foregoing sentence) promptly and in any event within 30 days of notice from
Agent that the creditworthiness of any Cash Management Bank is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Agent that the operating performance,
funds transfer, or availability procedures or performance of the Cash
Management Bank with respect to Cash Management Accounts or Agent's liability
under any Cash Management Agreement with such Cash Management Bank is no longer
acceptable in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral accounts, with
all cash, checks and similar items of payment in such accounts securing payment
of the Obligations, and in which Borrowers are hereby deemed to have granted a
Lien to Agent.
2.8 Crediting Payments. The receipt of any payment item by Agent (whether from
transfers to Agent by the Cash Management Banks pursuant to the Cash Management
Agreements or otherwise) shall not be considered a payment on account unless
such payment item is a wire transfer of immediately available federal funds made
to the Agent's Account or unless and until such payment item is honored when
presented for payment. Should any payment item not be honored when presented for
payment, then Borrowers shall be deemed not to have made such payment and
interest shall be calculated accordingly. Anything to the contrary contained
herein notwithstanding, any payment item shall be deemed received by Agent only
if it is received into the Agent's Account on a Business Day on or before 11:00
a.m. (California time). If any payment item is received into the Agent's Account
on a non-Business Day or after 11:00 a.m. (California time) on a Business Day,
it shall be deemed to have been received by Agent as of the opening of business
on the immediately following Business Day.
2.9 Designated Account. Agent is authorized to make the Advances, and Issuing
Lender is authorized to issue the Letters of Credit, under this Agreement based
upon telephonic or other instructions received from anyone purporting to be an
Authorized Person, or without instructions if pursuant to Section 2.6(d). Each
Borrower agrees to establish and maintain its Designated Account with the
applicable Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by such Borrower and made by Agent or the Lenders
hereunder. Unless otherwise agreed by Agent and the applicable Borrower, any
Advance, Agent Advance, or Swing Loan requested by such Borrower and made by
Agent or the Lenders hereunder shall be made to the applicable Borrower's
Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of each Borrower (each, a "Loan
Account", and collectively, the "Loan Accounts") on which the applicable
Borrower will be charged with all Advances (including Agent Advances and Swing
Loans) made by Agent, Swing Lender, or the Lenders to such Borrower or for such
Borrower's account, the Letters of Credit issued by Issuing Lender for the
applicable Borrower's account, and with all other payment Obligations of such
Borrower hereunder or under the other Loan Documents (except for Bank Product
Obligations), including, accrued interest, fees and expenses, and Lender Group
Expenses. In accordance with Section 2.8, each Borrower's Loan Account will be
credited with all payments received by Agent from such Borrower or for such
Borrower's account, including all amounts received in the Agent's Account from
any Cash Management Bank attributable to such Borrower. Agent shall render
statements regarding the Loan Account to Borrowers, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Parent and Borrowers and the Lender Group unless, within 90 days
after receipt thereof by the applicable Borrower, such Borrower shall deliver to
Agent written objection thereto describing the error or errors contained in any
such statements.
2.11 Fees. Borrowers shall pay to Agent the following fees and charges, which
fees and charges shall be non-refundable when paid (irrespective of whether this
Agreement is terminated thereafter) and shall be apportioned among the Lenders
in accordance with the terms of letter agreements between Agent and individual
Lenders:
(a) Unused Line Fee. On the first day of each month during the term of this
Agreement, an unused line fee in an amount equal to 0.25% per annum times the
result of (a) the Maximum Revolver Amount, less (b) the average Daily Balance
of the Revolver Usage for the immediately preceding month,
(b) Fee Letter Fees. As and when due and payable under the terms of the
Fee Letter, Borrowers shall pay to Agent the fees set forth in the Fee Letter,
and
(c) Audit, Appraisal, and Valuation Charges. For the separate account of
Agent, audit, appraisal, and valuation fees and charges as follows (i) a fee of
$850 per day, per auditor, plus out-of-pocket expenses for each financial audit
of a Borrower performed by personnel employed by Agent, provided, however,
that, so long as no Event of Default shall have occurred and be continuing,
a Borrower shall not be obligated to pay such fees and expenses in respect of
more than 4 financial audits of such Borrower in any calendar year, (ii) a fee
of $1,500 per day per appraiser, plus out-of-pocket expenses, for each
appraisal of the Collateral performed by personnel employed by Agent, provided,
however, that, so long as no Event of Default shall have occurred and be
continuing, Borrowers shall not be obligated to pay such fees and expenses in
respect of more than 2 appraisals of the Collateral in any calendar year, and
(iii) the actual charges paid or incurred by Agent if it elects to employ the
services of one or more third Persons to perform financial audits of Borrowers,
to appraise the Collateral, or any portion thereof, or to assess a Borrower's
business valuation. Notwithstanding the foregoing, the Borrowers shall not be
obligated to pay more than $45,000 in any calendar year for the fees and
expenses associated with the financial audits and appraisals of the Collateral
performed during such year.
2.12 Letters of Credit
(a) Subject to the terms and conditions of this Agreement, the Issuing Lender
agrees to issue letters of credit for the account of each of the Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Xxxxx Fargo) for the account of
each of the Borrowers. To request the issuance of an L/C or an L/C Undertaking
(or the amendment, renewal, or extension of an outstanding L/C or L/C
Undertaking), the applicable Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing so have been
approved by the Issuing Lender) to the Issuing Lender and Agent (reasonably in
advance of the requested date of issuance, amendment, renewal, or extension) a
notice requesting the issuance of an L/C or L/C Undertaking, or identifying the
L/C or L/C Undertaking to be amended, renewed, or extended, the date of
issuance, amendment, renewal, or extension, the date on which such L/C or L/C
Undertaking is to expire, the amount of such L/C or L/C Undertaking, the name
and address of the beneficiary thereof (or the beneficiary of the Underlying
Letter of Credit, as applicable), and such other information as shall be
necessary to prepare, amend, renew, or extend such L/C or L/C Undertaking. If
requested by the Issuing Lender, the applicable Borrower also shall be an
applicant under the application with respect to any Underlying Letter of Credit
that is to be the subject of an L/C Undertaking. The Issuing Lender shall have
no obligation to issue a Letter of Credit if any of the following would result
after giving effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Aggregate Borrowing
Base less the amount of outstanding Advances, or
(ii) the Big Dog Letter of Credit Usage would exceed the Big Dog
Borrowing Base less the aggregate amount of the Big Dog Revolver Advances,
or
(iii) the CSI Letter of Credit Usage would exceed the CSI Borrowing
Base less the aggregate amount of the CSI Revolver Advances, or
(iv) the Letter of Credit Usage would exceed $5,000,000, or
(v) the Letter of Credit Usage would exceed the Maximum Revolver
Amount less the then extant amount of outstanding Advances.
Borrowers and the Lender Group acknowledge and agree that
certain Underlying Letters of Credit may be issued to support letters of credit
that already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if the applicable Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by the applicable Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
the Business Day that the applicable Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances under Section 2.6. To the
extent an L/C Disbursement is deemed to be an Advance hereunder, Borrowers'
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Advance. Promptly following receipt by Agent of any payment
from the applicable Borrower pursuant to this paragraph, Agent shall distribute
such payment to the Issuing Lender or, to the extent that Lenders have made
payments pursuant to Section 2.12(c) to reimburse the Issuing Lender, then to
such Lenders and the Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement pursuant to
Section 2.12(a), each Lender agrees to fund its Pro Rata Share of any Advance
deemed made pursuant to the foregoing subsection on the same terms and
conditions as if the applicable Borrower had requested such Advance and Agent
shall promptly pay to Issuing Lender the amounts so received by it from the
Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter of
Credit increasing the amount thereof) and without any further action on the part
of the Issuing Lender or the Lenders, the Issuing Lender shall be deemed to have
granted to each Lender, and each Lender shall be deemed to have purchased, a
participation in each Letter of Credit, in an amount equal to its Pro Rata Share
of the Risk Participation Liability of such Letter of Credit, and each such
Lender agrees to pay to Agent, for the account of the Issuing Lender, such
Lender's Pro Rata Share of any payments made by the Issuing Lender under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of each L/C
Disbursement made by the Issuing Lender and not reimbursed by the applicable
Borrower on the date due as provided in clause (a) of this Section, or of any
reimbursement payment required to be refunded to the applicable Borrower for any
reason. Each Lender acknowledges and agrees that its obligation to deliver to
Agent, for the account of the Issuing Lender, an amount equal to its respective
Pro Rata Share pursuant to this Section 2.12(b) shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in Section 3 hereof. If any such Lender fails to make
available to Agent the amount of such Lender's Pro Rata Share of any payments
made by the Issuing Lender in respect of such Letter of Credit as provided in
this Section, Agent (for the account of the Issuing Lender) shall be entitled to
recover such amount on demand from such Lender together with interest thereon at
the Defaulting Lender Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by the Lender Group arising out of or in connection with
any Letter of Credit; provided, however, that no Borrower shall be obligated
hereunder to indemnify for any loss, cost, expense, or liability that is caused
by the gross negligence or willful misconduct of the Issuing Lender or any other
member of the Lender Group. Each Borrower agrees to be bound by the Underlying
Issuer's regulations and interpretations of any Underlying Letter of Credit or
by Issuing Lender's interpretations of any L/C issued by Issuing Lender to or
for such Borrower's account, even though this interpretation may be different
from such Borrower's own, and each Borrower understands and agrees that the
Lender Group shall not be liable for any error, negligence, or mistake, whether
of omission or commission, in following Borrowers' instructions or those
contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Each Borrower understands that the L/C Undertakings may
require Issuing Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by Borrowers against such Underlying Issuer.
Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless with respect to any loss, cost, expense (including reasonable
attorneys fees), or liability incurred by the Lender Group under any L/C
Undertaking as a result of the Lender Group's indemnification of any Underlying
Issuer; provided, however, that no Borrower shall be obligated hereunder to
indemnify for any loss, cost, expense, or liability that is caused by the gross
negligence or willful misconduct of the Issuing Lender or any other member of
the Lender Group.
(d) Each Borrower hereby authorizes and directs any Underlying Issuer to
deliver to the Issuing Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon the Issuing Lender's instructions with
respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by the Issuing
Lender relating to Underlying Letters of Credit shall be Lender Group Expenses
for purposes of this Agreement and immediately shall be reimbursable by
Borrowers to Agent for the account of the Issuing Lender; it being acknowledged
and agreed by each Borrower that, as of the Closing Date, the issuance charge
imposed by the prospective Underlying Issuer is .825% per annum times the face
amount of each Underlying Letter of Credit, that such issuance charge may be
changed from time to time, and that the Underlying Issuer also imposes a
schedule of charges for amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change in any applicable law, treaty, rule, or
regulation or any change in the interpretation or application thereof by any
Governmental Authority, or (ii) compliance by the Underlying Issuer or the
Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority including, Regulation D of the Federal Reserve Board as from time to
time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the Lender
Group any other condition regarding any Underlying Letter of Credit or any
Letter of Credit issued pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Parent, and Borrowers shall pay on demand such amounts as Agent may
specify to be necessary to compensate the Lender Group for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Base Rate
Seasonal Advances hereunder. The determination by Agent of any amount due
pursuant to this Section, as set forth in a certificate setting forth the
calculation thereof in reasonable detail, shall, in the absence of manifest or
demonstrable error, be final and conclusive and binding on all of the parties
hereto.
(g) Each Borrower acknowledges and agrees that certain of the Qualified Import
Letters of Credit may provide for the presentation of time drafts to the
Underlying Issuer. If an Underlying Issuer accepts such a time draft that is
presented under an Underlying Letter of Credit, it is acknowledged and agreed
that (i) the Letter of Credit will require the Issuing Lender to reimburse the
Underlying Issuer for amounts paid on account of such time draft on or after the
maturity date thereof, (ii) the pricing provisions hereof (including Sections
2.6(b) and 2.12(e)) shall continue to apply, until payment of such time draft on
or after the maturity date thereof, as if the Underlying Letter of Credit were
still outstanding, and (iii) on the date on which Issuing Lender makes payment
to the Underlying Issuer of the amounts paid on account of such time draft,
Borrowers immediately shall reimburse such amount to Issuing Lender and such
amount shall constitute an L/C Disbursement hereunder.
2.13 LIBOR Option.
(a) Interest and Interest Payment Dates. In lieu of having interest charged at
the rate based upon the Base Rate, each Borrower shall have the option (the
"LIBOR Option") to have interest on all or a portion of the Standard Advances be
charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate
Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Agent on behalf thereof elect to
accelerate the maturity of the all or any portion of the Obligations, or (iii)
termination of this Agreement pursuant to the terms hereof. On the last day of
each applicable Interest Period, unless a Borrower properly has exercised the
LIBOR Option with respect thereto, the interest rate applicable to such LIBOR
Rate Loan automatically shall convert to the rate of interest then applicable to
Base Rate Standard Advances hereunder. At any time that an Event of Default has
occurred and is continuing with respect to a Borrower, such Borrower no longer
shall have the option to request that Standard Advances bear interest at the
LIBOR Rate and Agent shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Standard
Advances hereunder.
(b) LIBOR Election.
(i) Each Borrower may, at any time and from time to time, so long as
no Event of Default has occurred and is continuing, elect to exercise the
LIBOR Option by notifying Agent prior to 11:00 a.m. (California time) at
least 3 Business Days prior to the commencement of the proposed Interest
Period (the "LIBOR Deadline"). Notice of a Borrower's election of the
LIBOR Option for a permitted portion of the Advances and an Interest
Period pursuant to this Section shall be made by delivery to Agent of a
LIBOR Notice received by Agent before the LIBOR Deadline, or by telephonic
notice received by Agent before the LIBOR Deadline (to be confirmed by
delivery to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m.
(California time) on the same day. Promptly upon its receipt of each such
LIBOR Notice, Agent shall provide a copy thereof to each of the Lenders.
(ii) Each LIBOR Notice shall be irrevocable and binding on Borrowers.
In connection with each LIBOR Rate Loan, Borrowers shall indemnify,
defend, and hold Agent and the Lenders harmless against any loss, cost,
or expense incurred by Agent or any Lender as a result of (a) the payment
of any principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any LIBOR Rate Loan other than on the
last day of the Interest Period applicable thereto, or (c) the
failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the
date specified in any LIBOR Notice delivered pursuant hereto (such losses,
costs, and expenses, collectively, "Funding Losses"). Funding Losses
shall, with respect to Agent or any Lender, be deemed to equal the amount
determined by Agent or such Lender to be the excess, if any, of (i) the
amount of interest that would have accrued on the principal amount
of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate
that would have been applicable thereto, for the period from the date of
such event to the last day of the then current Interest Period therefor
(or, in the case of a failure to borrow, convert, or continue, for the
period that would have been the Interest Period therefor), minus (ii) the
amount of interest that would accrue on such principal amount for such
period at the interest rate which Agent or such Lender would be
offered were it to be offered, at the commencement of such period, Dollar
deposits of a comparable amount and period in the London interbank
market. A certificate of Agent or a Lender delivered to a Borrower setting
forth any amount or amounts that Agent or such Lender is entitled to
receive pursuant to this Section shall be conclusive absent manifest
error.
(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrowers only may exercise the LIBOR Option for
LIBOR Rate Loans of at least $1,000,000 and integral multiples of $500,000
in excess thereof.
(c) Prepayments. Each Borrower may prepay LIBOR Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with Section
2.4(b) or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the
Lenders and their Participants harmless against any and all Funding Losses in
accordance with clause (b)(ii) above.
(d) Special Provisions Applicable to LIBOR Rate.
(i) The LIBOR Rate may be adjusted by Agent with respect to any
Lender on a prospective basis to take into account any additional or
increased costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs due to changes in applicable law occurring
subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements
imposed by the Board of Governors of the Federal Reserve System (or any
successor), excluding the Reserve Percentage, which additional or
increased costs would increase the cost of funding loans bearing interest
at the LIBOR Rate. In any such event, the affected Lender shall give
Borrowers and Agent notice of such a determination and adjustment and
Agent promptly shall transmit the notice to each other Lender and, upon
its receipt of the notice from the affected Lender, Borrowers may, by
notice to such affected Lender (y) require such Lender to furnish to
Borrowers a statement setting forth the basis for adjusting such LIBOR Rate
and the method for determining the amount of such adjustment, or (z)
repay the LIBOR Rate Loans with respect to which such adjustment is
made (together with any amounts due under clause (b)(ii) above).
(ii) In the event that any change in market conditions or any law,
regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date
hereof, in the reasonable opinion of any Lender, make it unlawful or
impractical for such Lender to fund or maintain LIBOR Advances or to
continue such funding or maintaining, or to determine or charge interest
rates at the LIBOR Rate, such Lender shall give notice of such changed
circumstances to Agent and the applicable Borrower and Agent promptly shall
transmit the notice to each other Lender and (y) in the case of any LIBOR
Rate Loans of such Lender that are outstanding, the date specified in
such Lender's notice shall be deemed to be the last day of the Interest
Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans
of such Lender thereafter shall accrue interest at the rate then
applicable to Base Rate Standard Advances, and (z) the applicable
Borrower shall not be entitled to elect the LIBOR Option until such Lender
determines that it would no longer be unlawful or impractical to do so.
(e) No Requirement of Matched Funding. Anything to the contrary contained
herein notwithstanding, neither Agent, nor any Lender, nor any of their
Participants, is required actually to acquire eurodollar deposits to fund or
otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing
at the LIBOR Rate by acquiring eurodollar deposits for each Interest Period
in the amount of the LIBOR Rate Loans.
2.14 Capital Requirements. If, after the date hereof, any Lender determines that
(i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on such Lender's or such
holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrowers and Agent thereof. Following receipt of such notice,
Borrowers agree to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
2.15 Joint and Several Liability of Borrowers.
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(a) Each Borrower is accepting joint and several liability hereunder and under
the other Loan Documents in consideration of the financial accommodations to be
provided by the Agent and the Lenders under this Agreement, for the mutual
benefit, directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations.
(b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Borrowers, with respect to the
payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 2.15), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall fail to
make any payment with respect to any of the Obligations as and when due or to
perform any of the Obligations in accordance with the terms thereof, then in
each such event the other Persons composing Borrowers will make such payment
with respect to, or perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under the provisions
of this Section 2.15 constitute the absolute and unconditional, full recourse
Obligations of each Person composing Borrowers enforceable against each such
Borrower to the full extent of its properties and assets, irrespective
of the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each Person
composing Borrowers hereby waives notice of acceptance of its joint and several
liability, notice of any Advances or Letters of Credit issued under or pursuant
to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Person composing Borrowers hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any Person composing Borrowers in the performance
or satisfaction of any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Agent or Lenders in respect of any
of the Obligations, and the taking, addition, substitution or release, in whole
or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Person
composing Borrowers. Without limiting the generality of the foregoing, each
Borrower assents to any other action or delay in acting or failure to act on the
part of any Agent or Lender with respect to the failure by any Person composing
Borrowers to comply with any of its respective Obligations, including, without
limitation, any failure strictly or diligently to assert any right or to pursue
any remedy or to comply fully with applicable laws or regulations thereunder,
which might, but for the provisions of this Section 2.15 afford grounds for
terminating, discharging or relieving any Person composing Borrowers, in whole
or in part, from any of its Obligations under this Section 2.15, it being the
intention of each Person composing Borrowers that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of such Person
composing Borrowers under this Section 2.15 shall not be discharged except by
performance and then only to the extent of such performance. The Obligations of
each Person composing Borrowers under this Section 2.15 shall not be diminished
or rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Person
composing Borrowers or any Agent or Lender. The joint and several liability of
the Persons composing Borrowers hereunder shall continue in full force and
effect notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of any of the Persons
composing Borrowers or any Agent or Lender.
(f) Each Person composing Borrowers represents and warrants to Agent and
Lenders that such Borrower is currently informed of the financial condition of
Borrowers and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Each Person
composing Borrowers further represents and warrants to Agent and Lenders
that such Borrower has read and understands the terms and conditions of the Loan
Documents. Each Person composing Borrowers hereby covenants that such Borrower
will continue to keep informed of Borrowers' financial condition, the financial
condition of other guarantors, if any, and of all other circumstances which bear
upon the risk of nonpayment or nonperformance of the Obligations.
(i) The provisions of this Section 2.15 are made for the benefit of the
Agent, the Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all of the Persons
composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.15 shall remain in effect until all of the Obligations shall have
been paid in full or otherwise fully satisfied. If at any time, any payment,
or any part thereof, made in respect of any of the Obligations, is rescinded or
must otherwise be restored or returned by any Agent or Lender upon the
insolvency, bankruptcy or reorganization of any of the Persons composing
Borrowers, or otherwise, the provisions of this Section 2.15 will forthwith be
reinstated in effect, as though such payment had not been made.
(j) Each of the Persons composing Borrowers hereby agrees that it will not
enforce any of its rights of contribution or subrogation against the other
Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
the Agent or the Lenders with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have been
paid in full in cash. Any claim which any Borrower may have against any other
Borrower with respect to any payments to any Agent or Lender hereunder or under
any other Loan Documents are hereby expressly made subordinate and junior in
right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
(k) Each of the Persons composing Borrowers hereby agrees that, after the
occurrence and during the continuance of any Default or Event of Default, the
payment of any amounts due with respect to the indebtedness owing by any
Borrower to any other Borrower is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Borrower hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Borrower will not demand, xxx for or otherwise attempt to collect any
indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for the Lender Group, and such Borrower
shall deliver any such amounts to Agent for application to the Obligations in
accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of
the Lender Group (or any member thereof) to make the initial Advance (or
otherwise to extend any credit provided for hereunder), is subject to the
fulfillment, to the satisfaction of Agent, of each of the conditions precedent
set forth below:
(a) the Closing Date shall occur on or before November 15, 2001;
(b) Agent shall have received all financing statements required by Agent, duly
executed by Borrowers, and Agent shall have received searches reflecting the
filing of all such financing statements;
(c) Agent shall have received each of the following documents, in form and
substance satisfactory to Agent, duly executed, and each such document shall be
in full force and effect:
(i) [intentionally omitted],
(ii) [intentionally omitted],
(iii) the Copyright Security Agreement,
(iv) the Disbursement Letter,
(v) the Fee Letter,
(vi) the Guarantor Security Agreement,
(vii) the Guaranty,
(viii) the Intercompany Subordination Agreement,
(ix) the Officers' Certificate,
(x) the Pay-Off Letter, together with UCC termination statements
and other documentation evidencing the termination by Existing Lender of
its Liens in and to the properties and assets of Big Dog, and
(xi) the Stock Pledge Agreement, together with all certificates
representing the shares of Stock pledged thereunder, as well
as Stock powers with respect thereto endorsed in blank,
(xii) the Trademark Security Agreement;
(d) Agent shall have received an executed trademark termination agreement from
Israel Discount Bank, wherein Israel Discount Bank terminates its lien in the
trademarks of Big Dog, in form and substance satisfactory to Agent;
(e) Agent shall have received a side letter relative to that certain
financing statement filed by Creative Real Estate Associates, Inc. against
"Big Dog, Inc." with the Wisconsin Department of Financial Institutions on
August 28, 1998;
(f) Agent shall have received, in form and substance satisfactory to Agent,
duly executed and in full force and effect, that certain letter agreement
between Xxxxx Printables and Big Dog, whereby Big Dog clarifies certain aspects
of the arrangement under which Xxxxx Printables delivers to Big Dog quantities
of t-shirts, sport shirts, tank tops, sweaters and other goods;
(g) Agent shall have received a certificate from the Secretary of each
Borrower attesting to the resolutions of such Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which such Borrower is a party and authorizing specific
officers of such Borrower to execute the same;
(h) Agent shall have received copies of each Borrower's Governing Documents,
as amended, modified, or supplemented to the Closing Date, certified by the
Secretary of such Borrower;
(i) Agent shall have received a certificate of status with respect to each
Borrower, dated within 30 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Borrower, which certificate shall indicate that such Borrower is in good
standing in such jurisdiction;
(j) Agent shall have received certificates of status with respect to each
Borrower, each dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;
(k) Agent shall have received a certificate from the Secretary of Parent
attesting to the resolutions of Parent's Board of Directors authorizing its
execution, delivery, and performance of the Loan Documents to which Parent is a
party and authorizing specific officers of Parent to execute the same;
(l) Agent shall have received copies of Parent's Governing Documents, as
amended, modified, or supplemented to the Closing Date, certified by the
Secretary of Parent;
(m) Agent shall have received a certificate of status with respect to Parent,
dated within 30 days of the Closing Date, such certificate to be issued by the
appropriate officer of the jurisdiction of organization of Parent, which
certificate shall indicate that Parent is in good standing in such jurisdiction;
(n) Agent shall have received certificates of status with respect to Parent,
each dated within 30 days of the Closing Date, such certificates to be issued by
the appropriate officer of the jurisdictions (other than the jurisdiction of
organization of Parent) in which its failure to be duly qualified or licensed
would constitute a Material Adverse Change, which certificates shall indicate
that Parent is in good standing in such jurisdictions;
(o) Agent shall have received a certificate of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Agent;
(p) Agent shall have received a Collateral Access Agreement with respect to
Big Dog's leased facility located in Santa Fe Springs, California;
(q) Agent shall have received an opinion of Borrowers' in-house counsel in
form and substance satisfactory to Agent;
(r) Agent shall have received satisfactory evidence (including a certificate
of the chief financial officer of each Borrower) that all tax returns required
to be filed by each Borrower have been timely filed and all taxes upon each
Borrower or its properties, assets, income, and franchises (including real
property taxes and payroll taxes) have been paid prior to delinquency, except
such taxes that are the subject of a Permitted Protest;
(s) Borrowers shall have the Required Availability after giving effect to the
initial extensions of credit hereunder;
(t) Agent shall have completed its business, legal, and collateral due
diligence, including (i) a collateral audit and review of Borrowers' books and
records and verification of Borrowers' representations and warranties to the
Lender Group, the results of which shall be satisfactory to Agent, and (ii) an
inspection of each of the locations where Inventory is located, the results of
which shall be satisfactory to Agent;
(u) Agent shall have received completed reference checks with respect to
Borrowers' senior management, the results of which are satisfactory to Agent in
its sole discretion;
(v) Agent shall have received an appraisal of the Liquidation Percentage
applicable to Borrowers' Inventory, the results of which shall be
satisfactory to Agent;
(w) Agent shall have received Borrowers' Closing Date Business Plan;
(x) Borrowers shall pay all Lender Group Expenses incurred in connection with
the transactions evidenced by this Agreement;
(y) Agent shall have received copies of (i) the intellectual property license
agreement between Parent and Big Dog, (ii) the intellectual property license
agreement between Parent and Motorcycles, and (iii) the security agreement
between Parent and Motorcycles, each together with a certificate of the
Secretary of Parent, certifying each such document as being a true, correct, and
complete copy thereof, which shall be satisfactory to Agent in its Permitted
Discretion;
(z) Agent shall have received evidence satisfactory to Agent in its Permitted
Discretion that all copyrights required to be registered with the United States
Copyright Office in order to register the Required Library have been registered
in accordance with Section 6.16;
(aa) Borrowers shall have received all licenses, approvals or evidence of
other actions required by any Governmental Authority in connection with the
execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby;
(bb) all other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or recorded
and shall be in form and substance satisfactory to Agent; and
(cc) Agent shall have received that certain side letter between and among
Parent, each Borrower, and the Lender Group regarding certain Events of Default.
3.2 Conditions Subsequent to the Initial Extension of Credit. The obligation of
the Lender Group (or any member thereof) to continue to make Advances (or
otherwise extend credit hereunder) is subject to the fulfillment, on or before
the date applicable thereto, of each of the conditions subsequent set forth
below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) by the date that is 15 days after the Closing Date, Big Dog shall have
ceased using account number 14655-02080 maintained with Bank of America, whose
office is located at Warner Center Commercial Banking Office, 0000 Xxxxxx
Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000, as Big Dog's concentration account and
shall have designated a deposit account of Big Dog (located within the United
States) as the Big Dog concentration account, such designation to be in writing
by Big Dog to Agent; such deposit account to be subject to a Cash Management
Agreement and otherwise shall be satisfactory to Agent in its sole discretion;
(b) within 30 days of the Closing Date, deliver to Agent certified copies of
the policies of insurance, together with the endorsements thereto, as are
required by Section 6.8, the form and substance of which shall be satisfactory
to Agent and its counsel; and
(c) Borrowers shall use their reasonable best efforts to deliver to Agent,
within 90 days of the Closing Date, a Collateral Access Agreement for each
retail store location.
3.3 Conditions Precedent to all Extensions of Credit. The obligation of the
Lender Group (or any member thereof) to make all Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the date of such extension of credit, as though made on and as of such
date (except to the extent that such representations and warranties relate
solely to an earlier date),
(b) no Default or Event of Default shall have occurred and be continuing on
the date of such extension of credit, nor shall either result from the making
thereof,
(c) no injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the extending of such credit shall have
been issued and remain in force by any Governmental Authority against any
Borrower, Agent, any Lender, or any of their Affiliates.
(d) no Material Adverse Change shall have occurred.
3.4 Term. This Agreement shall become effective upon the execution and delivery
hereof by Parent, Borrowers, Agent, and the Lenders and shall continue in full
force and effect for a term ending on October 23, 2004 (the "Maturity Date").
The foregoing notwithstanding, the Lender Group, upon the election of the
Required Lenders, shall have the right to terminate its obligations under this
Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
3.5 Effect of Termination. On the date of termination of this Agreement, all
Obligations (including contingent reimbursement obligations of Borrowers with
respect to outstanding Letters of Credit and including all Bank Products
Obligations) immediately shall become due and payable without notice or demand
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of the Lenders in an amount equal to 105% of the then extant Letter of
Credit Usage, or (ii) causing the original Letters of Credit to be returned to
the Issuing Lender, and (b) providing cash collateral to be held by Agent for
the benefit of Xxxxx Fargo or its Affiliates with respect to the then extant
Bank Products Obligations). No termination of this Agreement, however, shall
relieve or discharge Borrowers of their duties, Obligations, or covenants
hereunder and the Agent's Liens in the Collateral shall remain in effect until
all Obligations have been fully and finally discharged and the Lender Group's
obligations to provide additional credit hereunder have been terminated. When
this Agreement has been terminated and all of the Obligations have been fully
and finally discharged and the Lender Group's obligations to provide additional
credit under the Loan Documents have been terminated irrevocably, Agent will, at
Borrowers' sole expense, execute and deliver any UCC termination statements,
lien releases, mortgage releases, re-assignments of trademarks, discharges of
security interests, and other similar discharge or release documents (and, if
applicable, in recordable form) as are reasonably necessary to release, as of
record, the Agent's Liens and all notices of security interests and liens
previously filed by Agent with respect to the Obligations.
3.6 Early Termination by Borrower. Borrowers have the option, at any time upon
30 days prior written notice by Borrowers to Agent, to terminate this Agreement
by paying to Agent, for the benefit of the Lender Group, in cash, the
Obligations (including (a) either (i) providing cash collateral to be held by
Agent for the benefit of the Lenders in an amount equal to 105% of the then
extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to the Issuing Lender, and (b) providing cash collateral to be held
by Agent for the benefit of Xxxxx Fargo or its Affiliates with respect to the
then extant Bank Products Obligations), in full, together with the Applicable
Prepayment Premium (to be allocated based upon letter agreements between Agent
and individual Lenders). If Borrowers have sent a notice of termination pursuant
to the provisions of this Section, then the Commitments shall terminate and
Borrowers shall be obligated to repay the Obligations (including (a) either (i)
providing cash collateral to be held by Agent for the benefit of the Lenders in
an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender, and
(b) providing cash collateral to be held by Agent for the benefit of Xxxxx Fargo
or its Affiliates with respect to the then extant Bank Products Obligations), in
full, together with the Applicable Prepayment Premium, on the date set forth as
the date of termination of this Agreement in such notice. In the event of the
termination of this Agreement and repayment of the Obligations at any time prior
to the Maturity Date, for any other reason, including (a) termination upon the
election of the Required Lenders to terminate after the occurrence of an Event
of Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral
in any Insolvency Proceeding, or (iv) restructure, reorganization, or compromise
of the Obligations by the confirmation of a plan of reorganization or any other
plan of compromise, restructure, or arrangement in any Insolvency Proceeding,
then, in view of the impracticability and extreme difficulty of ascertaining the
actual amount of damages to the Lender Group or profits lost by the Lender Group
as a result of such early termination, and by mutual agreement of the parties as
to a reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrowers shall pay the Applicable Prepayment Premium to Agent (to
be allocated based upon letter agreements between Agent and individual Lenders),
measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each Borrower hereby grants to Agent, for the
benefit of the Lender Group, a continuing security interest in all of its right,
title, and interest in all currently existing and hereafter acquired or arising
Borrowers Collateral in order to secure prompt repayment of any and all of the
Obligations in accordance with the terms and conditions of the Loan Documents
and in order to secure prompt performance by Borrowers of each of their
covenants and duties under the Loan Documents. The Agent's Liens in and to the
Borrowers Collateral shall attach to all Borrowers Collateral without further
act on the part of Agent or Borrowers. Anything contained in this Agreement or
any other Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, Borrowers have no authority, express or implied, to dispose of any
item or portion of the Collateral. Anything contained herein or in any other
Loan Document to the contrary notwithstanding, Agent acknowledges and agrees
that Parent previously has granted a license (the "License") in and to the marks
(the "Marks") "Big Dog", "Big Dog Motorcycles", "Big Dog Service Center", and
"Big Dog Motorcycles & Design" in favor of Motorcycles. The License is a license
of the Marks solely in conjunction with motorcycles and motorcycle related
products and services. Agent acknowledges and agrees that its Liens in and to
the Marks is subject to the rights of Motorcycles under the License and that any
exercise of remedies of Agent with respect to its Liens in and to the Marks
would not interfere with the right of Motorcyles to enjoy the benefits of the
License.
4.2 Negotiable Collateral. In the event that any Collateral, including proceeds,
is evidenced by or consists of Negotiable Collateral, and if and to the extent
that perfection or priority of Agent's security interest is dependent on or
enhanced by possession, the applicable Borrower, immediately upon the request of
Agent, shall endorse and deliver physical possession of such Negotiable
Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral. At
any time after the occurrence and during the continuation of an Event of
Default, Agent or Agent's designee may (a) notify Account Debtors of Borrowers
that the Accounts, chattel paper, or General Intangibles have been assigned to
Agent or that Agent has a security interest therein, or (b) collect the
Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Accounts. Borrowers agree that they
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that they receive and immediately will deliver said Collections to
Agent or a Cash Management Bank in their original form as received by them.
4.4 Delivery of Additional Documentation Required. At any time upon the request
of Agent, Borrowers shall execute and deliver to Agent, any and all financing
statements, original financing statements in lieu of continuation statements,
fixture filings, security agreements, pledges, assignments, endorsements of
certificates of title, and all other documents (the "Additional Documents") that
Agent may request in its Permitted Discretion, in form and substance
satisfactory to Agent, to perfect and continue perfected or better perfect the
Agent's Liens in the Collateral (whether now owned or hereafter arising or
acquired), to create and perfect Liens in favor of Agent in any real property
acquired after the Closing Date, and in order to fully consummate all of the
transactions contemplated hereby and under the other Loan Documents. To the
maximum extent permitted by applicable law, each Borrower authorizes Agent to
execute any such Additional Documents in the applicable Borrower's name and
authorize Agent to file such executed Additional Documents in any appropriate
filing office. In addition, on such periodic basis as Agent shall require,
Parent and Borrowers shall (a) provide Agent with a report of all new patentable
materials and trademarkable materials acquired or generated by Parent and each
Borrower during the prior period, (b) cause all patents and trademarks acquired
or generated by Parent and each Borrower that are not already the subject of a
registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of Parent's and each Borrower's
ownership thereof, (c) cause to be prepared, executed, and delivered to Agent
supplemental schedules to the applicable Loan Documents to identify such patents
and trademarks as being subject to the security interests created thereunder,
(d) provide Agent with the information required under Section 6.16 in respect of
copyrights and copyrightable materials.
4.5 Power of Attorney. Each Borrower hereby irrevocably makes, constitutes, and
appoints Agent (and any of Agent's officers, employees, or agents designated by
Agent) as such Borrower's true and lawful attorney, with power to (a) if such
Borrower refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of such Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign such Borrower's name on any invoice or xxxx of lading
relating to the Collateral, drafts against Account Debtors, or notices to
Account Debtors, (c) send requests for verification of Accounts, (d) endorse
such Borrower's name on any Collection item that may come into the Lender
Group's possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under such Borrower's policies
of insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has occurred
and is continuing, settle and adjust disputes and claims respecting the
Accounts, chattel paper, or General Intangibles directly with Account Debtors,
for amounts and upon terms that Agent determines to be reasonable, and Agent may
cause to be executed and delivered any documents and releases that Agent
determines to be necessary. The appointment of Agent as each Borrower's
attorney, and each and every one of its rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully and
finally repaid and performed and the Lender Group's obligations to extend credit
hereunder are terminated.
4.6 Right to Inspect. Agent and each Lender (through any of their respective
officers, employees, or agents) shall have the right, from time to time
hereafter to inspect the Books and to check, test, and appraise the Collateral
in order to verify Borrowers' financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral.
4.7 Control Agreements. Each Borrower agrees that it will not transfer assets
out of any Securities Accounts other than as permitted under Section 7.19 and,
if to another securities intermediary, unless each of the applicable Borrower,
Agent, and the substitute securities intermediary have entered into a Control
Agreement. No arrangement contemplated hereby or by any Control Agreement in
respect of any Securities Accounts or other Investment Property shall be
modified by Borrowers without the prior written consent of Agent. Upon the
occurrence and during the continuance of a Default or Event of Default, Agent
may notify any securities intermediary to liquidate the applicable Securities
Account or any related Investment Property maintained or held thereby and remit
the proceeds thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, Parent and each Borrower make the following representations and
warranties to the Lender Group which shall be true, correct, and complete, in
all material respects, as of the date hereof, and shall be true, correct, and
complete, in all material respects, as of the Closing Date, and at and as of the
date of the making of each Advance (or other extension of credit) made
thereafter, as though made on and as of the date of such Advance (or other
extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:
5.1 No Encumbrances. Each Borrower has good and indefeasible title to the
Collateral free and clear of Liens except for Permitted Liens.
5.2 [Intentionally Omitted].
5.3 Eligible Inventory. All Eligible Inventory is of good and merchantable
quality, free from defects. As to each item of Inventory that is identified by
Borrowers as Eligible Inventory in a borrowing base report submitted to Agent,
such Inventory is not excluded as ineligible by virtue of one or more of the
excluding criteria set forth in the definition of Eligible Inventory.
5.4 Equipment. All of the Equipment is used or held for use in Borrowers'
business and is fit for such purposes.
5.5 [Intentionally Omitted].
5.6 Inventory Records. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory
and the book value thereof.
5.7 Location of Chief Executive Office; FEIN. The chief executive office of
Parent and each Borrower is located at the address indicated in Schedule 5.7 and
Parent's and each Borrower's XXXXx are identified in Schedule 5.7.
5.8 Due Organization and Qualification; Subsidiaries.
(a) Parent and each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified
to do business in any state where the failure to be so qualified reasonably
could be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate description of
the authorized capital Stock of Parent and each Borrower, by class, and, as of
the Closing Date, a description of the number of shares of each such class that
are issued and outstanding. Other than as described on Schedule 5.8(b), there
are no subscriptions, options, warrants, or calls relating to any shares of each
Borrower's capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Neither Parent nor any Borrower is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital Stock or any security convertible
into or exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate list of Parent's
and each Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization, (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries, and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by Parent or the applicable Borrower. All of the
outstanding capital Stock of each such Subsidiary has been validly issued and is
fully paid and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no subscriptions,
options, warrants, or calls relating to any shares of Parent's or any Borrower's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Neither Parent nor any Borrower
nor any of its Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of Parent's
or any Borrower's Subsidiaries' capital Stock or any security convertible into
or exchangeable for any such capital Stock.
5.9 Due Authorization; No Conflict.
(a) The execution, delivery, and performance by each Borrower of this
Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Borrower.
(b) The execution, delivery, and performance by each Borrower of this
Agreement and the Loan Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or regulation applicable
to any Borrower, the Governing Documents of any Borrower, or any order,
judgment, or decree of any court or other Governmental Authority binding on any
Borrower, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation of any Borrower, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets
of any Borrower, other than Permitted Liens, or (iv) require any approval of
any Borrower's interestholders or any approval or consent of any Person under
any material contractual obligation of any Borrower.
(c) Other than the filing of financing statements, the execution, delivery,
and performance by each Borrower of this Agreement and the Loan Documents to
which such Borrower is a party do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
Governmental Authority or other Person.
(d) This Agreement and the other Loan Documents to which each Borrower is a
party, and all other documents contemplated hereby and thereby, when executed
and delivered by such Borrower will be the legally valid and binding obligations
of such Borrower, enforceable against such Borrower in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, and first priority
Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by Parent of the Loan Documents
to which it is a party have been duly authorized by all necessary action on the
part of Parent.
(g) The execution, delivery, and performance by Parent of the Loan Documents
to which it is a party do not and will not (i) violate any provision of federal,
state, or local law or regulation applicable to Parent, the Governing Documents
of Parent, or any order, judgment, or decree of any court or other Governmental
Authority binding on Parent, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of Parent, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of Parent, other than Permitted Liens, or (iv) require any approval of
Parent's interestholders or any approval or consent of any Person under any
material contractual obligation of Parent.
(h) The execution, delivery, and performance by Parent of the Loan Documents
to which Parent is a party do not and will not require any registration with,
consent, or approval of, or notice to, or other action with or by, any
Governmental Authority or other Person.
(i) The Loan Documents to which Parent is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by Parent will be
the legally valid and binding obligations of Parent, enforceable against Parent
in accordance with their respective terms, except as enforcement may be limited
by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.
5.10 Litigation. Other than those matters disclosed on Schedule 5.10, there are
no actions, suits, or proceedings pending or, to the best knowledge of Parent or
Borrowers, threatened against Parent or any Borrower, or any of their
Subsidiaries, as applicable, except for (a) matters that are fully covered by
insurance (subject to customary deductibles), and (b) matters arising after the
Closing Date that, if decided adversely to Parent or any Borrower, or any of
their Subsidiaries, as applicable, reasonably could not be expected to result in
a Material Adverse Change.
5.11 No Material Adverse Change. All financial statements relating to Borrowers
or Parent that have been delivered by Borrowers or Parent to the Lender Group
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, Borrowers' (or
Parent's, as applicable) financial condition as of the date thereof and results
of operations for the period then ended. There has not been a Material Adverse
Change with respect to Borrowers (or Parent, as applicable) since the date of
the latest financial statements submitted to the Lender Group on or before the
Closing Date.
5.12 Fraudulent Transfer.
(a) Parent and each Borrower is Solvent.
(b) No transfer of property is being made by Parent or any Borrower and no
obligation is being incurred by Parent or any Borrower in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of Parent
or any Borrower.
5.13 Employee Benefits. None of Parent, any of its Subsidiaries, or any of
their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a) to
Parent's and Borrowers' knowledge, none of Parent's or Borrowers' assets has
ever been used by Parent or Borrowers or by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such production, storage, handling, treatment,
release or transport was in violation, in any material respect, of applicable
Environmental Law, (b) to Parent's and Borrowers' knowledge, none of Parent's or
Borrowers' properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) none of Parent or Borrowers have received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any real
property owned or operated by Parent or Borrowers, and (d) none of Parent or
Borrowers have not received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by Parent or any Borrower resulting in
the releasing or disposing of Hazardous Materials into the environment.
5.15 Brokerage Fees. Neither Parent nor Borrowers have not utilized the services
of any broker or finder in connection with Borrowers' obtaining financing from
the Lender Group under this Agreement and no brokerage commission or finders fee
is payable by Parent or Borrowers in connection herewith.
5.16 Intellectual Property. Parent owns, or holds licenses in, all trademarks,
trade names, copyrights, patents, patent rights, and licenses that are necessary
to the conduct of Borrower's business as currently conducted. Parent has
executed and delivered a fully paid, non-cancelable, world-wide license to Big
Dog enabling Big Dog to use and exploit each of Parent's trademarks, trade
names, copyrights, patents, patent rights, and licenses used in Big Dog's
business. From and after the consummation of the Crazy Shirt Acquisition, Parent
has executed and delivered a fully paid, non-cancelable, world-wide license to
CSI enabling CSI to use and exploit each of Parent's trademarks, trade names,
copyrights, patents, patent rights, and licenses used in CSI's business.
Attached hereto as Schedule 5.16 is a true, correct, and complete listing as of
the Closing Date of all material patents, patent applications, trademarks,
trademark applications, copyrights, and copyright registrations as to which
Parent or a Borrower is the owner or a licensee.
5.17 Leases. Borrowers enjoys peaceful and undisturbed possession under all
leases material to the business of Borrowers and to which it is a party or under
which it is operating. All of such leases are valid and subsisting and no
material default by Borrowers exists under any of them. Parent enjoys peaceful
and undisturbed possession under all leases material to the business of Parent
and to which it is a party or under which it is operating. All of such leases
are valid and subsisting and no material default by Parent exists under any of
them.
5.18 DDAs. Set forth on Schedule 5.18 are all of Parent's and Borrowers' DDAs,
including, with respect to each depository (i) the name and address of such
depository, and (ii) the account numbers of the accounts maintained with such
depository.
5.19 Complete Disclosure. All factual information (taken as a whole) furnished
by or on behalf of Parent or Borrowers in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Parent or Borrowers in writing to Agent or any Lender will be, true
and accurate, in all material respects, on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact necessary
to make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such information
was provided. On the Closing Date, the Closing Date Projections represent, and
as of the date on which any other Projections are delivered to Agent, such
additional Projections represent Parent's and Borrowers' good faith best
estimate of its future performance for the periods covered thereby.
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list of all
Indebtedness of Parent, each Borrower, and their Subsidiaries outstanding
immediately prior to the Closing Date that is to remain outstanding after the
Closing Date and such Schedule accurately reflects the aggregate principal
amount of such Indebtedness and the principal terms thereof.
5.21 Inactive Subsidiaries. The Inactive Subsidiaries do not own any material
assets and do not engage in any business activity whatsoever.
5.22 Material Agreements. Neither the consummation of the Crazy Shirt
Acquisition pursuant to the Crazy Shirt Acquisition Documents or any other
documents evidencing the Crazy Shirt Acquisition nor the grant by Parent or its
Subsidiaries of security interests in the Collateral as contemplated hereunder
and under the other Loan Documents will conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation or material lease of Parent or any of its
Subsidiaries.
6. AFFIRMATIVE COVENANTS.
Each of Parent and each Borrower, jointly and severally,
covenants and agrees that, so long as any credit hereunder shall be available
and until full and final payment of the Obligations, Parent and Borrower shall
and shall cause each of its respective Subsidiaries to do all of the following:
6.1 Accounting System. Maintain a system of accounting that enables Parent and
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 Collateral Reporting. Provide Agent (and if so requested by Agent,
with copies for each Lender) with the following documents at the following
times in form satisfactory to Agent:
Daily (a) a borrowing base certificate with summary backup
information.
Weekly (not later than (b) Inventory reports specifying cost and retail
Tuesday of the following value of Borrowers' Inventory, by category,
week) with additional detail showing additions to an
deletions from the Inventory, and
(c) a daily flash report.
Monthly (not later than (d) a weekly sales report,
the 20th day of each
month) (e) a monthly comparable sales report,
(f) a facilities management report (stock ledger by
department),
(g) a facilities management report (stock ledger by
store),
(h) a three week report (open-to buy-report),
(i) a report of Inventory on order (placed purchase
orders report),
(j) an open payables report (an accounts payable
report by due date),
(k) an Inventory certificate (on Agent's form)
inclusive of sales to stock percentages,
(l) a purchases and accounts payable aging analysis
form with account payable aging (on Agent's
form), and
(m) a rent, tax, and insurance compliance
certificate (on Agent's form),
Monthly (not (n) a reconciliation of the stock ledger to
later than the last Borrowers' availability and to the general
day of each ledger,
month for the
immediately preceding (o) a statement of store activity (on Agent's form),
month) and
(p) an officer's compliance certificate (on Agent's
form),
Quarterly (q) a report regarding each Borrower's accrued, but
unpaid, ad valorem taxes,
Upon request by Agent (r) such other reports as to the
Collateral, or the financial condition of each
Borrower, as Agent may request.
In addition, each of Parent and each Borrower agrees to
cooperate fully with Agent to facilitate and implement a system of electronic
collateral reporting in order to provide electronic reporting of each of the
items set forth above.
6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with copies
to each Lender:
(a) as soon as available, but in any event within 30 days (45 days in the case
of a month that is the end of one of the first 3 fiscal quarters in a fiscal
year) after the end of each month during each of Parent's fiscal years,
(i) a company prepared consolidated balance sheet, income statement, and
statement of cash flow covering Parent's and its Subsidiaries' operations
during such period,
(ii) a certificate signed by the chief financial officer of Parent to the
effect that:
(A) the financial statements delivered hereunder have been prepared
in accordance with GAAP (except for the lack of footnotes and being
subject to year-end audit adjustments) and fairly present in all
material respects the financial condition of Parent and its
Subsidiaries,
(B) the representations and warranties of Parent and Borrowers
contained in this Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date), and
(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the
extent of any non-compliance, describing such
non-compliance as to which he or she may have
knowledge and what action Parent or Borrowers have
taken, are taking, or propose to take with respect
thereto), and
(iii) for each month that is the date on which a financial covenant
in Section 7.21 is to be tested, a Compliance Certificate demonstrating, in
reasonable detail, compliance at the end of such period with the applicable
financial covenants contained in Section 7.21, and
(b) as soon as available, but in any event within 105 days after the end of
each of Parent's fiscal years,
(i) financial statements of Parent and its Subsidiaries for each
such fiscal year, audited by independent certified public accountants
reasonably acceptable to Agent and certified, without any qualifications,
by such accountants to have been prepared in accordance with GAAP (such
audited financial statements to include a balance sheet, income statement,
and statement of cash flow and, if prepared, such accountants' letter to
management),
(ii) a certificate of such accountants addressed to Agent and the
Lenders stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under Section 7.21,
(c) as soon as available, but in any event within 30 days prior to the start
of each of Parent's fiscal years,
(i) copies of Parent's Projections, in form and substance (including as
to scope and underlying assumptions) satisfactory to Agent, in its sole
discretion, for the forthcoming fiscal year, on a yearly and month by month
basis, certified by the chief financial officer of Parent as being
such officer's good faith best estimate of the financial performance of
Parent during the period covered thereby,
(d) if and when filed by Parent,
(i) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K
current reports,
(ii) any other filings made by Parent with the SEC,
(iii) copies of Parent's federal income tax returns, and any amendments
thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Parent to its
shareholders generally,
(e) if and when filed by any Borrower and as requested by Agent, satisfactory
evidence of payment of applicable excise taxes in each jurisdictions in which
(i) any Borrower conducts business or is required to pay any such excise tax,
(ii) where the failure to pay any such applicable excise tax would result in a
Lien on the properties or assets of any Borrower, or (iii) where any Borrower's
failure to pay any such applicable excise tax reasonably could be expected to
result in a Material Adverse Change,
(f) as soon as either Parent or a Borrower has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that Parent or Borrowers propose to take with
respect thereto, and
(g) upon the request of Agent, any other report reasonably requested relating
to the financial condition of Parent or Borrowers.
In addition to the financial statements referred to above,
Parent agrees to deliver financial statements prepared on both a consolidated
and consolidating basis and agrees that no Subsidiary of Parent will have a
fiscal year different from that of Parent. Parent and each Borrower agrees that
their independent certified public accountants are authorized to communicate
with Agent and to release to Agent whatever financial information concerning
Parent or Borrowers Agent reasonably may request. Parent and each Borrower
waives the right to assert a confidential relationship, if any, it may have with
any accounting firm or service bureau in connection with any information
requested by Agent pursuant to or in accordance with this Agreement, and agrees
that Agent may contact directly any such accounting firm or service bureau in
order to obtain such information.
6.4 [Intentionally Omitted].
6.5 Return. Cause returns and allowances, as between Borrowers and their Account
Debtors, to be on the same basis and in accordance with the usual customary
practices of the applicable Borrower, as they exist at the time of the execution
and delivery of this Agreement. If any Account Debtor returns any Inventory to
any Borrower, such Borrower promptly shall determine the reason for such return
and, if the applicable Borrower accepts such return, issue a credit memorandum
in the appropriate amount to such Account Debtor.
6.6 Maintenance of Properties. Maintain and preserve all of its properties which
are necessary or useful in the proper conduct to its business in good working
order and condition, ordinary wear and tear excepted, and comply at all times
with the provisions of all leases to which it is a party as lessee so as to
prevent any loss or forfeiture thereof or thereunder.
6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Parent or
its Subsidiaries or any of their assets to be paid in full, before delinquency
or before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Parent and each Borrower will make timely payment or deposit of all tax payments
and withholding taxes required of it by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that Parent or the applicable Borrower has made such payments
or deposits. Parent and each Borrower shall deliver satisfactory evidence of
payment of applicable excise taxes in each jurisdictions in which any Borrower
is required to pay any such excise tax.
6.8 Insurance.
(a) At Parent's or Borrowers' expense, maintain insurance respecting their
assets wherever located, covering loss or damage by fire, theft, explosion, and
all other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. Each of Parent and Borrowers also
shall maintain business interruption, public liability, and product liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in such amounts and
with such insurance companies as are reasonably satisfactory to Agent. Parent
and each Borrower shall deliver copies of all such policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as sole loss payee
or additional insured, as appropriate. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever.
(b) Parent and each Borrower shall give Agent prompt notice of any loss in
excess of $250,000 covered by such insurance. Agent shall have the exclusive
right to adjust, in its reasonable discretion, any losses payable under any such
insurance policies in excess of $250,000, without any liability to Parent or
Borrowers whatsoever in respect of such adjustments. Any monies received as
payment for any loss under any insurance policy mentioned above (other than
liability insurance policies) or as payment of any award or compensation for
condemnation or taking by eminent domain, shall be paid over to Agent to be
applied at the option of the Required Lenders either to the prepayment of the
Obligations or shall be disbursed to the applicable Borrower under staged
payment terms reasonably satisfactory to the Required Lenders for application to
the cost of repairs, replacements, or restorations. Any such repairs,
replacements, or restorations shall be effected with reasonable promptness and
shall be of a value at least equal to the value of the items of property
destroyed prior to such damage or destruction.
6.9 [Intentionally Omitted].
6.10 Compliance with Laws. Comply with the requirements of all applicable laws,
rules, regulations, and orders of any Governmental Authority, including the Fair
Labor Standards Act and the Americans With Disabilities Act, other than laws,
rules, regulations, and orders the non-compliance with which, individually or in
the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.
6.11 Leases. Pay when due all rents and other amounts payable under any leases
to which Parent or any Borrower is a party or by which Parent's or any
Borrower's properties and assets are bound, unless such payments are the subject
of a Permitted Protest. Notwithstanding the foregoing, neither Parent nor any
Borrower shall be deemed to have violated this Section unless Parent or
Borrower, as applicable, have leases that are not in compliance with the
foregoing and such leases have reached the Leasehold Threshold.
6.12 Brokerage Commissions. Pay any and all brokerage commission or finders fees
incurred in connection with or as a result of Borrowers' obtaining financing
from the Lender Group under this Agreement. Parent and each Borrower agrees and
acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Parent and each Borrower, and Parent and
each Borrower, jointly and severally, agrees to indemnify, defend, and hold
Agent and the Lender Group harmless from and against any claim of any broker or
finder arising out of Borrowers' obtaining financing from the Lender Group under
this Agreement.
6.13 Existence. At all times preserve and keep in full force and effect Parent's
and each Borrower's valid existence and good standing and any rights and
franchises material to Parent's and each Borrower's businesses.
6.14 Environmental.
(a) Keep any property either owned or operated by Parent or any Borrower free
of any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material in any reportable quantity from or onto property owned or operated by
Parent or any Borrower and take any Remedial Actions required to xxxxx said
release or otherwise to come into compliance with applicable Environmental Law,
and (d) promptly provide Agent with written notice within 10 days of the
receipt of any of the following: (i) notice that an Environmental Lien has
been filed against any of the real or personal property of Parent or any
Borrower, (ii) commencement of any Environmental Action or notice that an
Environmental Action will be filed against Parent or any Borrower, and (iii)
notice of a violation, citation, or other administrative order which reasonably
could be expected to result in a Material Adverse Change.
6.15 Disclosure Updates. Promptly and in no event later than 5 Business Days
after obtaining knowledge thereof, (a) notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained any untrue statement
of a material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made, and (b) correct any defect or error that may be discovered therein
or in any Loan Document or in the execution, acknowledgement, filing, or
recordation thereof.
6.16 Copyright Registrations. Maintain in accordance with this Section, valid
registered, or applied for, copyrights with the United States Copyright Office
constituting the Required Library. Parent and each Borrower shall (a) cause all
copyrights generated by each of Parent and each Borrower and constituting the
Required Library to be registered with the United States Copyright Office in a
manner sufficient to impart constructive notice of Parent's and each Borrower's
ownership thereof, (b) on such periodic basis as Agent shall require, provide
Agent with a report of all new copyrightable materials constituting the Required
Library that have been acquired or generated by each of Parent and each Borrower
during the prior period, and (c) cause to be prepared, executed, and delivered
to Agent, with sufficient time to permit Agent to record no later than the last
Business Day within 10 days following the date that such copyrights have been
registered or an application for registration has been filed, a Copyright
Security Agreement or supplemental schedules to the Copyright Security Agreement
reflecting the security interest of Agent in such new copyrights, which
supplemental schedules shall be in form and content suitable for registration
with the United States Copyright Office so as to give constructive notice, when
so registered, of the transfer by Parent and each Borrower to Agent of a
security interest in such copyrights.
7. NEGATIVE COVENANTS.
Each of Parent and each Borrower covenants and agrees that, so
long as any credit hereunder shall be available and until full and final payment
of the Obligations, Parent and Borrowers will not and will not permit any of
their respective Subsidiaries extant as of the Closing Date to do any of the
following:
7.1 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise become
or remain, directly or indirectly, liable with respect to any Indebtedness,
except:
(a) Indebtedness evidenced by this Agreement and the other Loan Documents,
together with Indebtedness owed to Underlying Issuers with respect to Underlying
Letters of Credit,
(b) Indebtedness set forth on Schedule 5.20,
(c) Permitted Purchase Money Indebtedness, and
(d) refinancings, renewals, or extensions of Indebtedness permitted under
clauses (b) and (c) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not, in Agent's judgment,
materially impair the prospects of repayment of the Obligations by Borrowers or
materially impair Borrowers' creditworthiness, (ii) such refinancings, renewals,
or extensions do not result in an increase in the principal amount of, or
interest rate with respect to, the Indebtedness so refinanced, renewed, or
extended, (iii) such refinancings, renewals, or extensions do not result in a
shortening of the average weighted maturity of the Indebtedness so refinanced,
renewed, or extended, nor are they on terms or conditions that, taken as a
whole, are materially more burdensome or restrictive to Parent or the applicable
Borrower's, and (iv) if the Indebtedness that is refinanced, renewed, or
extended was subordinated in right of payment to the Obligations, then the terms
and conditions of the refinancing, renewal, or extension Indebtedness must
include subordination terms and conditions that are at least as favorable to the
Lender Group as those that were applicable to the refinanced, renewed, or
extended Indebtedness; (e) Indebtedness composing Permitted Investments;
(f) Indebtedness of a Borrower resulting from Permitted Intercompany Advances;
(g) obligations of Parent or CSI under the Crazy Shirt Asset Acquisition
Agreement;
(h) guarantees permitted under Section 7.6;
(i) Subordinated Indebtedness incurred in connection with the consummation of
a Permitted Acquisition; and
(j) Indebtedness incurred pursuant to Permitted Bond Financing.
7.2 Liens. Create, incur, assume, or permit to exist, directly or indirectly,
any Lien on or with respect to any of its assets, of any kind, whether now owned
or hereafter acquired, or any income or profits therefrom, except for Permitted
Liens (including Liens that are replacements of Permitted Liens to the extent
that the original Indebtedness is refinanced, renewed, or extended under Section
7.1(d) and so long as the replacement Liens only encumber those assets that
secured the refinanced, renewed, or extended Indebtedness).
7.3 Restrictions on Fundamental Changes.
(a) Except for the consummation of Permitted Acquisitions, enter into
any merger, consolidation, reorganization, or recapitalization, or
reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution).
(c) Other than a sale of Cash Equivalents by Parent or any Borrower in a
Permitted Bond Financing, Convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell, lease,
license, assign, transfer, or otherwise dispose of the assets of any Borrower.
7.5 Change Name. Change any Borrower's name, FEIN, corporate structure, or
identity, or add any new fictitious name; provided, however, that (i) a Borrower
may change its name upon at least 30 days prior written notice to Agent of such
change and so long as, at the time of such written notification, such Borrower
provides any financing statements or fixture filings necessary to perfect and
continue perfected the Agent's Liens, and (ii) CSI may change its name to Crazy
Shirts, Inc. so long as the CSI Funding Conditions have been satisfied and so
long as CSI provides any financing statements or fixture filings necessary to
perfect and continue perfected the Agent's Liens.
7.6 Guarantee. Guarantee or otherwise become in any way liable with respect to
the obligations of any third Person except (a) by endorsement of instruments or
items of payment for deposit to the account of Borrowers or which are
transmitted or turned over to Agent, (b) guarantees by Parent of the leases of
Big Dog or CSI, and (c) guarantees by Big Dog of the leases of CSI in an
aggregate amount not to exceed $1,000,000.
7.7 Nature of Business. Make any change in the principal nature of Borrowers'
business.
7.8 Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by Section 7.1(d) or in
connection with a Permitted Bond Financing, prepay, redeem, defease, purchase,
or otherwise acquire any Indebtedness of any Borrower, other than the
Obligations in accordance with this Agreement, and
(b) Except in connection with a refinancing permitted by Section 7.1(d) or in
connection with a Permitted Bond Financing, directly or indirectly, amend,
modify, alter, increase, or change any of the terms or conditions of any
agreement, instrument, document, indenture, or other writing evidencing or
concerning Indebtedness permitted under Sections 7.1(b) or (c).
7.9 Change of Control. Cause, permit, or suffer, directly or indirectly, any
Change of Control.
7.10 Consignments. Consign any Inventory or sell any Inventory on xxxx and
hold, sale or return, sale on approval, or other conditional terms of sale.
7.11 Distributions. Other than Permitted Distributions, make any Distribution
(in cash or other property).
7.12 Accounting Methods. Modify or change its method of accounting (other than
as may be required to conform to GAAP) or enter into, modify, or terminate any
agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
Borrowers' accounting records without said accounting firm or service bureau
agreeing to provide Agent information regarding the Collateral or Borrowers'
financial condition.
7.13 Investments. Except for Permitted Investments (including investments in
connection with a Permitted Bond Financing), directly or indirectly, make or
acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Borrowers and their Subsidiaries shall not have Permitted Investments (other
than in the Cash Management Accounts, and other than temporary (i.e., held for
less than 2 Business Days) deposits of retail store receipts made by Borrowers
in deposit accounts maintained at banks that are physically proximate to the
stores that generated such receipts) in deposit accounts or Securities Accounts
in excess of $1,000,000 outstanding at any one time unless the applicable
Borrower or its Subsidiary, as applicable, and the applicable securities
intermediary or bank have entered into Control Agreements governing such
Permitted Investments, as Agent shall determine in its Permitted Discretion, to
perfect (and further establish) the Agent's Liens in such Permitted Investments.
7.14 Transactions with Affiliates. Except for Permitted Intercompany Advances,
Directly or indirectly enter into or permit to exist any transaction with any
Affiliate of any Borrower except for transactions that are in the ordinary
course of the applicable Borrower's business, upon fair and reasonable terms,
that are no less favorable to the applicable Borrower than would be obtained in
an arm's length transaction with a non-Affiliate, and for any transaction the
book value of which is $100,000 or greater, that are fully disclosed to Agent.
7.15 Suspension. Suspend or go out of a substantial portion of its business.
7.16 [Intentionally Omitted].
7.17 Use of Proceeds. Use the proceeds of the Advances for any purpose other
than (a) on the Closing Date, (i) to repay, in full, the outstanding principal,
accrued interest, and accrued fees and expenses owing to Existing Lender, (ii)
to pay transactional fees, costs, and expenses incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby, and (iii) upon satisfaction of the CSI Funding Conditions, to pay
all of the cash purchase consideration payable by it for the Crazy Shirt
Acquisition, and (b) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted purposes.
7.18 Change in Location of Chief Executive Office. Relocate its chief executive
office to a new location without providing 30 days prior written notification
thereof to Agent and so long as, at the time of such written notification, the
applicable Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected the Agent's Liens and also provides
to Agent a Collateral Access Agreement with respect to such new location.
7.19 Securities Accounts. Except in connection with a Permitted Bond Financing,
establish or maintain any Securities Account unless Agent shall have received a
Control Agreement in respect of such Securities Account. Borrowers shall not
transfer assets out of any Securities Account; provided, however, that, so long
as no Event of Default has occurred and is continuing or would result therefrom,
Borrowers may use such assets (and the proceeds thereof) to the extent not
prohibited by this Agreement.
7.20 Inactive Subsidiary. Permit the Inactive Subsidiaries to (a) own any
material assets, or (b) engage in any business activity.
7.21 Financial Covenants.
(a) Fail to maintain:
(i) Minimum EBITDA. EBITDA of not less than the required amount set
forth in the following table for the applicable period set forth opposite
thereto:
Applicable Amount Applicable Period
$968,000 For the 9 month period
ending September 30, 2001
$4,494,000 For the 12 month period
ending December 31, 2001
$4,662,000 For the 12 month period
ending January 31, 2002
$5,003,000 For the 12 month period
ending February 28, 2002
$5,182,000 For the 12 month period
ending March 31, 2002
$5,441,000 For the 12 month period
ending April 30, 2002
$6,292,000 For the 12 month period
ending May 31, 2002
$6,687,000 For the 12 month period
ending June 30, 2002
$7,310,000 For the 12 month period
ending July 31, 2002
$8,221,000 For the 12 month period
ending August 31, 2002
$8,573,000 For the 12 month period
ending September 30, 2002
$8,859,000 For the 12 month period
ending October 31, 2002
$9,298,000 For the 12 month period
ending November 30, 2002
$9,716,000 For the 12 month period
ending December 31, 2002
As provided below Thereafter
Agent, in its Permitted Discretion, shall establish EBITDA
covenants on a month-end basis for the trailing twelve month periods thereafter,
which covenants shall be based upon Parent's Projections delivered to Agent
pursuant to Section 6.3(c)(i) and utilizing criteria similar to the criteria
that Agent used to establish the EBITDA covenants in the above table. If Parent
or either Borrower fails to timely deliver Parent's Projections pursuant to
Section 6.3(c)(i), the EBITDA covenant for each trailing twelve month period
thereafter shall continue to be measured on a month-end basis at the same level
that existed as of December 31, 2002 until Parent's Projections have been
delivered at least 60 days prior to a month-end.
(ii) Minimum Excess Availability. Minimum Excess Availability in an
amount equal to $1,000,000.
(b) Maintain:
(i) Maximum Total Inventory. An aggregate amount (based on cost)
of Inventory, measured on a consolidated and month-end basis, of not
more than the amount that is equal to 110% times the aggregate amount of
Inventory set forth in Parent's Projections (delivered to Agent in the
Closing Date Business Plan or pursuant to Section 6.3(c)(i), as applicable)
for the two month period ending on the last day of each month.
(ii) Maximum Inventory for Distribution Centers. An aggregate amount
(based on cost) of Inventory at Borrowers' warehouses or distribution
centers (exclusive of Inventory, up to a maximum aggregate amount of
$2,000,000 at any one time, that is physically segregated from the other
Inventory and relates to the mail order and internet business, corporate
sales business, or wholesale sales business), measured on a consolidated
and month-end basis, of not more than an amount that is equal to 46% times
the aggregate amount of all Inventory set forth in Parent's Projections
(delivered to Agent in the Closing Date Business Plan or pursuant to
Section 6.3(c)(i), as applicable) for the two month period ending on the
last day of each month.
(c) Make:
(i) Capital Expenditures. Capital expenditures, measured on a
consolidated basis, in excess of $2,000,000 during any fiscal quarter and
in excess of $4,000,000 during any fiscal year.
7.22 Material Agreements. Directly or indirectly amend, modify, cancel or
terminate, or permit the amendment, modification, cancellation or termination of
that certain letter agreement between Xxxxx Printables and Big Dog, whereby Big
Dog clarifies certain aspects of the arrangement under which Xxxxx Printables
delivers to Big Dog quantities of t-shirts, sport shirts, tank tops, sweaters
and other goods.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
8.1 If any Borrower fails to pay when due and payable, or when declared due and
payable, all or any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due the Lender Group,
reimbursement of Lender Group Expenses, or other amounts constituting
Obligations), provided, however, that in the case of Overadvances that are
caused by the charging of interest, fees, or Lender Expenses to the Loan
Account, such event shall not constitute an Event of Default if, within 5
Business Days of Parent's receipt of telephonic or other notice of such
Overadvance, the applicable Borrower eliminates such Overadvance;
8.2 The Events of Default specified in that certain letter agreement, entered
into concurrently herewith, between and among Parent, each Borrower, and the
Lender Group;
8.3 If any material portion of Parent's or any Borrower's assets is attached,
seized, subjected to a writ or distress warrant, levied upon, or comes into the
possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by Parent or any Borrower;
8.5 If an Insolvency Proceeding is commenced against Parent or any Borrowers,
and any of the following events occur: (a) Parent or any Borrower consents to
the institution of such Insolvency Proceeding against it, (b) the petition
commencing the Insolvency Proceeding is not timely controverted, (c) the
petition commencing the Insolvency Proceeding is not dismissed within 60
calendar days of the date of the filing thereof; provided, however, that, during
the pendency of such period, Agent (including any successor agent) and each
other member of the Lender Group shall be relieved of their obligations to
extend credit hereunder, (d) an interim trustee is appointed to take possession
of all or any substantial portion of the properties or assets of, or to operate
all or any substantial portion of the business of, Parent or any Borrower, or
(e) an order for relief shall have been entered therein;
8.6 If Parent, any Borrower or any of their Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7 [intentionally omitted];
8.8 If one or more judgments or other claims involving an aggregate amount of
$1,000,000 or more becomes a Lien or encumbrance upon any material portion of
Parent's, any Borrower's or any of their Subsidiaries' assets and the same is
not discharged before the earlier of 30 days after the date it first arises or 5
days prior to the date on which such property or asset is subject to forfeiture,
provided, however, that an Event of Default shall not occur if (a) such judgment
is fully insured (without a reservation of rights), or (b) prior to the
expiration of the 30-day period or 5-day period, as applicable, such judgment or
claim is appealed and the applicable judgment debtor secured a bond covering the
full amount of such judgment;
8.9 If there is a default in any agreement involving an aggregate amount of, in
Agent's sole discretion, $1,000,000 to which Parent, any Borrower or any of
their Subsidiaries is a party and such default (a) occurs at the final maturity
of the obligations thereunder, or (b) results in a right by the other party
thereto, irrespective of whether exercised, to accelerate the maturity of
Parent's, any Borrower's or their Subsidiaries' obligations thereunder, to
terminate such agreement, or to refuse to renew such agreement pursuant to an
automatic renewal right therein;
8.10 If Parent, any Borrower or any of their Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any material misstatement or misrepresentation exists now or hereafter
in any warranty, representation, statement, or Record made to the Lender Group
by Parent, any Borrower, any of their Subsidiaries, or any officer, employee,
agent, or director of Parent, any Borrower or any of their Subsidiaries;
8.12 If the obligation of Parent under the Guaranty is limited or terminated by
operation of law or by Parent thereunder; or
8.13 If this Agreement or any other Loan Document that purports to create a
Lien, shall, for any reason, fail or cease to create a valid and perfected and,
except to the extent permitted by the terms hereof or thereof, first priority
Lien on or security interest in the Collateral covered hereby or thereby, unless
such failure is caused by Agent or the Lender Group; or
8.14 Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by Parent or any Borrower, or a proceeding shall be commenced by
Parent or any Borrower, or by any Governmental Authority having jurisdiction
over Parent or any Borrower, seeking to establish the invalidity or
unenforceability thereof, or Parent or any Borrower shall deny that Parent or
any Borrower has any liability or obligation purported to be created under any
Loan Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an
Event of Default, the Required Lenders (at their election but without notice of
their election and without demand) may authorize and instruct Agent to do any
one or more of the following on behalf of the Lender Group (and Agent, acting
upon the instructions of the Required Lenders, shall do the same on behalf of
the Lender Group), all of which are authorized by Parent and Borrowers:
(a) Declare all Obligations, whether evidenced by this Agreement, by any of
the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit of
Borrowers under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of the Lender Group, but without affecting any of
the Agent's Liens in the Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account Debtors for
amounts and upon terms which Agent considers advisable, and in such cases, Agent
will credit the Loan Accounts with only the net amounts received by Agent in
payment of such disputed Accounts after deducting all Lender Group Expenses
incurred or expended in connection therewith;
(e) Cause Borrowers to hold all returned Inventory in trust for the Lender
Group, segregate all returned Inventory from all other assets of Borrowers or in
Borrowers' possession and conspicuously label said returned Inventory as the
property of the Lender Group;
(f) Without notice to or demand upon any Borrower, make such payments and do
such acts as Agent considers necessary or reasonable to protect its security
interests in the Collateral. Each Borrower agrees to assemble the Borrowers
Collateral if Agent so requires, and to make the Borrowers Collateral available
to Agent at a place that Agent may designate which is reasonably convenient to
both parties. Each Borrower authorizes Agent to enter the premises where the
Borrowers Collateral is located, to take and maintain possession of the
Borrowers Collateral, or any part of it, and to pay, purchase, contest, or
compromise any Lien that in Agent's determination appears to conflict with the
Agent's Liens and to pay all expenses incurred in connection therewith and to
charge Borrowers' Loan Account therefor. With respect to any of Borrowers' owned
or leased premises, each Borrower hereby grants Agent a license to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of the Lender Group's rights or remedies provided herein, at law,
in equity, or otherwise;
(g) Without notice to any Borrower (such notice being expressly waived), and
without constituting a retention of any collateral in satisfaction of an
obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of any Borrower held by the
Lender Group (including any amounts received in the Cash Management Accounts),
or (ii) Indebtedness at any time owing to or for the credit or the account of
any Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits of any
Borrower held by the Lender Group, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell (in the manner provided for herein) the Borrowers
Collateral. Each Borrower hereby grants to Agent a license or other right to
use, without charge, such Borrower's labels, patents, copyrights, trade secrets,
trade names, trademarks, service marks, and advertising matter, or any property
of a similar nature, as it pertains to the Borrowers Collateral, in completing
production of, advertising for sale, and selling any Borrowers Collateral and
such Borrower's rights under all licenses and all franchise agreements shall
inure to the Lender Group's benefit;
(j) Sell the Borrowers Collateral at either a public or private sale, or both,
by way of one or more contracts or transactions, for cash or on terms, in such
manner and at such places (including Borrowers' premises) as Agent determines is
commercially reasonable. It is not necessary that the Borrowers Collateral be
present at any such sale;
(k) Agent shall give notice of the disposition of the Borrowers Collateral as
follows:
(i) Agent shall give Borrowers (for the benefit of the applicable
Borrower) a notice in writing of the time and place of public sale, or, if
the sale is a private sale or some other disposition other than a public
sale is to be made of the Borrowers Collateral, the time on or after which
the private sale or other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed, postage
prepaid, to Borrowers as provided in Section 12, at least 10 days before the
earliest time of disposition set forth in the notice; no notice needs to be
given prior to the disposition of any portion of the Borrowers Collateral
that is perishable or threatens to decline speedily in value or that is of a
type customarily sold on a recognized market;
(l) Agent, on behalf of the Lender Group may credit bid and purchase at any
public sale;
(m) Agent may seek the appointment of a receiver or keeper to take possession
of all or any portion of the Collateral or to operate same and, to the maximum
extent permitted by law, may seek the appointment of such a receiver without the
requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and remedies available
to it at law or in equity pursuant to any other Loan Documents; and
(o) Any deficiency that exists after disposition of the Borrowers Collateral
as provided above will be paid immediately by Borrowers. Any excess will be
returned, without interest and subject to the rights of third Persons, by Agent
to Borrowers (for the benefit of the applicable Borrower).
9.2 Remedies Cumulative. The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance policies of the
type described in Section 6.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which each such Borrower may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Each Borrower hereby agrees
that: (a) so long as the Lender Group complies with its obligations, if any,
under the Code, Agent shall not in any way or manner be liable or responsible
for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.
11.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons with respect to each Lender,
each Participant, and each of their respective officers, directors, employees,
agents, and attorneys-in-fact (each, an "Indemnified Person") harmless (to the
fullest extent permitted by law) from and against any and all claims, demands,
suits, actions, investigations, proceedings, and damages, and all reasonable
attorneys fees and disbursements and other costs and expenses actually incurred
in connection therewith (as and when they are incurred and irrespective of
whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, or administration of this
Agreement, any of the other Loan Documents, or the transactions contemplated
hereby or thereby, and (b) with respect to any investigation, litigation, or
proceeding related to this Agreement, any other Loan Document, or the use of the
proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto (all the foregoing, collectively, the
"Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrowers were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Parent or Borrowers, on the one hand, or Agent, on the other hand, to
the other relating to this Agreement or any other Loan Document shall be in
writing and (except for financial statements and other informational documents
which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail (postage prepaid, return
receipt requested), overnight courier, electronic mail (at such email addresses
as Parent, the applicable Borrower, or Agent, as applicable, may designate to
each other in accordance herewith), or telefacsimile to Parent, the applicable
Borrower, or Agent, as the case may be, at its address set forth below:
If to Parent or
Borrowers: BIG DOG HOLDINGS, INC.
BIG DOG USA, INC.
CSI ACQUISITION CORPORATION
000 Xxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx
Attn: Xxxxxx Xxxxxxxx
Xxxxxxx Xxxx, Esq.
Fax No. (000) 000-0000
Tel. No. (000) 000-0000 x0000
with copies to: BUCHALTER, NEMER, FIELDS & YOUNGER
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxxx, Esq.
Fax No. (000) 000-0000
Tel. No. (000) 000-0000
If to Agent: XXXXX FARGO RETAIL FINANCE, LLC
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxx
Fax No. 000.000.0000
Tel. No. 000.000.0000
XXXXX FARGO RETAIL FINANCE, LLC
0 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxx
Fax No. (000) 000-0000
Tel. No. (000) 000-0000
with copies to: XXXXXXX, PHLEGER & XXXXXXXX LLP
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx Hilson, Esq.
Fax No. 000.000.0000
Tel. No. 000.000.0000
Agent, Parent, and Borrowers may change the address at which
they are to receive notices hereunder, by notice in writing in the foregoing
manner given to the other party. All notices or demands sent in accordance with
this Section 12, other than notices by Agent in connection with enforcement
rights against the Collateral under the provisions of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 Business Days after
the deposit thereof in the mail. Parent and each Borrower acknowledges and
agrees that notices sent by the Lender Group in connection with the exercise of
enforcement rights against Collateral under the provisions of the Code shall be
deemed sent when deposited in the mail or personally delivered, or, where
permitted by law, transmitted by telefacsimile or any other method set forth
above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED
ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH BORROWER AND THE LENDER
GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
(c) EACH BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH BORROWER AND THE LENDER GROUP REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT
OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
(a) Any Lender may, with the written consent of Agent (provided that no
written consent of Agent shall be required in connection with any assignment and
delegation by a Lender to an Eligible Transferee), assign and delegate to one or
more assignees (each an "Assignee") all, or any ratable part of all, of the
Obligations, the Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount of $5,000,000;
provided, however, that Borrowers and Agent may continue to deal solely and
directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
have been given to Borrowers and Agent by such Lender and the Assignee, (ii)
such Lender and its Assignee have delivered to Borrowers and Agent an Assignment
and Acceptance in form and substance satisfactory to Agent, and (iii) the
assignor Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $5,000. Anything contained herein to the
contrary notwithstanding, the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the assignor Lender (with a
copy to Borrowers) that it has received an executed Assignment and Acceptance
and payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Lender under the Loan Documents, and (ii) the
assignor Lender shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (except with respect to Section
11.3 hereof) and be released from its obligations under this Agreement (and in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement and the
other Loan Documents, such Lender shall cease to be a party hereto and thereto),
and such assignment shall affect a novation between Borrowers and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (1) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(2) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrowers or the
performance or observance by Borrowers of any of their obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (3) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(4) such Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (5) such
Assignee appoints and authorizes Agent to take such actions and to exercise such
powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee payment under
the Assignment and Acceptance and receipt and acknowledgment by Agent of such
fully executed Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of Agent, sell to one
or more commercial banks, financial institutions, or other Persons not
Affiliates of such Lender (a "Participant") participating interests in its
Obligations, the Commitment, and the other rights and interests of that Lender
(the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or a material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums; and (v) all amounts
payable by Borrowers hereunder shall be determined as if such Lender had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or proposed
assignment or participation, a Lender may disclose all documents and information
which it now or hereafter may have relating to Borrowers or Borrowers' business.
Prior to making any such disclosure of any such documents or information, the
Lender shall cause such prospective assignee or participant to enter into a
confidentiality agreement containing confidentiality provision substantially
similar to those contained in Section 16.17(d).
(g) Any other provision in this Agreement notwithstanding, any Lender may at
any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Bank or U.S.
Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
14.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrowers and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all of the Lenders affected thereby and
Borrowers and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to take any
action hereunder,
(e) amend this Section or any provision of the Agreement providing for
consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section 16.12,
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or Parent from any obligation for the payment of
money, or
(j) change the definitions of Borrowing Base, Dilution, Dilution Reserve,
Eligible Accounts, Eligible Inventory, Eligible In-Transit Inventory,
Eligible Landed Inventory, Maximum Revolver Amount, Net Liquidation
Percentage, Term Loan Amount, or change Section 2.1(b); or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.
15.2 Replacement of Holdout Lender If any action to be taken by the Lender Group
or Agent hereunder requires the unanimous consent, authorization, or agreement
of all Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a "Replacement Lender"), and
the Holdout Lender shall have not right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or, any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent. Each Lender hereby designates and
appoints Foothill as its representative under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 16. The
provisions of this Section 16 are solely for the benefit of Agent, and the
Lenders, and Borrowers shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management accounts as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrowers, the Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
16.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 Liability of Agent. None of the Agent-Related Persons shall (i) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.
16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5 Notice of Default or Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrowers referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a "notice of default." Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 16.4, Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
16.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of Borrowers and their
Subsidiaries or Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
Borrowers and any other Person (other than the Lender Group) party to a Loan
Document, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Borrowers. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group
Expenses to the extent Agent reasonably deems necessary or appropriate for the
performance and fulfillment of its functions, powers, and obligations pursuant
to the Loan Documents, including court costs, reasonable attorneys fees and
expenses, costs of collection by outside collection agencies and auctioneer fees
and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders
for such expenses pursuant to the Loan Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from Collections
received by Agent to reimburse Agent for such out-of-pocket costs and expenses
prior to the distribution of any amounts to Lenders. In the event Agent is not
reimbursed for such costs and expenses from Collections received by Agent, each
Lender hereby agrees that it is and shall be obligated to pay to or reimburse
Agent for the amount of such Lender's Pro Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of Borrowers and without limiting the obligation of Borrowers to do so),
according to their Pro Rata Shares, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any Defaulting Lender in
failing to make an Advance or other extension of credit hereunder. Without
limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such Lender's ratable share of any costs or out-of-pocket expenses (including
attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 Agent in Individual Capacity. Foothill and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrowers or their Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrowers or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 Lender in Individual Capacity. Any Lender and its respective Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with Borrowers and
their Subsidiaries and Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents as though such Lender were not a Lender
hereunder without notice to or consent of the other members of the Lender Group.
The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11 Withholding Taxes.
(a) If any Lender is a "foreign corporation, partnership or trust" within the
meaning of the IRC and such Lender claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees
with and in favor of Agent and Borrowers, to deliver to Agent and Borrowers:
(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (a) a statement of the Lender,
signed under penalty of perjury, that it is not a (I) a "bank" as described
in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder (within the
meaning of Section 881(c)(3)(B) of the IRC), or (III) a controlled foreign
corporation described in Section 881(c)(3)(C) of the IRC, and (B) a properly
completed IRS Form W-8BEN, before the first payment of any interest under
this Agreement and at any other time reasonably requested by Agent or
Borrowers;
(ii) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS
Form W-8BEN before the first payment of any interest under this Agreement
and at any other time reasonably requested by Agent or Borrowers;
(iii) if such Lender claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two
properly completed and executed copies of IRS Form W-8ECI before the first
payment of any interest is due under this Agreement and at any other time
reasonably requested by Agent or Borrowers;
(iv) such other form or forms as may be required under the IRC or other
laws of the United States as a condition to exemption from, or reduction of,
United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrowers of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of, withholding tax
under a United States tax treaty by providing IRS Form W-8BEN and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part
of the Obligations of Borrowers to such Lender, such Lender agrees to notify
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations of Borrowers to such Lender. To the extent of such percentage
amount, Agent will treat such Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender is entitled to a reduction in the applicable withholding
tax, Agent may withhold from any interest payment to such Lender an amount
equivalent to the applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by subsection (a) of
this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form
was not delivered, was not properly executed, or because such Lender failed to
notify Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section, together with all costs and expenses (including attorneys
fees and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.
(e) All payments made by Borrowers hereunder or under any note or other Loan
Document will be made without setoff, counterclaim, or other defense, except as
required by applicable law other than for Taxes (as defined below). All such
payments will be made free and clear of, and without deduction or withholding
for, any present or future taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any jurisdiction
(other than the United States) or by any political subdivision or taxing
authority thereof or therein (other than of the United States) with respect to
such payments (but excluding, any tax imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein (i) measured by or
based on the net income or net profits of a Lender, or (ii) to the extent that
such tax results from a change in the circumstances of the Lender, including a
change in the residence, place of organization, or principal place of business
of the Lender, or a change in the branch or lending office of the Lender
participating in the transactions set forth herein) and all interest, penalties
or similar liabilities with respect thereto (all such non-excluded taxes,
levies, imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, each Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any note, including any amount paid pursuant to this Section 16.11(e)
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein; provided, however, that Borrowers shall not
be required to increase any such amounts payable to Agent or any Lender (i) that
is not organized under the laws of the United States, if such Person fails to
comply with the other requirements of this Section 16.11, or (ii) if the
increase in such amount payable results from Agent's or such Lender's own
willful misconduct or gross negligence. Borrowers will furnish to Agent as
promptly as possible after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by
Borrowers.
16.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its option and in its
sole discretion, to release any Lien on any Collateral (i) upon the termination
of the Commitments and payment and satisfaction in full by Borrowers of all
Obligations, (ii) constituting property being sold or disposed of if a release
is required or desirable in connection therewith and if Borrowers certifies to
Agent that the sale or disposition is permitted under Section 7.4 of this
Agreement or the other Loan Documents (and Agent may rely conclusively on any
such certificate, without further inquiry), (iii) constituting property in which
no Borrower owned any interest at the time the security interest was granted or
at any time thereafter, or (iv) constituting property leased to a Borrower under
a lease that has expired or is terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or substantially all of the Collateral, all of the
Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
Borrowers at any time, the Lenders will confirm in writing Agent's authority to
release any such Liens on particular types or items of Collateral pursuant to
this Section 16.12; provided, however, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrowers in respect of) all
interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders to assure
that the Collateral exists or is owned by Borrowers or is cared for, protected,
or insured or has been encumbered, or that the Agent's Liens have been properly
or sufficiently or lawfully created, perfected, protected, or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
Agent pursuant to any of the Loan Documents, it being understood and agreed that
in respect of the Collateral, or any act, omission, or event related thereto,
subject to the terms and conditions contained herein, Agent may act in any
manner it may deem appropriate, in its sole discretion given Agent's own
interest in the Collateral in its capacity as one of the Lenders and that Agent
shall have no other duty or liability whatsoever to any Lender as to any of the
foregoing, except as otherwise provided herein.
16.13 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the express consent
of Agent, and that it shall, to the extent it is lawfully entitled to do so,
upon the request of Agent, set off against the Obligations, any amounts owing
by such Lender to Borrowers or any deposit accounts of Borrowers now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by Agent, take or cause to
be taken any action, including, the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral the purpose of which is, or could be, to
give such Lender any preference or priority against the other Lenders with
respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations arising under, or relating to, this Agreement or
the other Loan Documents, except for any such proceeds or payments received by
such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments
from Agent in excess of such Lender's ratable portion of all such distributions
by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind,
and with such endorsements as may be required to negotiate the same to Agent, or
in immediately available funds, as applicable, for the account of all of the
Lenders and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as among
the Lenders in accordance with their Pro Rata Shares; provided, however, that if
all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14 Agency for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15 Payments by Agent to the Lenders. All payments to be made by Agent to the
Lenders shall be made by bank wire transfer or internal transfer of immediately
available funds pursuant to such wire transfer instructions as each party may
designate for itself by written notice to Agent. Concurrently with each such
payment, Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, or interest of the Obligations.
16.16 Concerning the Collateral and Related Loan Documents. Each member of the
Lender Group authorizes and directs Agent to enter into this Agreement and the
other Loan Documents relating to the Collateral, for the benefit of the Lender
Group. Each member of the Lender Group agrees that any action taken by Agent in
accordance with the terms of this Agreement or the other Loan Documents relating
to the Collateral and the exercise by Agent of its powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information. By becoming a party to this Agreement,
each Lender:
(a) is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each field audit or examination report (each a
"Report" and collectively, "Reports") prepared by Agent, and Agent shall so
furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any audit or
examination will inspect only specific information regarding Borrowers and will
rely significantly upon the Books, as well as on representations of Borrowers'
personnel,
(d) agrees to keep all Reports and other material, non-public information
regarding Borrowers and their Subsidiaries and their operations, assets, and
existing and contemplated business plans in a confidential manner; it being
understood and agreed by Borrowers that in any event such Lender may make
disclosures (a) to counsel for and other advisors, accountants, and auditors to
such Lender, (b) reasonably required by any bona fide potential or actual
Assignee or Participant in connection with any contemplated or actual assignment
or transfer by such Lender of an interest herein or any participation interest
in such Lender's rights hereunder, (c) of information that has become public by
disclosures made by Persons other than such Lender, its Affiliates, assignees,
transferees, or Participants, or (d) as required or requested by any court,
governmental or administrative agency, pursuant to any subpoena or other legal
process, or by any law, statute, regulation, or court order; provided, however,
that, unless prohibited by applicable law, statute, regulation, or court order,
such Lender shall notify Borrowers of any request by any court, governmental or
administrative agency, or pursuant to any subpoena or other legal process for
disclosure of any such non-public material information concurrent with, or where
practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any such other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrowers, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans of
Borrowers; and (ii) to pay and protect, and indemnify, defend and hold Agent,
and any such other Lender preparing a Report harmless from and against, the
claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrowers, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Borrowers the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrowers, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrowers a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.
16.18 Several Obligations; No Liability. Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of the Lenders,
any and all obligations on the part of Agent (if any) to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 16.7, no member of the Lender Group shall have any
liability for the acts or any other member of the Lender Group. No Lender shall
be responsible to any Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for it or on its behalf in connection with its Commitment, nor to take
any other action on its behalf hereunder or in connection with the financing
contemplated herein.
16.19 Legal Representation of Agent. In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Xxxxxxx, Xxxxxxx
& Xxxxxxxx LLP ("Xxxxxxx") only has represented and only shall represent
Foothill in its capacity as Agent and as a Lender. Each other Lender hereby
acknowledges that Xxxxxxx does not represent it in connection with any such
matters.
17. GENERAL PROVISIONS.
17.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by Borrowers, Agent, and each Lender whose signature is provided for on
the signature pages hereof.
17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against the Lender Group or Borrowers,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 Amendments in Writing. This Agreement only can be amended by a writing in
accordance with Section 15.1.
17.6 Counterparts; Telefacsimile Execution. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 Revival and Reinstatement of Obligations. If the incurrence or payment of
the Obligations by any Borrower or Parent or the transfer to the Lender Group of
any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of Borrowers
or Parent automatically shall be revived, reinstated, and restored and shall
exist as though such Voidable Transfer had never been made.
17.8 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
[Signature page to follow.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
BIG DOG HOLDINGS, INC.,
a Delaware corporation
By:
Title:
BIG DOG USA, INC.,
a California corporation
By:
Title:
CSI ACQUISITION CORPORATION,
a California corporation
By:
Title:
XXXXX FARGO RETAIL FINANCE, LLC,
a Delaware limited liability company,
as Agent and as a Lender
By:
Title:
TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION.............................................................................1
1.1 Definitions.....................................................................................1
1.2 Accounting Terms...............................................................................30
1.3 Code...........................................................................................30
1.4 Construction...................................................................................30
1.5 Schedules and Exhibits.........................................................................30
2. LOAN AND TERMS OF PAYMENT...............................................................................31
2.1 Revolver Advances..............................................................................31
2.2 [Intentionally Omitted]........................................................................32
2.3 Borrowing Procedures and Settlements...........................................................33
2.4 Payments.......................................................................................40
2.5 Overadvances...................................................................................43
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations....................43
2.7 Cash Management................................................................................45
2.8 Crediting Payments.............................................................................46
2.9 Designated Account.............................................................................46
2.10 Maintenance of Loan Account; Statements of Obligations.........................................46
2.11 Fees...........................................................................................47
2.12 Letters of Credit..............................................................................47
2.13 LIBOR Option...................................................................................51
2.14 Capital Requirements...........................................................................54
2.15 Joint and Several Liability of Borrowers.......................................................54
3. CONDITIONS; TERM OF AGREEMENT...........................................................................57
3.1 Conditions Precedent to the Initial Extension of Credit........................................57
3.2 Conditions Subsequent to the Initial Extension of Credit.......................................61
3.3 Conditions Precedent to all Extensions of Credit...............................................61
3.4 Term...........................................................................................62
3.5 Effect of Termination..........................................................................62
3.6 Early Termination by Borrower..................................................................62
4. CREATION OF SECURITY INTEREST...........................................................................63
4.1 Grant of Security Interest.....................................................................63
4.2 Negotiable Collateral..........................................................................64
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral.........................64
4.4 Delivery of Additional Documentation Required..................................................64
4.5 Power of Attorney..............................................................................65
4.6 Right to Inspect...............................................................................65
4.7 Control Agreements.............................................................................65
5. REPRESENTATIONS AND WARRANTIES..........................................................................66
5.1 No Encumbrances................................................................................66
5.2 [Intentionally Omitted]........................................................................66
5.3 Eligible Inventory.............................................................................66
5.4 Equipment......................................................................................66
5.5 [Intentionally Omitted]........................................................................66
5.6 Inventory Records..............................................................................66
5.7 Location of Chief Executive Office; FEIN.......................................................66
5.8 Due Organization and Qualification; Subsidiaries...............................................67
5.9 Due Authorization; No Conflict.................................................................67
5.10 Litigation.....................................................................................69
5.11 No Material Adverse Change.....................................................................69
5.12 Fraudulent Transfer............................................................................69
5.13 Employee Benefits..............................................................................69
5.14 Environmental Condition........................................................................69
5.15 Brokerage Fees.................................................................................70
5.16 Intellectual Property..........................................................................70
5.17 Leases.........................................................................................70
5.18 DDAs...........................................................................................70
5.19 Complete Disclosure............................................................................71
5.20 Indebtedness...................................................................................71
5.21 Inactive Subsidiaries..........................................................................71
5.22 Material Agreements............................................................................71
6. AFFIRMATIVE COVENANTS...................................................................................71
6.1 Accounting System..............................................................................72
6.2 Collateral Reporting...........................................................................72
6.3 Financial Statements, Reports, Certificates....................................................73
6.4 [Intentionally Omitted]........................................................................75
6.5 Return.........................................................................................75
6.6 Maintenance of Properties......................................................................75
6.7 Taxes..........................................................................................75
6.8 Insurance......................................................................................76
6.9 [Intentionally Omitted]........................................................................76
6.10 Compliance with Laws...........................................................................77
6.11 Leases.........................................................................................77
6.12 Brokerage Commissions..........................................................................77
6.13 Existence......................................................................................77
6.14 Environmental..................................................................................77
6.15 Disclosure Updates.............................................................................78
6.16 Copyright Registrations........................................................................78
7. NEGATIVE COVENANTS......................................................................................78
7.1 Indebtedness...................................................................................78
7.2 Liens..........................................................................................79
7.3 Restrictions on Fundamental Changes............................................................80
7.4 Disposal of Assets.............................................................................80
7.5 Change Name....................................................................................80
7.6 Guarantee......................................................................................80
7.7 Nature of Business.............................................................................80
7.8 Prepayments and Amendments.....................................................................81
7.9 Change of Control..............................................................................81
7.10 Consignments...................................................................................81
7.11 Distributions..................................................................................81
7.12 Accounting Methods.............................................................................81
7.13 Investments....................................................................................81
7.14 Transactions with Affiliates...................................................................82
7.15 Suspension.....................................................................................82
7.16 [Intentionally Omitted]........................................................................82
7.17 Use of Proceeds................................................................................82
7.18 Change in Location of Chief Executive Office...................................................82
7.19 Securities Accounts............................................................................82
7.20 Inactive Subsidiary............................................................................83
7.21 Financial Covenants............................................................................83
7.22 Material Agreements............................................................................85
8. EVENTS OF DEFAULT.......................................................................................85
9. THE LENDER GROUP'S RIGHTS AND REMEDIES..................................................................87
9.1 Rights and Remedies............................................................................87
9.2 Remedies Cumulative............................................................................89
10. TAXES AND EXPENSES......................................................................................90
11. WAIVERS; INDEMNIFICATION................................................................................90
11.1 Demand; Protest; etc...........................................................................90
11.2 The Lender Group's Liability for Collateral....................................................90
11.3 Indemnification................................................................................90
12. NOTICES. 91
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..............................................................93
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS..............................................................93
14.1 Assignments and Participations.................................................................93
14.2 Successors.....................................................................................96
15. AMENDMENTS; WAIVERS.....................................................................................96
15.1 Amendments and Waivers.........................................................................96
15.2 Replacement of Holdout Lender..................................................................98
15.3 No Waivers; Cumulative Remedies................................................................98
16. AGENT; THE LENDER GROUP.................................................................................98
16.1 Appointment and Authorization of Agent.........................................................98
16.2 Delegation of Duties...........................................................................99
16.3 Liability of Agent.............................................................................99
16.4 Reliance by Agent.............................................................................100
16.5 Notice of Default or Event of Default.........................................................100
16.6 Credit Decision...............................................................................101
16.7 Costs and Expenses; Indemnification...........................................................101
16.8 Agent in Individual Capacity..................................................................102
16.9 Successor Agent...............................................................................102
16.10 Lender in Individual Capacity.................................................................103
16.11 Withholding Taxes.............................................................................103
16.12 Collateral Matters............................................................................105
16.13 Restrictions on Actions by Lenders; Sharing of Payments.......................................106
16.14 Agency for Perfection.........................................................................107
16.15 Payments by Agent to the Lenders..............................................................107
16.16 Concerning the Collateral and Related Loan Documents..........................................107
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports
and Information...............................................................................108
16.18 Several Obligations; No Liability.............................................................109
16.19 Legal Representation of Agent.................................................................109
17. GENERAL PROVISIONS.....................................................................................110
17.1 Effectiveness.................................................................................110
17.2 Section Headings..............................................................................110
17.3 Interpretation................................................................................110
17.4 Severability of Provisions....................................................................110
17.5 Amendments in Writing.........................................................................110
17.6 Counterparts; Telefacsimile Execution.........................................................110
17.7 Revival and Reinstatement of Obligations......................................................110
17.8 Integration...................................................................................111
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule B-1 Big Dog Designated Account
Schedule C-1 Commitments
Schedule E-1 Eligible Inventory Locations
Schedule P-1 Permitted Liens
Schedule 2.8(a) Cash Management Banks
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule A-1
Agent's Account
Account number 4641-073531 maintained by Agent with Xxxxx Fargo Bank, 0000
Xxxxxxx Xx., Xxxxx Xxxxxxx, Xxxxxxxxxx 00000, ABA #000000000.
Schedule B-1
Big Dog Designated Account
Account number 14655-02080 of Big Dog maintained with the Big Dog Designated
Account Bank, or such other deposit account of Big Dog (located within the
United States) that has been designated as such, in writing, by Big Dog to
Agent.
Schedule C-1
Commitments
Lender Commitment
Xxxxx Fargo Retail Finance, LLC $30,000,000
All Lenders $30,000,000
