Exhibit 4(c)
REVOLVING CREDIT AGREEMENT
dated as March 24, 1997
among
XXXXXXXX STORES INC.
AS BORROWER,
THE FINANCIAL INSTITUTIONS PARTY HERETO,
AS LENDERS,
and
THE CIT GROUP/BUSINESS CREDIT, INC.,
AS AGENT
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$100,000,000
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Table of Contents
Section Title Page
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ARTICLE I
DEFINITIONS; CONSTRUCTION 1
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1.01. Certain Definitions 1
1.02. Construction 25
1.03. Accounting Principles 25
ARTICLE II
THE CREDITS 26
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2.01. Revolving Credit Loans 26
2.02. Notes 26
2.03. Notice of Borrowing; Making of Loans 26
2.04. Reduction of Commitments; Mandatory Prepayment; Optional
Prepayment 29
2.05. Interest Rate 30
2.06. Interest Payment Dates 31
2.07. Amortization 31
2.08. Payments and Fees. 31
2.09. Use of Proceeds 33
2.10. Eurodollar Rate Not Determinable; Illegality or Impropriety 34
2.11. Reserve Requirements; Capital Adequacy Circumstances 34
2.12. Indemnity 36
2.13. Sharing of Setoffs 36
2.14. Continuation and Conversion of Loans 37
2.15. Taxes 38
2.16. Activation of Inactive Revolving Credit Commitments 40
2.17. Eurodollar Margin Adjustments 40
2.18. Termination 41
ARTICLE III
LETTERS OF CREDIT 42
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3.01. Letters of Credit 42
3.02. Participations 45
ARTICLE IV
BORROWING BASE 47
4.01. Condition of Lending and Assisting in Establishing
or Opening Letters of Credit 47
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4.02. Mandatory Prepayment 47
4.03. Rights and Obligations Unconditional 47
4.04 Borrowing Base Certificate 47
4.05. General Provisions 48
ARTICLE V
CONDITIONS OF EFFECTIVENESS,
LETTER OF CREDIT ISSUANCE AND LENDING
49
5.01. Conditions Precedent to Effectiveness 49
5.02. Conditions Precedent to Loans and Letters of Credit 54
ARTICLE VI
REPRESENTATIONS AND WARRANTIES 55
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6.01. Organization, Good Standing, Etc. 55
6.02. Authorization, Etc. 55
6.03. Governmental Approvals 56
6.04. Enforceability of Loan Documents 56
6.05. Subsidiaries 56
6.06. Litigation 56
6.07. Financial Condition 56
6.08. Compliance with Law, Etc. 57
6.09. ERISA 57
6.10. Taxes, Etc. 57
6.11. Regulations G, T,U and X. 58
6.12. Nature of Business 58
6.13. Adverse Agreements, Etc. 58
6.14. Holding Company and Investment Company Acts 58
6.15. Permits, Etc. 58
6.16. Priority; Title 58
6.17. Full Disclosure 59
6.18. Operating Lease Obligations 59
6.19. Environmental Matters 59
6.20. Schedules 60
6.21. Insurance 60
6.22. Use of Proceeds 60
6.23. Security Documents 60
6.24. Financial Accounting Practices, Etc. 60
6.25. No Material Adverse Effect 61
6.26. Real Property; Leases 61
6.27. Location of Bank Accounts 62
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6.28. No Event of Default 62
6.29. Capitalized Leases 62
6.30. Tradenames 62
6.31. Solvency 62
6.32. Inventory 62
6.33. Intellectual Property 62
6.34. Material Contracts 63
6.35. Labor Relations; Collective Bargaining Agreements 63
ARTICLE VII
AFFIRMATIVE COVENANTS 64
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7.01. Reporting Requirements 64
7.02. Compliance with Laws, Etc. 68
7.03. Preservation of Existence, Etc. 68
7.04. Keeping of Records and Books of Account 68
7.05. Inspection Rights and Verification 68
7.06. Maintenance of Properties, Etc. 69
7.07. Maintenance of Insurance 69
7.08. Environmental 69
7.09. Further Assurances 70
7.10. Borrowing Base 70
7.11. Change in Collateral; Collateral Records 70
7.12. Financial Accounting Practices, Etc. 71
7.13. Cash Management System 71
7.14. Leases 71
7.15. Additional Subsidiaries 72
ARTICLE VIII
NEGATIVE COVENANTS 72
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8.01. Liens, Etc. 73
8.02. Indebtedness 74
8.03. Guarantees, Etc. 74
8.04. Merger, Consolidation, Sale of Assets, Etc. 75
8.05. Change in Nature of Business 75
8.06. Loans, Advances and Investments, Etc. 75
8.07. Lease Obligations 76
8.08. Capital Expenditures 76
8.09. Dividends, Prepayments, Etc. 76
8.10. Federal Reserve Regulations 76
8.11. Transactions with Affiliates 76
8.12. Markup and Markdown Policies 76
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8.13. Environmental 77
8.14. ERISA 77
ARTICLE IX
DEFAULTS 77
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9.01. Events of Default 77
9.02. Consequences of an Event of Default 80
9.03. Deposit for Letters of Credit 80
9.04. Certain Remedies 81
ARTICLE X
MISCELLANEOUS 81
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10.01. Holidays 81
10.02. Records 81
10.03. Amendments and Waivers 81
10.04. No Implied Waiver; Cumulative Remedies 82
10.05. Notices 83
10.06. Expenses; Taxes; Attorneys' Fees; Indemnification 83
10.07. Application 84
10.08. Severability 85
10.09. Governing Law 85
10.10. Prior Understandings 85
10.11. Duration; Survival 85
10.12. Counterparts 85
10.13. Assignments; Participations 85
10.14. Successors and Assigns 87
10.15. Confidentiality 88
10.16. Waiver of Jury Trial 88
10.17. Right of Setoff 89
10.18. Headings 89
10.19. Forum Selection and Consent to Jurisdiction 89
ARTICLE XI
THE AGENT 90
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11.01. Appointment 90
11.02. Nature of Duties 90
11.03. Rights, Exculpation, Etc. 91
11.04. Reliance 92
11.05. Indemnification 92
11.06. CIT Individually 92
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11.07. Successor Agent 93
11.08. Collateral Matters 93
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REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of March 24, 1997, among
XXXXXXXX STORES INC, a Michigan corporation (the "Borrower"), the financial
institutions from time to time party hereto (collectively, the "Lenders" and
individually, a "Lender"), and THE CIT GROUP/BUSINESS CREDIT, INC. ("CIT"),
as agent for the Lenders (in such capacity, the "Agent").
BACKGROUND
WHEREAS, the Borrower has requested the Agent and Lenders to
provide the Borrower with a $100 million revolving credit facility
(consisting of, initially, an $80 million available, activated portion and a
$20 million unavailable portion which is subject to activation as hereinafter
provided), including a $5 million subfacility for the issuance of letters of
credit and, subject to the terms and conditions set forth herein, the Lenders
have agreed to provide such facility.
In consideration of the mutual covenants herein contained and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
1.01. Certain Definitions. In addition to other words and
terms defined elsewhere in this Agreement, as used herein the following words
and terms shall have the following meanings, respectively, unless the context
hereof otherwise clearly requires:
"Account" means each Borrower revolving credit card account
issued to a Customer pursuant to a Cardholder Agreement between the Borrower
and any Person for the sole purpose of providing credit for the purchase of
merchandise and services at the Borrower, and which is identified by account
number, Customer name, Customer address and Credit Card Receivable balance in
each computer file or microfiche list of accounts delivered to the Agent by
the Borrower, including, without limitation, each Renumbered Account.
"Activated Revolving Credit Commitments" shall mean, with
respect to each Lender, the sum of (a) the amount set forth on Schedule
1.01(B) to this Agreement opposite such Lender's name under the heading
"Activated Revolving Credit Commitment or assigned to such Lender in
accordance with Section 10.13 plus (b) the portion of the Inactive Revolving
Credit Commitment which has been activated in accordance with Section 2.16
hereof, as such
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amounts may be reduced from time to time pursuant to the terms of this
Agreement and "Activated Revolving Credit Commitments" shall, collectively,
mean the aggregate amount of the Activated Revolving Credit Commitments of
all the Lenders, the maximum amount of which shall not exceed $100,000,000.
"Accountant's Opinion" shall have the meaning given that term
in Section 7.01(a) hereof.
"Affiliate" of a Person shall mean any other Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" of a Person means the power, directly or
indirectly, either to (a) vote 10% or more of the securities having ordinary
voting power for the election of directors of such Person or (b) direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise.
"Agent Account" shall mean an account in the name of the Agent
designated to the Borrower from time to time into which the Borrower shall
make all payments to the Agent for the account of the Agent or the Lenders,
as the case may be, under this Agreement.
"Agent Advances" shall have the meaning given that term in
Section 11.08 hereof.
"Agreement" shall mean this Revolving Credit Agreement as
amended, modified, supplemented or restated from time to time.
"Anniversary Date" shall mean the date occurring three (3)
years from the date hereof and the same date in every year thereafter.
"Applicable Eurodollar Margin" means initially, 2.25% subject
to adjustment as provided in Section 2.17 hereof.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the
Agent, substantially in the form of Exhibit G hereto.
"Availability" shall mean, at any time (i) the Current
Commitment minus (ii) the sum of (A) the aggregate outstanding principal
amount of all Loans and (B) the Letter of Credit Exposure.
"Bank" shall mean Chase Manhattan Bank, its successors or any
other bank designated by the Agent to the Borrower from time to time that is
reasonably acceptable to the Borrower.
"Benefit Plan" shall mean a defined benefit plan as defined in
Section 3(35) of ERISA and subject to Title IV of ERISA (other than a
Multiemployer Plan) in respect of which
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the Borrower or any ERISA Affiliate is or within the immediately preceding
six (6) years was an "employer" as defined in Section 3(5) of ERISA.
"Board" means the Board of Governors of the Federal Reserve
System of the United States.
"Book Value" shall mean, as to any Inventory in respect of
which such amount is to be determined, the lower of (i) cost (as reflected in
the general ledgers of the Borrower) and (ii) market value (both cost and
market value being (A) determined in accordance with GAAP calculated on the
first in first out basis and (B) calculated exclusive of any accounting
adjustments made for capitalized expenditures.
"Borrower" shall have the meaning given that term in the
introductory paragraph to this Agreement.
"Borrower's Account" shall have the meaning given that term in
Section 2.08(a) hereof.
"Borrowing Base" shall mean an amount equal to (i) the sum of
(a) 65% of the Net Book Value of Eligible Inventory plus (b) 90% of the
Outstanding Balance of Net Eligible Credit Card Receivables, minus (ii) the
Borrowing Base Reserves.
"Borrowing Base Availability" shall mean, at any time (i) the
Borrowing Base minus (ii) the sum of (A) the aggregate outstanding principal
amount of all Loans and (B) the Letter of Credit Exposure.
"Borrowing Base Certificate" shall have the meaning given that
term in Section 4.04(a) hereof.
"Borrowing Base Reserves" shall mean the sum of (i) the
aggregate Rent Reserves, (ii) accrued and unpaid sales taxes, (iii) to the
extent not already excluded in determining the Net Book Value of Eligible
Inventory or the Outstanding Balance of Net Eligible Credit Card Receivables
the sum of (A) the amount of outstanding customer credits and deposits, (B)
the amount of lay-a-way deposits and (C) 60% of the face value of all
outstanding gift certificates that cannot be applied as a payment on accounts
and are identified as such, to the satisfaction of Agent, and 82% of the face
value of all other outstanding gift certificates, in each case issued by the
Borrower at any time, (iv) the outstanding amount payable to consignors of
Inventory held by the Borrower, and (v) such additional reserves as the
Agent, in its sole discretion, exercised reasonably may deem appropriate from
time to time.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions are authorized or obligated
to close in New York, New York, provided, that with respect to the borrowing,
payment, conversion to or continuation of Eurodollar Loans, Business Day
shall also mean a day on which dealings in Dollars are carried on in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange
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operations in respect of the Bank's eurodollar loans are then being
conducted.
"Capital Expenditures" shall mean, for any period, the
aggregate amount of all expenditures during such period which, in accordance
with GAAP, would be classified as capital expenditures.
"Capitalized Lease" shall mean any lease which is required
under GAAP to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligations" shall mean the aggregate
amount which is required under GAAP to be reported as a liability on the
balance sheet of a Person as lessee under a Capitalized Lease.
"Cardholder Agreement" means the agreement (and the related
application) for any Account, as in effect on the date hereof and in the form
attached as Exhibit J hereto subject only to such amendments, modifications,
or other changes which are made thereto in accordance with Requirements of
Law. The "related Cardholder Agreement" means, when used with respect to any
Credit Card Receivable, the Cardholder Agreement under which such Credit Card
Receivable arose.
"Cardholder Guidelines" means the Borrower's policies and
procedures relating to the operation of its credit card business in effect on
the date of this Agreement, including, without limitation, the policies and
procedures for determining the credit worthiness of potential and existing
credit card customers, and relating to the maintenance of credit card
accounts and collection of credit card receivables.
"Cash Concentration Accounts" shall mean the deposit accounts
maintained by the Borrower at each Cash Concentration Account Bank described
and designated as such on Schedule 6.27 hereto or any new cash concentration,
depository account with respect to which the Borrower has complied with the
requirements of Section 7.13 hereof, which deposit accounts shall be, upon
the occurrence of a Cash Management Triggering Event, under the sole dominion
and control of the Agent.
"Cash Concentration Account Agreement" shall mean an
agreement, in form and substance satisfactory to the Agent, between each Cash
Concentration Account Bank and the Agent, as such Agreement may be modified
and supplemented and in effect from time to time.
"Cash Concentration Account Bank" shall mean Comerica Bank,
Xxxxxxx Bank, N.A., Michigan National Bank or such other bank as the Borrower
may select with the written approval of the Agent.
"Cash Management Triggering Event" shall mean (i) any date on
which Availability is less than $15,000,000 (assuming the Activated Revolving
Credit Commitments are $100,000,000) or (ii) the occurrence of a Potential
Default or Event of Default hereunder.
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"CIT" shall have the meaning given that term in the
introductory paragraph to this Agreement.
"Closing Date" shall mean the date on which the conditions set
forth in Section 5.01 hereof shall be satisfied.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import. References to sections
of the Code shall be construed also to refer to any successor sections.
"Collection" means any payment by or on behalf of Customers
received by the Borrower in respect of Credit Card Receivables, in the form
of cash, checks, wire transfers, electronic transfers, ATM transfers or any
other form of payment in accordance with the Cardholder Agreement in effect
from time to time, including, without limitation, all Recoveries. A
Collection processed on an Account in excess of the amount of Credit Card
Receivables in such Account as of the date of receipt by the Borrower of such
Collection (an "Excess Collection") shall be deemed to be a payment in
respect of Credit Card Receivables to the extent of such excess and shall be
held in such Account for the remainder of the Cycle, and shall be returned to
the Customer in accordance with Borrower's customary business practices.
"Collateral" shall mean all of the property (tangible and
intangible) of any Person purported to be subject to the Lien purported to be
created by any Security Document heretofore or hereafter executed by such
Person as security for all or any part of the Obligations.
"Comerica Mortgage Loan" shall mean the loan made pursuant to
that certain Secured Term Loan Agreement dated June 16, 1988 between Xxxxxxxx
Stores Realty Company and Comerica Bank.
"Consolidated Subsidiary" of a Person at any time shall mean
those Subsidiaries or other Affiliates of such Person whose accounts are or
should in accordance with GAAP be consolidated with those of such Person.
"Credit Card Receivables" shall mean a right to receive
payment arising from a sale of merchandise or service by the Borrower
pursuant to an arrangement between the Borrower and any such Person pursuant
to which such Person is obligated to pay for merchandise or service under the
Borrower's "private label" credit plan that permits the purchase of such
merchandise and services on credit, and includes the right to payment of any
interest or finance charges and other obligations of such Person with respect
thereto.
"Credit Extension" shall mean (a) the making of any Loan by a
Lender or the Agent on behalf of the Lenders or (b) the issuance, increase in
the Stated Amount, or extension of the expiration date, of any Letter of
Credit which CIT assists the Borrower in opening or establishing.
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"Cumulative FIFO EBITDA" shall mean, (i) for each fiscal
quarter in the fiscal year of the Borrower ending January 25, 1997, the
aggregate FIFO EBITDA for the period beginning on the first day of such
fiscal year and ending at the end of such fiscal quarter and (ii) for each
fiscal quarter of the Borrower after January 25, 1997, the aggregate FIFO
EBITDA for the period of four (4) consecutive fiscal quarters of the Borrower
ending at the end of such fiscal quarter.
"Current Commitment" shall have the meaning assigned to that
term in Section 2.01 hereof.
"Customer" means, with respect to any Account, the Person or
Persons obligated to make payments with respect to such Account pursuant to a
Cardholder Agreement, including any guarantor thereof.
"Cycle" means each billing cycle used by the Borrower to xxxx
Customers of the Credit Card Receivables.
"Cycle Closing Date", in respect of any Account, means the
last day of each Cycle applicable to such Account.
"Defaulted Credit Card Receivable" means a Credit Card
Receivable:
(i) in respect of which the related Customer
has failed to make the minimum monthly payment
required under the terms of the related Cardholder
Agreement for a period of 215 days or seven
consecutive Cycles (whichever is less);
(ii) as to which the Customer thereof or any
other Person obligated thereon has filed for
protection under any bankruptcy law or has become
subject to a petition under any bankruptcy law; or
(iii) which, consistent with the Cardholder
Guidelines, would be written off the Borrower's books
as uncollectible.
"Delinquent Credit Card Receivable" means a principal Credit
Card Receivable that is not a Defaulted Credit Card Receivable:
(i) in respect of which the related Customer
has failed to make the minimum monthly payment
required under the terms of the related Cardholder
Agreement for a period of 63 days or two consecutive
Cycles (which ever is less); or
(ii) which, consistent with the Cardholder
Guidelines, would be classified as delinquent by the
Borrower.
"Depository Accounts" shall mean the depository accounts
maintained by the
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Borrower or any Subsidiary for the collection of the cash of the Borrower and
the Subsidiaries and the proceeds from the sale of the Inventory of the
Borrower or the Subsidiaries which are described on Schedule 6.27 hereto or
any new depository account with respect to which the Borrower has complied
with the requirements of Section 7.13 hereof.
"Depository Bank" shall mean each financial institution at
which a Depository Account is maintained.
"Designated Borrowing Officer" shall mean any one of the
President, Chairman of the Board/Chief Executive Officer, Vice Chairman of
the Board, Vice President and Controller and Vice President and Treasurer, or
such other officer as shall be designated from time to time in writing by the
Borrower to the Agent.
"Designated Financial Officer" of a Person shall mean the
individual designated from time to time by the Board of Directors or
governing body performing like functions of such Person to be the chief
financial officer or treasurer of such Person (and individuals designated
from time to time by the Board of Directors or governing body performing like
functions of such Person to act in lieu of the chief financial officer or the
treasurer).
"Diluted Credit Card Receivable" shall mean any Credit Card
Receivable (that is not a Defaulted Credit Card Receivable) in respect of
which the Borrower has adjusted downward the amount of such Credit Card
Receivable because of a rebate, refund, unauthorized charge or billing error
to a Customer or any set-off by the Customer thereof, or because such Credit
Card Receivable was created in respect of merchandise or services which was
refused or returned by a Customer or because the Borrower charged off as
uncollectible small balances pursuant to the Cardholder Guidelines, or if the
Borrower otherwise adjusted or pursuant to the Cardholder Guidelines should
have adjusted downward the amount of any Credit Card Receivable without
receiving Collections therefor or charges off such amount as uncollectible.
"Disbursement Account" shall mean the deposit account in the
name of the Borrower maintained at a bank in the United States designated by
the Borrower to the Agent into which there shall be deposited proceeds of
Loans and funds disbursed to the Borrower by the Agent.
"Dollar," "Dollars" and the symbol "$" shall mean lawful money
of the United States of America.
"Early Termination Date" shall mean the date on which the
Borrower terminates the Revolving Credit Commitments and this Agreement which
date is prior to an Anniversary Date.
"Early Termination Fee" shall mean the fee which the Agent on
behalf of the Lender is entitled to charge the Borrower in the event the
Borrower terminates the Revolving Credit Commitments on a date prior to an
Anniversary Date, the amount of which shall be
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equal to (a) the average daily outstanding amount of Loans and Undrawn Letter
of Credit Availability for the period from the date of this Agreement to the
Early Termination Date times (b) one-half of one percent (1/2%) per annum for
the number of days from the Early Termination Date to the next succeeding
Anniversary Date.
"Eligible Account" shall mean each Account: (a) which is
payable in United States Dollars; and (b) which the Borrower has not
classified on its electronic records as counterfeit, cancelled or fraudulent,
and did not arise after any card issued in connection therewith was stolen or
lost.
"Eligible Credit Card Receivable" shall mean each Credit Card
Receivable that is, and at all times continues to be, acceptable to the Agent
in all respects. Criteria for eligibility may be established and revised from
time to time by the Agent in its reasonable business judgment. In general, a
Credit Card Receivable of the Borrower will be deemed eligible if at the time
of determination such Credit Card Receivable meets the following criteria:
(a) which has arisen under an Eligible Account;
(b) which was created in compliance, in all material respects,
with all Requirements of Law applicable to the Borrower;
(c) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any Governmental
Authority required to be obtained, effected or given by the Borrower in
connection with the creation of such Credit Card Receivable or the execution,
delivery and performance by the Borrower of the Cardholder Agreement pursuant
to which such Credit Card Receivable was created, have been duly obtained,
effected or given and are in full force and effect as of such date of
creation;
(d) as to which, at the time of and at all times after the
creation of such Credit Card Receivable, the Borrower has sole title thereto,
free and clear of all Liens (other than the Lien of the Agent);
(e) which constitutes an "account" or a "general intangible"
or "proceeds" of either under Article 9 of the UCC as then in effect in any
applicable jurisdiction;
(f) the Customer of which (A) has not failed to make, at the
time of the sale of the goods and services giving rise to such Credit Card
Receivable, at least the minimum monthly payment required in order to entitle
such Customer to further extensions of credit under the terms of the
Cardholder Guidelines and (B) at the time the application for the extension
of credit in respect thereof was processed, was a United States resident or a
resident of Canada so long as the aggregate outstanding amount of Credit Card
Receivables owing from Canadian Customers does not exceed $500,000;
(g) the Customer of which has not failed to make any such
required
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payments for any period of two consecutive Cycles (including the Cycle ending
on the most recent Cycle Closing Date under the related Cardholder Agreement
to occur 10 Business Days or more prior to the date of creation of such
Credit Card Receivable);
(h) which is required to be paid either by cash or check sent
or delivered to one of the Borrower's store locations or its corporate
headquarters in Jackson, Michigan or to another location designated by the
Borrower and reasonably acceptable to the Agent;
(i) which:
(A) arises under a Cardholder Agreement which,
together with such Credit Card Receivable, is in full force
and effect and constitutes the legal, valid and binding
obligation of the Customer of such Credit Card Receivable,
except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization moratorium or similar
law affecting creditors' rights generally or by general
principles of equity (whether considered in a proceeding in
equity or at law),
(B) arises from a Cardholder Agreement and has been
billed or unbilled to the related Customer on such Customer's
Statement in accordance with the terms of such Cardholder
Agreement,
(C) is not subject to any dispute, offset,
counterclaim or defense whatsoever,
(D) has not been purchased by or transferred to any
other Person, and
(E) has not otherwise been charged off as
uncollectible pursuant to the Cardholder Guidelines;
(j) which, together with the Cardholder Agreement related
thereto, does not contravene in any material respect any local, state or
federal laws, rules or regulations applicable thereto (including, without
limitation, Regulation Z of the Board of Governors of the Federal Reserve
System, the Federal Consumer Protection Act (including, without limitation
the Federal Truth in Lending Act), the Fair Credit Billing Act, and all other
laws, rules and regulations relating to usury, consumer protection, truth in
lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with respect to
which no party to the Cardholder Agreement related thereto is in violation of
any such law, rule or regulation in any material respect;
(k) which satisfies all applicable requirements of the
Cardholder Guidelines;
(l) was not originated in or subject to the laws of a
jurisdiction whose laws would make such Credit Card Receivable, the related
Cardholder Agreement or the grant of a Lien in such Credit Card Receivable to
the Agent unlawful, invalid or unenforceable;
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(m) such Credit Card Receivable is not a Delinquent Credit
Card Receivable, a Defaulted Credit Card Receivable or the written-down
portion of a Diluted Credit Card Receivable;
(n) the Agent has a valid, perfected and sole first priority
security interest in such Credit Card Receivable and such Credit Card
Receivable otherwise conforms to each of the representations or warranties
contained in this Agreement and the Security Agreement with respect thereto;
and
(o) such Credit Card Receivable is not otherwise regarded by
the Agent as unsuitable collateral for the Obligations.
"Eligible Inventory" shall mean finished goods Inventory of
the Borrower that is, and at all times continues to be, acceptable to the
Agent in all respects. Criteria for eligibility may be established and
revised from time to time by the Agent in its reasonable business judgment.
In general, Inventory of the Borrower will be deemed eligible if at the time
of determination such Inventory meets all the following qualifications:
(i) it is lawfully owned by the Borrower and
not subject to any Lien, other than the security
interest in favor of the Agent securing the
Obligations, it is not held on consignment and it may
be lawfully sold;
(ii) the Agent has a perfected, first priority
security interest in such Inventory,
(iii) it is (A) located in the Borrower's
distribution centers, warehouses or retail locations
listed on Schedule 1.01(A) hereto or (B) located in
other locations in the continental United States as
the Agent shall have approved in writing from time to
time, which approval shall be given upon the Borrower
providing the Agent with evidence satisfactory to the
Agent, in its sole discretion, of (1) the Agent's
perfected, first priority security interest in all
assets of the Borrower located in such locations and
(2) the absence of any other Liens on any assets of
the Borrower located in such locations;
(iv) it is readily marketable for sale by the
Borrower and it is not unsalable Inventory;
(v) the Agent determines, in its sole
discretion, that it is substantially similar in
quality and mix to the Inventory owned by the Borrower
immediately prior to the Closing Date;
(vi) the Inventory does not represent packaging
or shipping
-10-
materials, boxes or supplies which is not held for
sale in the ordinary course of business; and
(vii) the Inventory is not otherwise regarded
by the Agent, as unsuitable collateral for the
Obligations.
"Environmental Actions" shall mean any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation,
proceeding, judgment, letter or other communication from any Governmental
Authority or any third party involving a Release (i) from or onto any of the
properties presently or formerly owned or leased by the Borrower or its
Subsidiaries or (ii) from or onto any facilities which received Hazardous
Materials from the Borrower or its Subsidiaries, or involving any violation
of any Environmental Law.
"Environmental Indemnity Agreement" shall mean the
Environmental Indemnity Agreement dated as of the date hereof made by the
Borrower in favor of the Agent and the Lenders, as modified and supplemented
and in effect from time to time.
"Environmental Law" shall mean all federal, state and local
laws, statutes, ordinances and regulations, now or hereafter in effect
relating to the regulation and protection of human health, safety, the
environment and natural resources. Environmental Laws include but are not
limited to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. ss. 9601 et seq.) ("CERCLA");
the Hazardous Material Transportation Act, as amended (49 U.S.C. ss. 180 et
seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. ss.
6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as amended (15
U.S.C. ss. 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. ss. 7401
et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. ss.
1251 et seq.); and their state and local counterparts or equivalents.
"Environmental Liabilities and Costs" shall mean 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, expert
and consulting and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any Environmental
Action relating to any environmental condition, violation of Environmental
Law, Remedial Actions or a Release of Hazardous Materials from or onto (i)
any property presently or formerly owned by the Borrower or any of its
Subsidiaries or (ii) any facility which received Hazardous Materials
generated by the Borrower or any of its Subsidiaries.
"Environmental Lien" shall mean any Lien securing
Environmental Liabilities and Costs incurred by a Governmental Authority.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar import. References
to sections of ERISA shall be construed also to refer to any successor
sections.
-11-
"ERISA Affiliate" shall mean any (i) corporation which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower, (ii) partnership or other trade
or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Code) with the Borrower, or (iii) member of
the same affiliated service group (within the meaning of Section 414(m) of
the Code) as the Borrower, any corporation described in clause (i) above or
any partnership or trade or business described in clause (ii) above.
"Eurodollar Base Rate" shall mean, with respect to a
Eurodollar Loan for the relevant Interest Period, the rate determined by the
Agent to be the rate at which deposits in Dollars are offered by the Bank to
first-class banks in the interbank eurodollar market where the eurodollar and
foreign currency and exchange operations in respect of its eurodollar loans
are then being conducted at approximately 11:00 a.m., New York City time, two
Business Days prior to the first day of such Interest Period, in the
approximate amount of the relevant Eurodollar Loan and having a maturity
equal to such Interest Period.
"Eurodollar Loan" shall mean a Loan bearing interest at the
Eurodollar Rate.
"Eurodollar Rate" means with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined
for such day in accordance with the following formula (rounded upward to the
nearest 1/100 of 1%):
Eurodollar Base Rate
----------------------------------
1.00 - Reserve Requirements
"Event of Default" shall mean any of the Events of Default
described in Section 9.01 hereof.
"Existing Credit Agreement" shall mean that certain Credit
Agreement dated December 21, 1995 among Borrower, Comerica Bank, NBD Bank and
Comerica Bank as Agent, as the same may have been amended from time to time.
"Fee Letter" shall mean the letter agreement, dated as of the
date hereof, between the Borrower and the Agent obligating the Borrower to
pay certain fees to the Agent in connection with this Agreement, as such
letter agreement may be modified, supplemented or amended from time to time.
"FIFO EBITDA" shall mean, for any period, the consolidated net
income (or net loss) of the Borrower and its consolidated Subsidiaries for
such period as determined in accordance with GAAP, plus to the extent
deducted in arriving at such consolidated net income (or net loss) (i) the
sum of, without duplication the following for the Borrower and its
Consolidated Subsidiaries, (A) depreciation expense, (B) amortization expense
net of negative goodwill amortization, (C) the excess, if any, of gross
interest expense for such period over gross interest income for such period,
in each case determined in accordance with GAAP, (D) total income tax
expense, (E) extraordinary or unusual non-cash losses (provided that any such
extraordinary or unusual losses do not at any future time result in a cash
outlay by the
-12-
Borrower or any Consolidated Subsidiary), which include the cumulative effect
on earnings from the adoption of GAAP pronouncements, and (F) "LIFO charges"
to earnings for such period, less (ii) the sum of (A) "LIFO credits" to
earnings for such period, (B) extraordinary gains for such period, and (C)
income tax credits for such period in each case for the Borrower and its
Consolidated Subsidiaries.
"Finance Charge Credit Card Receivables" means all amounts
billed to the Customers on any Account in the ordinary course of the
Borrower's business in respect of (a) periodic rate finance charge, (b) late
payment fees or returned item fees, (c) annual fees with respect to the
Accounts, (d) returned check charges, and (e) any other fees with respect to
the Accounts designated by the Borrower by notice to the Agent at any time
and from time to time to be included as Finance Charge Credit Card
Receivables.
"Fixed Charge Coverage Ratio" means as of any date for which
the same is to be determined the ratio of (a) FIFO EBITDA for the four fiscal
quarters (taken as a single period) ended such date to (b) Fixed Charges for
such period.
"Fixed Charges" means for any period the sum of for such
period (i) net interest expense (whether such interest is paid or accrued),
(ii) dividends, (iii) principal payments or payments on Indebtedness for
borrowed money, (iv) capital expenditures and (v) total income tax expense.
"GAAP" shall mean generally accepted accounting principles as
such principles shall be in effect in the United States at the relevant date.
"Governmental Authority" shall mean any nation or government,
any federal, state, city, town, municipality, county, local or other
political subdivision thereof or thereto and any department, commission,
board, bureau, instrumentality, agency or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee" of or by any Person shall mean any obligation of
such Person guaranteeing any Indebtedness of any other Person (the "primary
obligor"), directly or indirectly through an agreement (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness
or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Indebtedness, (ii) to purchase property,
securities or services for the purpose of assuring the owner of such
Indebtedness against loss, or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness;
provided, however, that the term Guarantee shall not include endorsements for
collection or deposit, in either case in the ordinary course of business.
"Hazardous Materials" shall mean (i) any element, compound or
chemical that is defined, listed or otherwise classified as a solid waste,
contaminant, pollutant, toxic pollutant, hazardous substance, extremely
hazardous substance, toxic substance, hazardous
-13-
waste, or special waste under any Environmental Law; (ii) petroleum and its
refined fractions, (iii) any polychlorinated biphenyls, (iv) any flammable,
explosive or radioactive materials; and (v) any other raw materials used or
stored by the Borrower, including building components (including but not
limited to asbestos-containing materials) and manufactured products
containing Hazardous Materials.
"Inactive Revolving Credit Commitment" shall mean, with
respect to each Lender, the difference between (a) the amount set forth on
Schedule 1.01(B) to this Agreement opposite such Lender's name under the
heading "Inactive Revolving Credit Commitment" or assigned to such Lender in
accordance with Section 10.13 minus (b) the portion of the Inactive Revolving
Credit Commitment of such Lender which has been activated in accordance with
Section 2.16 hereof, as such amounts may be reduced from time to time
pursuant to the terms of this Agreement and "Inactive Revolving Credit
Commitments" shall, collectively, mean the aggregate amount of the Inactive
Revolving Credit Commitments of all the Lenders, the maximum amount of which
shall not exceed $20,000,000.
"Indebtedness" shall mean as to any Person (i) indebtedness
for borrowed money; (ii) indebtedness for the deferred purchase price of
property or services (other than current payables and accrued liabilities
incurred in the ordinary course of business and payable in accordance with
customary practices); (iii) indebtedness evidenced by bonds, debentures,
notes or other similar instruments (other than performance, surety and appeal
or other similar bonds arising in the ordinary course of business); (iv)
obligations and liabilities secured by a Lien upon property owned by such
Person, whether or not owing by such Person and even though such Person has
not assumed or become liable for the payment thereof; (v) obligations and
liabilities directly or indirectly Guaranteed by such Person; (vi)
obligations or liabilities created or arising under any conditional sales
contract or other title retention agreement with respect to property used
and/or acquired by such Person, even though the rights and remedies of the
lessor, seller and/or lender thereunder are limited to repossession of such
property, other than consignments in the ordinary course of business; (vii)
Capitalized Lease Obligations; (viii) all liabilities in respect of letters
of credit, acceptances and similar obligations created for the account of
such Person, and (ix) net liabilities of such Person under interest rate cap
agreements, interest rate swap agreements, foreign currency exchange
agreements and other hedging agreements or arrangements calculated on a basis
satisfactory to the Agent and in accordance with accepted practice.
"Indemnified Parties" shall have the meaning given that term
in Section 10.06 hereof.
"Insurance Proceeds" means any amounts received pursuant to
any credit life insurance policies, credit disability or unemployment
insurance policies covering any Customer with respect to Credit Card
Receivables under such Customer's Account to the extent such amounts are used
to make payments on such Account.
"Interest Period" shall mean, with respect to any Eurodollar
Loan, the period commencing on the borrowing date for, or the date of any
continuation of or conversion to,
-14-
such Eurodollar Loan, as the case may be, and ending one, two or three months
thereafter as the Borrower may elect in the applicable notice given to the
Agent pursuant to Section 2.03 or Section 2.14, as appropriate; provided that
(i) any Interest Period that would otherwise 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; (ii) any
Interest Period that begins on the last Business Day of a calendar month or
on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period shall end on the last Business Day
of the applicable calendar month; and (iii) no Interest Period for any Loan
shall end after the Termination Date. Interest shall accrue from and include
the first date of an Interest Period, but exclude the last day of such
Interest Period.
"Inventory" shall mean all goods and merchandise of the
Borrower including, but not limited to, all raw materials, work in process,
finished goods, materials and supplies of every nature used or usable in
connection with the shipping, storing, advertising or sale of such goods and
merchandise, whether now owned or hereafter acquired and all such property,
the sale or disposition of which would give rise to accounts receivable or
cash.
"Xxxxxxxx Credit" means Xxxxxxxx Credit Corp., a Michigan
corporation.
"Landlord's Waiver" means a landlord waiver in the form
attached hereto as Exhibit M hereto.
"Last Cycle Closing Date" means, for any fiscal month, the
latest-occurring Cycle Closing Date for all Cardholder Agreements in such
month.
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Governmental Authority.
"L/C Notice" shall have the meaning given to that term in
Section 3.01(b).
"Lease" shall mean any lease of real property to which the
Borrower is a party as lessee or lessor.
"Lenders" shall have the meaning given that term in the
introductory paragraph to this Agreement.
"Letter of Credit" shall have the meaning given to that term
in Section 3.01(a).
"Letter of Credit Application" shall have the meaning given to
that term in Section 3.01(a) hereof.
"Letter of Credit Cash Collateral Account" shall mean the
deposit account maintained at the Bank or such other bank as CIT may select,
which deposit account shall be
-15-
under the sole dominion and control of CIT.
"Letter of Credit Exposure" shall mean, at any time, the sum
at such time of (a) the aggregate amount of all Unreimbursed Draws under
Letters of Credit (whether or not such Letters of Credit are then
outstanding) and (b) the aggregate Undrawn Letter of Credit Availability
under all outstanding Letters of Credit.
"Letter of Credit Fee" shall have the meaning given to that
term in Section 2.08(f) hereof.
"Letter of Credit Guaranty" shall mean the guaranty delivered
by CIT to the Letter of Credit Issuer, guaranteeing the Borrower's
reimbursement obligations under a reimbursement agreement, Letter of Credit
Application or other like document.
"Letter of Credit Issuer" shall mean the issuer of the Letters
of Credit, which shall be the Bank or The Dai-Ichi Kangyo Bank, Limited, New
York Branch.
"Lien" shall mean any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement of any
nature whatsoever, including but not limited to any conditional sale or title
retention arrangement, and any assignment, deposit arrangement or lease
intended as, or having the effect of, security.
"Loan" or "Loans" shall mean any and all loan or loans made by
the Lenders or by the Agent on behalf of the Lenders to the Borrower or made
as a result of charges made to the Borrower's Account, in each case pursuant
to the terms of this Agreement.
"Loan Documents" shall mean this Agreement, the Notes, the
Letters of Credit, each Letter of Credit Application, the Letter of Credit
Guaranty, the Fee Letter, the Environmental Indemnity Agreement, the Cash
Concentration Account Agreements, the Security Documents, each notice letter
and credit card depository account agreement delivered to a Depository Bank
or other financial institution pursuant to Section 5.01(f) hereof and Section
7.13 hereof and the other documents, instruments and agreements referred to
in Section 5.01 hereof, and all other instruments, agreements and documents
from time to time delivered in connection with or otherwise relating to any
Loan Document.
"Loss Amount" for any Due Period means an amount (which shall
not be less than zero) equal to (a) the outstanding principal balance of any
Account or any portion thereof, which has been written off or, consistent
with the Cardholder Guidelines, should have been written off the Borrower's
books as uncollectible during such Due Period, minus (b) the amount of
Recoveries received in such Due Period with respect to Credit Card
Receivables previously charged off as uncollectible.
"Majority Lenders" shall mean, at any time, Lenders whose Pro
Rata Shares aggregate at least sixty-six and two-thirds percent (66-2/3%).
"Material Adverse Effect" shall mean a material adverse effect
upon (i)
-16-
the business, operations, condition (financial or otherwise), properties or
prospects of the Borrower or any of its Subsidiaries, (ii) the ability of the
Borrower or any of its Subsidiaries to perform its obligations hereunder,
under the Fee Letter or under any other Loan Document, (iii) the Lien arising
under the Loan Documents on any Collateral, (iv) the legality, validity or
enforceability of this Agreement or any Loan Document or the Lien arising
under any Loan Document, or (v) the aggregate value of the property included
in the calculation of the Borrowing Base.
"Material Contract" means each contract or agreement to which
the Borrower is a party which is material to the business, operations,
condition (financial or otherwise) performance or properties of such Person.
"Material Lease" means each lease pursuant to which the
Borrower or any of its Subsidiaries are obligated to pay rental obligations
in excess of $100,000 per year.
"Minority Lenders" shall have the meaning given to that term
in Section 10.03(b).
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 3(37) of ERISA and subject to Title IV of ERISA which is,
or within the immediately preceding six (6) years was, contributed to by the
Borrower or any ERISA Affiliate.
"Net Eligible Credit Card Receivables" shall mean the
Outstanding Balance of Eligible Card Receivables of the Borrower after
deducting the aggregate amount of reserves for (A) dilution, (B) roll rate,
(C) deterioration in portfolio yield, (D) charge off and (E) other reserves
required by the Agent in the exercise of its reasonable business judgment.
"Net Book Value of Eligible Inventory" shall mean the Book
Value of Eligible Inventory of the Borrower after deducting the aggregate
amount of reserves for (A) markdowns, (B) shrinkage, (C) lay-a-ways and
pac-a-ways, (D) displays and open stock to the extent such stock is of a type
customarily sold in a package, (E) rejected, defective, damaged, aged,
inactive, clearance, obsolete, discontinued, slow moving or other similar
Inventory, and (F) other reserves required by the Agent in the exercise of
its reasonable business judgment.
"Net Proceeds" shall mean, for any asset sale or disposition,
the amount of cash and other payments received (directly or indirectly) by
the Borrower and/or its Subsidiaries net of the sum of (1) the principal
amount of any Indebtedness secured by any Permitted Lien on such asset (other
than Indebtedness assumed by the purchaser of such asset) which is required
to be, and is, repaid in connection with the sale or other disposition
thereof (other than Indebtedness under this Agreement), (ii) reasonable
expenses incurred by the Borrower and/or its Subsidiaries in connection
therewith, and (iii) transfer taxes paid by the Borrower and/or its
Subsidiaries in connection therewith.
"Notes" shall mean the promissory notes of the Borrower
executed and
-17-
delivered to the Lenders under this Agreement and substantially in the form
of Exhibit A hereto, as modified or restated from time to time and any
promissory note or notes issued in exchange or replacement thereof, including
all extensions, renewals, refinancings or refundings thereof in whole or
part.
"Notice of Borrowing" shall have the meaning given to that
term in Section 2.03(a) hereof.
"Obligations" shall mean all indebtedness, obligations and
liabilities of the Borrower and its Subsidiaries to any Lender or the Agent
incurred under or related to this Agreement, the Notes, the Fee Letter or any
other Loan Document, whether such indebtedness, obligations or liabilities
are direct or indirect, secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance, now
existing or hereafter arising, including without limitation those which are
described in either of the following clauses (i) or (ii):
(i) All indebtedness, obligations (including
Reimbursement Obligations) and liabilities of any
nature whatsoever, including amounts due under Section
10.06 hereof and similar agreements contained in the
other Loan Documents, from time to time arising under
or in connection with or evidenced or secured by this
Agreement, the Notes, the Letters of Credit or any
other Loan Document, including but not limited to the
principal amount of Loans outstanding, together with
interest thereon (including, without limitation, all
interest that accrues after the commencement of any
case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the
Borrower), the amount of the Letter of Credit
Exposure, together with interest thereon and all
expenses, fees and indemnities hereunder or under any
other Loan Document. Without limitation, such amounts
include all Loans and interest thereon and the amount
of all Letter of Credit Exposure whether or not such
Loans were made or any Letters of Credit to which such
Letter of Credit Exposure relates were issued in
compliance with the terms and conditions hereof or in
excess of any Lender's obligation to lend and arrange
for the issuance of Letters of Credit hereunder or any
Lender's obligation to participate therein. If and to
the extent any amounts in any account (including the
Agent Account, the Letter of Credit Cash Collateral
Account, the Depository Accounts, the Cash
Concentration Account or otherwise) constituting
Collateral are applied to Obligations hereunder, and
any Lender or the Agent is subsequently obligated to
return or repay any such amounts to any Person for any
reason, the amount so returned or repaid shall be
deemed a Loan hereunder and shall constitute an
Obligation.
(ii) All indebtedness, obligations and
liabilities from time to time arising under or in
connection with any account from time to time
-18-
maintained by the Borrower or by any Lender or the
Agent pursuant to the terms of this Agreement or any
Loan Document, including but not limited to all
reimbursement obligations, service charges, fees and
interest in connection with any overdrafts or returned
items from time to time arising in connection with any
such account, or arising under or in connection with
any cash management services or other services from
time to time performed by any Lender or the Agent
pursuant to or in connection with this Agreement or
any other Loan Document.
"Obligor" shall have the meaning given that term in the
Security Agreement.
"Office" when used in connection with the Agent shall mean its
office located at 00 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 or at such
other office or offices of the Agent as may be designated in writing from
time to time by the Agent to the Borrower and when used in connection with
the Bank or the Letter of Credit Issuer shall mean the office of such entity
designated in writing from time to time by the Agent to the Borrower. In the
event Chase Manhattan Bank shall be the Bank or the Letter of Credit Issuer,
the Office for such entity shall until further written notice from the Agent
to the Borrower be its office located at 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000.
"Operating Lease Obligations" shall mean all obligations and
indebtedness of the Borrower and its Subsidiaries in respect of leases of
property (whether real, personal or mixed) other than Capitalized Lease
Obligations all as computed in accordance with GAAP consistent with the
Borrower's audited financial statements referred to in Section 6.07(a)
hereof.
"Other Taxes" shall have the meaning given to that term in
Section 2.15.
"Outstanding Balance" of a Credit Card Receivable on any day
means the aggregate principal amount owed by the Customer thereunder on such
day.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Permitted Investments" shall mean (a) direct obligations of
the United States of America or of any agency thereof or obligations
guaranteed as to principal and interest by the United States of America or of
any agency thereof, in either case maturing not more than 90 days from the
date of acquisition thereof by such Person; (b) deposit accounts with or
certificates of deposit and bankers' acceptances issued by any Depository
Bank or any bank or trust company organized under the laws of the United
States of America or any state thereof and having capital, surplus and
undivided profits of at least $500,000,000, maturing not more than 90 days
from the date of acquisition thereof by such Person; (c) commercial paper
rated A-1 or better or P-1 or better by Standard & Poor's Corporation ("S&P")
or Xxxxx'x Investors Services, Inc. ("Moody's"), respectively, maturing not
more than 90 days from the date of acquisition thereof by such Person; and
(d) Investments in money market funds rated
-19-
AAAm or AAAm-G by S&P and Aaa by Moody's.
"Permitted Liens" shall have the meaning given that term in
Section 8.01.
"Person" shall mean an individual, corporation, partnership,
limited liability company, limited liability partnership, trust,
unincorporated association, joint venture, joint-stock company, government
(including political subdivisions), Governmental Authority or agency, or any
other entity.
"Plan" shall mean an employee benefit plan defined in Section
3(3) of ERISA in respect of which the Borrower or any ERISA Affiliate is, or
within the immediately preceding six (6) years was, an "employer" as defined
in Section 3(5) of ERISA.
"Post-Default Rate" shall have the meaning given that term in
Section 2.08(d) hereof.
"Potential Default" shall mean any event or condition which,
with notice or passage of time, or any combination of the foregoing, would
constitute an Event of Default.
"Prime Loan" shall mean a Loan bearing interest at the Regular
Rate.
"Prime Rate" shall mean the interest rate per annum publicly
announced from time to time by the Bank in New York, New York as its Prime
Rate, such interest rate to change automatically from time to time effective
as of the announced effective date of each change in the Prime Rate. The
Prime Rate is not intended to be the lowest rate of interest charged by the
Bank to its borrowers.
"Pro Rata Share" shall mean, with respect to any Lender, a
fraction (expressed as a percentage), the numerator of which shall be the
amount of such Lender's Revolving Credit Commitment and the denominator of
which shall be the aggregate amount of all of the Lenders' Revolving Credit
Commitments, as adjusted from time to time in accordance with the provisions
of Section 10.13 hereof, provided that, if the Revolving Credit Commitments
have been terminated, the numerator shall be the unpaid amount of such
Lender's Loans and its interest in the Letter of Credit Exposure and the
denominator shall be the aggregate amount of all unpaid Loans and Letter of
Credit Exposure.
"Real Property" shall mean any land and/or buildings owned or
leased in their entirety (i.e., under a so-called ground lease) by the
Borrower or any of its Subsidiaries.
"Receivables" shall mean and include all of the Borrower's
accounts, instruments, documents, chattel paper and general intangibles,
whether secured or unsecured, whether now existing or hereafter created or
arising, and whether or not specifically assigned to the Agent for the
ratable benefit of the Lenders. Without limiting the immediately preceding
paragraph, the term "Receivables" shall include Credit Card Receivables and
all rights of the Borrower to payment of the purchase price or other amounts
in connection with a sale thereof
-20-
to Xxxxxxxx Credit.
"Recoveries" means all amounts received (net of out-of-pocket
costs of collection), including Insurance Proceeds, with respect to Credit
Card Receivables which were previously charged off as uncollectible.
"Register" shall have the meaning given that term in Section
10.13(c) hereof.
"Regular Rate" shall mean, for any day, the Prime Rate for
such day plus 0%.
"Reimbursement Obligation" shall mean the obligation of the
Borrower to reimburse CIT or the Lenders for amounts payable by CIT or the
Lenders under a Letter of Credit Guaranty in respect of any payments made
under any Letter of Credit issued by the Letter of Credit Issuer, together
with interest thereon and all fees and expenses related thereto.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, injection, discharging, injecting, escaping, leaching,
dumping or disposing (including abandonment or discarding of barrels,
containers and other closed receptacles containing any hazardous substance,
pollutant or contaminant) of a Hazardous Material into the indoor or outdoor
environment or onto or from any property presently or formerly owned or
operated by the Borrower or any of its Subsidiaries, or at any disposed
facility that received Hazardous Materials generated by the Borrower or any
of its Subsidiaries including the migration of Hazardous Materials through or
in the air, soil, surface water, groundwater or property.
"Remedial Action" shall mean all actions taken to (i) monitor,
assess, evaluate, investigate, clean up, remove, remediate, treat, contain or
in any other way address Hazardous Materials in the indoor or outdoor
environment; (ii) prevent or minimize a Release or threatened Release of
Hazardous Materials so that the Release or threatened Release does not
migrate or endanger or threaten to endanger public health or welfare or the
environment; or (iii) perform pre-remedial studies and investigations and
post-remedial operation and maintenance activities, or any other actions
authorized by 42 U.S.C. 9601.
"Rent Reserves" means with respect to the leased locations so
designated by an asterisk on Schedule 6.18, an aggregate amount equal to
three times the monthly rental obligations (including tax and expense
pass-through obligations) (computed based upon the average monthly rental for
the immediately preceding twelve (12) months) for each of such leased
locations until a Landlord's Waiver is executed and delivered with respect to
such leased location in which event the Rent Reserve for such location shall
be $0.
"Renumbered Account" means an Account with respect to which a
new credit account number has been issued by the Borrower under circumstances
resulting from a lost or stolen credit card, from the transfer from one
Customer to another Customer or from the addition of any Customer and not
requiring standard application and credit evaluation procedures under the
Cardholder Guidelines; and which in any case can be traced or identified by
reference to or by way of the computer files or microfiche or written lists
delivered to the
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Agent as an Account which has been renumbered.
"Reportable Event" shall mean any of the events described in
Section 4043(b) of ERISA (other than events for which the notice requirements
have been waived).
"Requirements of Law" means any law, treaty, rule or
regulation, or determination of an arbitrator or of the United States of
America, any state or other political subdivision thereof or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, whether federal, state or local
(including any usury law, the Federal Truth-in-Lending Act and Regulation Z
of the Board of Governors of the Federal Reserve System, and, when used with
respect to any Person, the certificate of incorporation and by-laws or other
charter or other governing documents of such Person.
"Reserve Requirements" shall mean, for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed
as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board) maintained by a member bank of the
Federal Reserve System. Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve requirements
without benefit of or credit for proration, exceptions or offsets which may
be available from time to time to any Lender or the Affiliate of any Lender
under Regulation D.
"Revolving Credit Commitment" shall mean, with respect to each
Lender, the sum of such Lender's Activated Revolving Credit Commitment and
Inactive Revolving Credit Commitment amounts as set forth on Schedule 1.01(B)
to this Agreement or assigned to such Lender in accordance with Section
10.13, as such amounts may be reduced from time to time pursuant to the terms
of this Agreement, and "Revolving Credit Commitments" shall, collectively,
mean the aggregate amount of the Revolving Credit Commitments of all the
Lenders, the maximum amount of which shall not exceed $100,000,000.
"Security Agreement" shall mean the Security Agreement,
substantially in the form of Exhibit B hereto, made by the Borrower in favor
of the Agent, for the benefit of the Lenders, as modified and supplemented
and in effect from time to time.
"Security Documents" shall mean, collectively, the Security
Agreement, each Subsidiary Guaranty, each Subsidiary Security Agreement and
each Assignment for Security (Trademarks), substantially in the form of
Exhibit A to the Security Agreement, executed and delivered by the Borrower,
and all Uniform Commercial Code financing statements required by this
Agreement and the Security Agreement to be filed with respect to the security
interests in personal property created pursuant to such agreements, and all
other documents and agreements executed and delivered by the Borrower and/or
its Subsidiaries in connection with
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any of the foregoing documents.
"Settlement Period" shall have the meaning set forth in
Section 2.03(f) hereof.
"Solvent" means, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
not less than the total amount of its liabilities, (b) the present fair
salable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its existing
debts as they become absolute and matured, (c) such Person is able to realize
upon its assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature and (e) such Person is not engaged in business
or a transaction, and, is not about to engage in business or a transaction,
for which such Person's property would constitute unreasonably small capital.
"Stated Amount" shall mean, with respect to a Letter of
Credit, the face amount thereof, drawn or undrawn, regardless of the
existence or satisfaction of any conditions or limitations on drawing.
"Statement" means, in respect of any Cardholder Agreement, the
periodic written notice to the related Customer setting forth the previous
balance, payments and credits, finance charge, charges (including sales and
other charges), new balance, and minimum payment.
"Subsidiary" shall mean, with respect to any Person, any
corporation, limited or general partnership, limited liability company,
limited liability partnership, trust, association or other business entity of
which an aggregate of 50% or more of the outstanding stock or other interests
entitled to vote in the election of the board of directors of such
corporation (irrespective of whether, at the time, stock of any other class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency), managers, trustees or other
controlling persons, or an equivalent controlling interest therein, of such
Person is, at the time, directly or indirectly, owned or controlled by such
Person and/or one or more Subsidiaries of such Person.
"Subsidiary Guarantees" shall mean each Subsidiary Guaranty,
substantially in the form of Exhibit D hereto, made by the Subsidiaries of
the Borrower existing on the date hereof in favor of the Agent and the
Lenders and each Subsidiary Guaranty, substantially in the form of Exhibit D
hereto, executed and delivered to the Agent pursuant to Section 7.15 hereof
by each Subsidiary of the Borrower created after the date hereof, in each
case in favor of the Agent and the Lenders, as modified and supplemented and
in effect from time to time.
"Subsidiary Security Agreements" shall mean the Subsidiary
Security Agreements, substantially in the form of Exhibit C hereto made by
the Subsidiaries of the
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Borrower existing on the date hereof in favor of the Agent for the benefit of
the Lenders and each Subsidiary Security Agreement, substantially in the Form
of Exhibit C hereto, executed and delivered to the Agent pursuant to Section
7.15 hereof by each Subsidiary of the Borrower created after the date hereof,
in each case in favor of the Agent for the benefit of the Lenders as modified
and supplemented and in effect from time to time.
"Syndication Date" shall mean the earlier of (i) the date
which is 60 days after the initial Credit Extension and (ii) the date on
which the Agent determines, in its sole discretion (and notifies the Borrower
and the Lenders), that the primary syndication and the resulting addition of
institutions as Lenders pursuant to Section 10.13 has been completed.
"Taxes" shall have the meaning given to that term in Section
2.15.
"Termination Date" shall have the meaning given that term in
Section 2.01(a) hereof.
"Termination Event" shall mean (i) a Reportable Event with
respect to any Benefit Plan; (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Benefit Plan during a plan year in which the Borrower or any
ERISA Affiliate was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA; (iii) the imposition of an obligation on the Borrower or any ERISA
Affiliate under Section 4041 of ERISA to provide affected parties written
notice of intent to terminate a Benefit Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Benefit Plan; or (v) the partial or complete
withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan.
"Undrawn Letter of Credit Availability" shall mean with
respect to a Letter of Credit, at any time, the maximum amount available to
be drawn under such Letter of Credit regardless of the existence or
satisfaction of any conditions or limitations on drawing.
"Unreimbursed Draws" shall mean with respect to a Letter of
Credit, at any time, the aggregate amount at such time of all payments made
by the Letter of Credit Issuer or payments made by CIT or the Lenders under a
Letter of Credit Guaranty in respect of such payments under such Letter of
Credit, to the extent not repaid by the Borrower, provided that Unreimbursed
Draws shall not include any such payments that have been charged to the
Borrower's Account and constitute a Loan pursuant to the terms of this
Agreement.
"Unused Line Fee" shall have the meaning given to that term in
Section 2.08(e).
1.02. Construction. Unless the context of this Agreement
otherwise clearly requires, references to the plural include the singular,
the singular the plural and the part the whole and "or" has the inclusive
meaning represented by the phrase "and/or." References in this Agreement to
"determination" by the Agent include good faith estimates by the Agent (in
the case of quantitative determinations) and good faith beliefs by the Agent
(in the case of qualitative determinations). The words "hereof," "herein,"
"hereunder" and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this
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Agreement. The section and other headings contained in this Agreement and the
Table of Contents preceding this Agreement are for reference purposes only
and shall not control or affect the construction of this Agreement or the
interpretation thereof in any respect. Section, subsection and exhibit
references are to this Agreement unless otherwise specified.
1.03. Accounting Principles. Except as otherwise provided in
this Agreement, all computations and determinations as to accounting or
financial matters and all financial statements to be delivered pursuant to
this Agreement shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), and all accounting or
financial terms shall have the meanings ascribed to such terms by GAAP.
Notwithstanding the definition of GAAP contained in this Agreement, no change
in GAAP that would affect the method or calculation of any of the financial
covenants, restrictions or standards or definitions of terms used herein
shall be given effect in such calculations until such financial covenants,
restrictions or standards or definitions are amended in a manner satisfactory
to the Borrower and the Majority Lenders so as to reflect such change in
GAAP.
ARTICLE II
THE CREDITS
2.01. Revolving Credit Loans. Subject to the terms and
conditions and relying upon the representations and warranties herein set
forth, each Lender severally agrees to make Loans to the Borrower at any time
and from time to time on or after the date hereof and to, but not including,
the Termination Date, in an aggregate principal amount not exceeding at any
one time its Pro Rata Share of the Current Commitment at such time. The
"Current Commitment" at any time shall be equal to the lesser of (A) the
aggregate amount of the Activated Revolving Credit Commitments of all Lenders
and (B) the Borrowing Base. No Lender shall have an obligation to make Loans
hereunder or arrange for the issuance of Letters of Credit on or after the
Termination Date or which, when added to the aggregate amount of all
outstanding and contemporaneous Loans and the Letter of Credit Exposure at
such time, would cause the aggregate amount of all Loans and the Letter of
Credit Exposure at any time to exceed the Current Commitment at such time.
Notwithstanding anything to the contrary, prior to the Syndication Date, all
Loans shall be incurred and maintained as Prime Loans. The "Termination Date"
means the date on which the Revolving Credit Commitment of each Lender
expires in accordance with this Agreement, including without limitation,
Section 2.18 hereof. Within the limits of time and amount set forth in this
Section 2.01, and subject to the provisions of this Agreement, the Borrower
may borrow, repay and reborrow hereunder.
2.02. Notes. The obligation of the Borrower to repay the
unpaid principal amount of the Loans made to it by each Lender and to pay
interest thereon shall be evidenced in part by a Note dated the date of this
Agreement in the principal amount of such Lender's Revolving Credit
Commitment with the blanks appropriately filled in. An executed Note for each
Lender shall be delivered by the Borrower to the Agent on the date of the
execution and delivery of this Agreement.
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2.03. Notice of Borrowing; Making of Loans.
(a) Whenever the Borrower desires to borrow, it shall
provide notice (in the form of Exhibit L attached hereto) to the Agent of
such proposed borrowing (a "Notice of Borrowing"), each such notice, to be
given (i) not later than 12:00 noon (New York City time) on the date of such
proposed borrowing, in the case of a borrowing consisting of Prime Loans, or
(ii) not later than 12:00 noon (New York City time) on the third Business Day
before the date of such borrowing, in the case of a borrowing consisting of
Eurodollar Loans, setting forth: (a) the date, which shall be a Business Day,
on which such borrowing is to occur, (b) whether such Loan is requested to be
a Prime Loan or a Eurodollar Loan and, if a Eurodollar Loan, the Interest
Period requested with respect thereto, (c) the principal amount of the Loan
being borrowed, and (d) the account information where such Loan is to be
received. Such notice shall be given by telephone or in writing by a
Designated Borrowing Officer, provided, that, if requested by the Agent, any
such telephonic notice shall be confirmed in writing by delivery to the
Agent, on or before the date on which such Loan is to be made, of a written
notice substantially in the form of Exhibit L hereto, containing the original
or facsimile signature of a Designated Borrowing Officer. Except for a Notice
of Borrowing when the Agent will fund the related Loan pursuant to Section
2.03(e) hereof, the Agent shall provide each Lender with prompt notice of
each Notice of Borrowing. Except as otherwise provided in Section 2.03(e), on
the date specified in such notice, each Lender shall, subject to the terms
and conditions of this Agreement, make its Pro Rata Share of such Loan in
immediately available funds by wire transfer to the Agent at its Office not
later than 1:30 p.m. (Chicago, Illinois time). Unless the Agent determines
that any applicable conditions in Section 5.02 have not been satisfied, the
Agent shall make the funds so received from the Lenders available to the
Borrower not later than 2:30 p.m. (Chicago, Illinois time), on the date
specified in such notice in immediately available funds by (i) depositing
such proceeds in the Disbursement Account if the Disbursement Account is
located at the Bank and (ii) initiating a wire transfer if the Disbursement
Account is not located at the Bank.
(b) The Agent and each Lender shall be entitled to
rely conclusively on each Designated Borrowing Officer's authority to request
a Loan on behalf of the Borrower until the Agent receives written notice to
the contrary. The Agent and the Lenders shall have no duty to verify the
authenticity of the signature appearing on any written Notice of Borrowing
and, with respect to an oral request for a Loan, the Agent and the Lenders
shall have no duty to verify the identity of any Person representing himself
as a Designated Borrowing Officer.
(c) The Agent and the Lenders shall not incur any
liability to the Borrower in acting upon any telephonic notice referred to
above which the Agent and the Lenders believe in good faith to have been
given by a Designated Borrowing Officer or for otherwise acting in good faith
under this Section 2.03 and, upon the funding of a Loan by the Lenders (or by
the Agent on behalf of the Lenders) in accordance with this Agreement
pursuant to any such telephonic notice, the Borrower shall have effected a
Loan hereunder.
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(d) Each Notice of Borrowing pursuant to this Section
2.03 shall be irrevocable and the Borrower shall be bound to make a borrowing
in accordance therewith. Each Prime Loan shall be in a minimum amount of
$1,000,000 and in multiples of $100,000 if in excess thereof, and each
Eurodollar Loan shall be in a minimum amount of $2,000,000 and in multiples
of $1,000,000 if in excess thereof, provided that the Borrower shall not be
entitled to request any Loan that, if made, would result in an aggregate of
more than five (5) separate Eurodollar Loans of any Lender being outstanding
hereunder at any one time.
(e) (i) Except as otherwise provided in this
subsection 2.03(e), all Loans under this Agreement shall be made by the
Lenders simultaneously and proportionately to their Pro Rata Shares, it being
understood that no Lender shall be responsible for any default by any other
Lender in that other Lender's obligation to make a Loan requested hereunder
nor shall the Revolving Credit Commitment of any Lender be increased or
decreased as a result of the default by any other Lender in that other
Lender's obligation to make a Loan requested hereunder.
(ii) Notwithstanding any other provision of this
Agreement, and in order to reduce the number of fund transfers among the
Borrower, the Lenders and the Agent, the Borrower, the Lenders and the Agent
agree that the Agent may (but shall not be obligated to), and the Borrower
and the Lenders hereby irrevocably authorize the Agent to, fund, on behalf of
the Lenders, Loans pursuant to Section 2.01, subject to the procedures for
settlement set forth in subsection 2.03(f); provided, however, that (a) the
Agent shall in no event fund such Loans if the Agent shall have received
written notice from the Majority Lenders on the Business Day prior to the day
of the proposed Loan that one or more of the conditions precedent contained
in Section 5.02 will not be satisfied on the day of the proposed Loan, and
(b) the Agent shall not otherwise be required to determine that, or take
notice whether, the conditions precedent in Section 5.02 have been satisfied.
(iii) Unless (A) the Agent has notified the
Lenders that the Agent, on behalf of the Lenders, will fund a particular Loan
pursuant to subsection 2.03(e)(ii), or (B) the Agent shall have been notified
by any Lender on the Business Day prior to the day of a proposed Loan that
such Lender does not intend to make available to the Agent such Lender's Pro
Rata Share of the Loan requested on such day, the Agent may assume that such
Lender has made such amount available to the Agent on such day and the Agent,
in its sole discretion, may, but shall not be obligated to, cause a
corresponding amount to be made available to the Borrower on such day. If the
Agent makes such corresponding amount available to the Borrower and such
corresponding amount is not in fact made available to the Agent by such
Lender, the Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from the
date such payment was due until the date such amount is paid to the Agent, at
the customary rate set by the Agent for the correction of errors among banks
for three Business Days and thereafter at the Regular Rate. During the period
in which such Lender has not paid such corresponding amount to the Agent,
notwithstanding anything to the contrary contained in this Agreement or any
other Loan Document, the amount so advanced by the Agent to the Borrower
shall, for all purposes hereof, be a Loan made by the Agent for its own
account. Upon any such failure by
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a Lender to pay the Agent, the Agent shall promptly thereafter notify the
Borrower of such failure and the Borrower shall immediately pay such
corresponding amount to the Agent for its own account.
(iv) Nothing in this subsection 2.03(e)
shall be deemed to relieve any Lender from its obligation to fulfill its
Revolving Credit Commitment hereunder or to prejudice any rights that the
Agent or the Borrower may have against any Lender as a result of any
default by such Lender hereunder.
(f) (i) With respect to all periods for which the
Agent has funded Loans pursuant to subsection 2.03(e), within 7 days after
the last day of each calendar month, or such shorter period as it may from
time to time select (any such month or shorter period being herein called a
"Settlement Period"), the Agent shall notify each Lender of the average daily
unpaid principal amount of the Loans outstanding during such Settlement
Period. In the event that such amount is greater than the average daily
unpaid principal amount of the Loans outstanding during the Settlement Period
immediately preceding such Settlement Period (or, if there has been no
preceding Settlement Period, the amount of the Loans made on the date of such
Lender's initial funding), each Lender shall promptly make available to the
Agent its Pro Rata Share of the difference in immediately available funds. In
the event that such amount is less than such average daily unpaid principal
amount, the Agent shall promptly pay over to each other Lender its Pro Rata
Share of the difference in immediately available funds. In addition, if the
Agent shall so request at any time when a Potential Default or an Event of
Default shall have occurred and be continuing, or any other event shall have
occurred as a result of which the Agent shall determine that it is desirable
to present claims against the Borrower for repayment, each Lender shall
promptly remit to the Agent or, as the case may be, the Agent shall promptly
remit to each Lender, sufficient funds to adjust the interests of the Lenders
in the then outstanding Loans to such an extent that, after giving effect to
such adjustment, each Lender's interest in the then outstanding Loans will be
equal to its Pro Rata Share thereof. The obligations of each Lender under
this subsection 2.03(f) shall be absolute and unconditional. Each Lender
shall only be entitled to receive interest on its Pro Rata Share of the Loans
which have been funded by such Lender.
(ii) In the event that any Lender fails to make
any payment required to be made by it pursuant to subsection 2.03(f)(i), the
Agent shall be entitled to recover such corresponding amount on demand from
such Lender together with interest thereon, for each day from the date such
payment was due until the date such amount is paid to the Agent, at the
customary rate set by the Agent for the correction of errors among banks for
three Business Days and thereafter at the Regular Rate. During the period in
which such Lender has not paid such corresponding amount to the Agent,
notwithstanding anything to the contrary contained in this Agreement or any
other Loan Document, the amount so advanced by the Agent to the Borrower
shall, for all purposes hereof, be a Loan made by the Agent for its own
account. Upon any such failure by a Lender to pay the Agent, the Agent shall
promptly thereafter notify the Borrower of such failure and the Borrower
shall immediately pay such corresponding amount to the Agent for its own
account. Nothing in this subsection 2.03(f)(ii) shall be deemed to relieve
any Lender from its obligation to fulfill its Revolving Credit Commitment
hereunder or to prejudice any rights that the Borrower or the Agent may have
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against any Lender as a result of any default by such Lender hereunder.
2.04. Reduction of Commitments; Mandatory Prepayment;
Optional Prepayment
(a) Reduction of the Commitments. The Borrower may at
any time or from time to time and without penalty or premium reduce the
Revolving Credit Commitments of the Lenders to an amount (which may be zero)
not less than the sum of the unpaid principal amount of all Loans then
outstanding plus the principal amount of all Loans not yet made as to which
notice has been given by the Borrower under Section 2.03 hereof plus the
Letter of Credit Exposure at such time plus the Stated Amount of all Letters
of Credit not yet issued as to which a request has been made unless the
request is withdrawn and the Letter of Credit is not issued by the Letter of
Credit Issuer under Section 3.01 hereof. Any reduction shall be in an amount
which is an integral multiple of $10,000,000. Reduction of the Revolving
Credit Commitments of the Lenders shall be made by providing not less than
two Business Days' written notice (which notice shall be irrevocable) to such
effect to the Agent (which notice the Agent shall promptly transmit to each
Lender). Reductions of the Revolving Credit Commitments of the Lenders are
irrevocable and may not be reinstated. Each such reduction shall reduce the
Revolving Credit Commitment of each Lender proportionately in accordance with
its Pro Rata Share. Each such reduction shall first reduce the Inactive
Revolving Credit Commitments and then the Activated Revolving Credit
Commitments.
(b) Mandatory Prepayment. (i) Exceeding Current
Commitment. If at any time the Current Commitment is less than the aggregate
unpaid principal amount of the Loans then outstanding plus the Letter of
Credit Exposure at such time, the Borrower shall prepay an amount of the
Loans not less than the amount of such difference or, if the Loans then
outstanding are less than the amount of such difference, provide cash
collateral to the Agent in an amount equal to 105% of such excess, which cash
collateral shall be deposited and held in the Letter of Credit Cash
Collateral Account until such time as such excess no longer exists. Any such
prepayment will not otherwise reduce the Revolving Credit Commitments of the
Lenders. Concurrently with any notice of reduction of the Revolving Credit
Commitments of the Lenders, the Borrower shall give notice to the Agent of
any mandatory prepayment which notice shall specify a prepayment date no
later than the effective date of such reduction of the Revolving Credit
Commitments of the Lenders.
(i) Asset Sales. Simultaneously with the
consummation of any sale or disposition of assets permitted under Section
8.04(b) hereof, whether by the Borrower or its Subsidiaries, the Borrower
shall prepay the Loans in an aggregate principal amount equal to 100% of the
Net Proceeds of such sale or disposition.
(ii) Proceeds of Financings Under Certain
Circumstances. To the extent that the Borrower has used more than $3,000,000
of the proceeds of Loans made to it hereunder to prepay the Comerica Mortgage
Loan, the Borrower shall prepay the Loans in an aggregate principal amount
equal to the amount of prepayments in excess of $3,000,000 from the proceeds
of any Indebtedness (or refinancing thereof) incurred by the Borrower after
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the date hereof, such prepayments to be due and payable simultaneously with
the closings of any such financings or refinancings. This section shall not
apply to payments of regularly scheduled principal payments on the Comerica
Mortgage Loan in accordance with the terms applicable thereto as in effect on
the date hereof. Nothing herein contained shall be construed to permit the
Borrower to use more than $6,000,000 of the proceeds of the Loans for
prepayments on the Comerica Mortgage Loan in violation of Section 6.22
hereof.
(iii) Other Mandatory Prepayments. The Agent
shall on each Business Day apply all funds deposited in the Agent Account to
the payment, in whole or in part, of the Obligations outstanding.
(c) Optional Prepayment. The Borrower may at any
time or from time to time prepay, in whole or in part, any or all Loans
then outstanding. Any partial prepayment of a Eurodollar Loan shall not
reduce the aggregate principal amount of such Eurodollar Loan to less than
$2,000,000 and in multiples of $1,000,000 if in excess thereof.
(d) Prepayment Penalty. All prepayments of Loans under
this Section 2.04 shall be without premium or penalty, except that any
prepayment of Eurodollar Loans shall be subject to the provisions of Section
2.12 hereof.
2.05. Interest Rate.
(a) Each Prime Loan shall bear interest at a rate per
annum for each day until paid equal to the Regular Rate for such day.
(b) Each Eurodollar Loan shall bear interest at a rate
per annum equal to the Eurodollar Rate plus the Applicable Eurodollar Margin
for the Interest Period in effect for such Eurodollar Loan.
2.06. Interest Payment Dates. The Borrower shall pay interest
on the unpaid principal amount of each Loan from the date of such Loan until
such principal amount shall be paid in full, which interest shall be payable
(i) if such Loan is a Prime Loan, monthly in arrears on the first day of each
month, commencing April 1, 1997, and (ii) if such Loan is a Eurodollar Loan,
on the last day of the Interest Period of such Eurodollar Loan. After
maturity of any principal amount of any Loan (by acceleration, at scheduled
maturity or otherwise), interest on such amount shall be due and payable on
demand.
2.07. Amortization. To the extent not due and payable earlier
pursuant to the terms of this Agreement, the entire unpaid principal amount
of each of the Loans shall be due and payable on the Termination Date.
2.08. Payments and Fees.
(a) Time, Place and Manner. All payments and
prepayments to be made in respect of principal, interest, fees or other
amounts due from the Borrower hereunder, under the Fee Letter, the Notes or
any other Loan Document shall be payable at or before
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12:00 noon, Chicago, Illinois time, on the day when due without presentment,
demand, protest or notice of any kind, all of which are hereby expressly
waived. Such payments shall be made to the Agent for the account of the
Agent, CIT or the Lenders, as the case may be, at the Agent Account in
Dollars in funds immediately available at the Bank's Office without setoff,
counterclaim or other deduction of any nature. The Agent shall maintain a
separate loan account (the "Borrower's Account") on its books in the name of
the Borrower in which the Borrower will be charged with Loans made by the
Agent or the Lenders to the Borrower hereunder and with any other
Obligations. The Borrower and the Lenders hereby authorize the Agent to, and
the Agent may, from time to time charge the Borrower's Account with any
interest, fees, expenses and other Obligations that are due and payable under
this Agreement or any Loan Document. The Borrower and the Lenders confirm
that any charges which the Agent may so make to the Borrower's Account as
herein provided will be made as an accommodation to the Borrower and solely
at the Agent's discretion and shall constitute a Loan to the Borrower funded
by the Agent on behalf of the Lenders and subject to subsections 2.03(e) and
2.03(f) of this Agreement. Each of the Lenders and the Borrower agrees that
the Agent shall have the right to make such charges regardless of whether any
Event of Default or Potential Default shall have occurred and be continuing
or whether any of the conditions precedent in Section 5.02 have been
satisfied. The Borrower's Account will be credited upon receipt of "good
funds" in the Agent Account with all amounts actually received by the Agent
from the Borrower or others for the account of the Borrower. Interest on all
Loans and all fees that accrue on a per annum basis shall be computed on the
basis of the actual number of days elapsed in the period during which
interest or such fee accrues and a year of 360 days. In computing interest on
any Loan, the date of the making of such Loan shall be included and the date
of payment shall be excluded; provided, however, that if a Loan is repaid on
the same day in which it is made, one day's interest shall be paid on such
Loan.
(b) Periodic Statements. The Agent shall provide the
Lenders and the Borrower promptly after the end of each calendar month a
summary statement (in the form from time to time used by the Agent) of (A)
the opening and closing daily balances in the Borrower's Account during such
month, (B) the amounts and dates of all Loans made during such month, (C) the
amounts and dates of all payments on account of the Loans made during such
month and each Lender's interest in the Loans, (D) the amount of interest
accrued on the Loans during such month, (E) any Letters of Credit issued by
the Letter of Credit Issuer during such month, specifying the Stated Amount
thereof, (F) the amount of charges to the Borrower's Account or Loans to be
made during such month to reimburse CIT, the Lenders or the Letter of Credit
Issuer for drawings made under Letters of Credit or payments made by CIT or
the Lenders under the Letter of Credit Guaranty, and (G) the amount and
nature of any charges to the Borrower's Account made during such month on
account of interest, fees and expenses and other Obligations. All entries on
any such statement shall, 30 days after the same is sent, be presumed to be
correct and shall constitute prima facie evidence of the information
contained in such statement, subject to the Borrower's and each Lender's
express right to rebut such presumption by conclusively demonstrating the
existence of any error on the part of the Agent.
(c) Apportionment of Payments. Except as otherwise
provided in
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this subsection, aggregate principal and interest payments shall be
apportioned among all outstanding Loans to which such payments relate and
payments of the Unused Line Fee and Letter of Credit Fee required to be paid
by the Borrower to the Lenders under subsections 2.08(e) and (f) shall, as
applicable, be apportioned ratably among the Lenders, in each case according
to their Pro Rata Shares. All payments shall be remitted to the Agent and all
such payments and any other amounts, including, without limitation, proceeds
of Collateral received by the Agent from or on behalf of the Borrower shall
be applied subject to the provisions of this Agreement first, to pay
principal of and interest on any Loans funded by the Agent on behalf of the
Lenders and any fees, expense reimbursements or indemnities then due to the
Agent from the Borrower; second, to pay any fees, expense reimbursements or
indemnities then due to the Lenders or the Letter of Credit Issuer hereunder;
third, to pay interest due in respect of Loans and Unreimbursed Draws under
Letters of Credit; and fourth, to pay, prepay or provide cash collateral in
respect of principal of Loans and Letter of Credit Exposure. The Agent shall
promptly distribute to each Lender at its primary address set forth on the
appropriate signature page hereof, or at such other address as such Lender
may designate in writing, such funds as it may be entitled to receive. The
foregoing apportionment of payments is solely for the purpose of determining
the obligations of the Borrower hereunder and, notwithstanding such
apportionment, any Lender may on its books and records allocate payments
received by it in a manner different from that contemplated hereby. No such
different allocation shall alter the rights and obligations of the Borrower
under this Agreement determined in accordance with the apportionments
contemplated by this Section 2.08(c). To the extent that the Borrower makes a
payment or payments to the Agent or the Agent receives any payment or other
amount, which payment(s) or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause then, to
the extent of such payment or proceeds received, the Obligations or part
thereof intended to be satisfied shall be revived and continue in full force
and effect, as if such payment or proceeds had not been received by the
Agent.
(d) Interest Upon Events of Default. To the extent
permitted by law, after there shall have occurred and so long as there is
continuing an Event of Default pursuant to Section 9.01, all principal,
interest, fees, indemnities or any other Obligations of the Borrower
hereunder, under the Fee Letter or under any Note or any other Loan Document
(and including interest accrued under this subsection 2.08(d)) shall compound
on a daily basis as provided in this subsection 2.08(d) and shall bear
interest for each day until paid (before and after judgment), payable on
demand, at a rate per annum (the "Post Default Rate") of 3% above the Prime
Rate for such day, such interest rate to change automatically from time to
time effective as of the announced effective date of each change in the Prime
Rate.
(e) Unused Line Fee. From and after the Closing Date
until the Termination Date, the Borrower shall pay to the Agent, for the
account of each Lender in accordance with such Lender's Pro Rata Share, an
unused line fee (the "Unused Line Fee") accruing at the rate of one-fourth of
one percent (1/4%) per annum, on the excess, if any, of the aggregate
Activated Revolving Credit Commitments over the sum of the Loans and Letter
of Credit Exposure outstanding from time to time. All Unused Line Fees shall
be payable
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monthly in arrears on the first day of each month commencing April 1, 1997.
(f) Letter of Credit Fees. From and after the Closing
Date until the Termination Date, the Borrower shall pay to the Agent, for the
account of each Lender in accordance with such Lender's Pro Rata Share, a
letter of credit fee (the "Letter of Credit Fee") (i) in the case of standby
Letters of Credit, a Letter of Credit Fee accruing at the rate of one and
one-fourth percent (1-1/4%) per annum on the average daily Undrawn Letter of
Credit Availability of all standby Letters of Credit, payable monthly in
arrears on the first day of each month commencing April 1, 1997 and (ii) in
the case of documentary letters of credit, a Letter of Credit Fee in an
amount equal to one and one-fourth percent (1-1/4%) of the Undrawn Letter of
Credit Availability of each documentary Letter of Credit, payable upon
issuance of each such Letter of Credit. The Borrower shall also pay the
customary letter of credit fees and charges of CIT and the Letter of Credit
Issuer for the administration, issuance, amendment and processing of any
Letters of Credit issued by the Letter of Credit Issuer. Promptly following
the Agent's receipt of any Letter of Credit Fees described above, the Agent
shall pay to each Lender its Pro Rata Share of the amount of the Letter of
Credit Fees received by the Agent.
(g) Fees. The Borrower shall pay to the Agent the fees
set forth in the Fee Letter at the times set forth in the Fee Letter. All
fees required to be paid to the Agent pursuant to the Fee Letter, this
Agreement and any other Loan Document shall be paid to the Agent for its own
account as required therein. All fees under this Agreement, the Fee Letter
and the other Loan Documents are non-refundable under all circumstances.
2.09. Use of Proceeds. The Borrower hereby covenants,
represents and warrants that the proceeds of the Loans made to it will be
used solely to refinance the indebtedness of the Borrower under the Existing
Credit Agreement and to fund working capital in the ordinary course of the
Borrower's business and, except as otherwise prohibited by the terms of this
Agreement and the other Loan Documents, for other general corporate purposes
(including, without limitation, payments and, subject to Sections 2.04(b) and
6.22 hereof, prepayments on the Comerica Mortgage Loan).
2.10. Eurodollar Rate Not Determinable; Illegality or
Impropriety.
(a) In the event, and on each occasion, that on or
before the day on which the Eurodollar Rate is to be determined for a
borrowing that is to include Eurodollar Loans, the Agent has determined in
good faith that, or has been advised by the Bank that, the Eurodollar Rate
cannot be determined for any reason or the Eurodollar Rate will not
adequately and fairly reflect the cost of maintaining Eurodollar Loans or
Dollar deposits in the principal amount of the applicable Eurodollar Loans
are not available in the interbank eurodollar market where the eurodollar and
foreign currency and exchange operations in respect of the Bank's eurodollar
loans are then being conducted, the Agent shall, as soon as practicable
thereafter, give written notice of such determination to the Borrower and the
other Lenders. In the event of any such determination, any request by the
Borrower for a Eurodollar Loan pursuant to Section 2.03 shall, until the
Agent shall have advised the Borrower and the
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other Lenders that the circumstances giving rise to such notice no longer
exist, be deemed to be a request for a Prime Loan. Each determination by the
Agent hereunder shall be conclusive and binding absent manifest error.
(b) In the event that it shall be unlawful or improper
for any Lender to make, maintain or fund any Eurodollar Loan as contemplated
by this Agreement, then such Lender shall forthwith give notice thereof to
the Agent and the Borrower describing such illegality or impropriety in
reasonable detail. Effective immediately upon the giving of such notice, the
obligation of such Lender to make Eurodollar Loans shall be suspended for the
duration of such illegality or impropriety and, if and when such illegality
or impropriety ceases to exist, such suspension shall cease, and such Lender
shall notify the Agent and the Borrower. If any such change shall make it
unlawful or improper for any Lender to maintain any outstanding Eurodollar
Loan as a Eurodollar Loan, such Lender shall, upon the happening of such
event, notify the Agent and the Borrower, and the Borrower shall immediately,
or if permitted by applicable law, rule, regulation, order, decree,
interpretation, request or directive, no later than the date permitted
thereby, convert each such Eurodollar Loan into a Prime Loan, without any
prepayment premium or penalty except as provided in Section 2.12.
2.11. Reserve Requirements; Capital Adequacy Circumstances.
(a) Notwithstanding any other provision herein, if any
change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall impose any tax on or change the basis of taxation of payments to
the Letter of Credit Issuer or any Lender or any Affiliate of a Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or of any
amounts payable hereunder (other than taxes imposed on the overall net income
of the Letter of Credit Issuer or such Lender or such Affiliate by the United
States of America or any jurisdiction in which the Letter of Credit Issuer or
such Lender or such Affiliate has its principal office or by any political
subdivision or taxing authority therein), or shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of or credit extended by the Letter of
Credit Issuer or such Lender or Affiliate of such Lender (except any such
reserve requirement that is reflected in Reserve Requirements) or shall
impose on the Letter of Credit Issuer or such Lender or such Affiliate any
other condition affecting this Agreement or any Eurodollar Loans made by such
Lender or any Letter of Credit, and the result of any of the foregoing shall
be to increase the cost to the Letter of Credit Issuer or such Lender of
making or maintaining any Eurodollar Loan or issuing or participating in any
Letter of Credit or to reduce the amount of any sum received or receivable by
the Letter of Credit Issuer or such Lender hereunder (whether of principal,
interest or otherwise) in respect thereof by an amount deemed by the Letter
of Credit Issuer or such Lender to be material, then the Borrower shall pay
to the Letter of Credit Issuer or such Lender such additional amount or
amounts as will compensate the Letter of Credit Issuer or such Lender for
such additional costs incurred or reduction suffered. Any amount or amounts
payable by the Borrower to the Letter of Credit Issuer or any Lender in
accordance with the provisions of this Section 2.11(a) shall be paid by the
Borrower to the Letter of Credit Issuer
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or such Lender within ten (10) days after receipt by the Borrower from the
Letter of Credit Issuer or such Lender of a statement setting forth in
reasonable detail the amount or amounts due and the basis for the
determination from time to time of such amount or amounts, which statement
shall be conclusive and binding absent manifest error.
(b) If the Letter of Credit Issuer or any Lender shall
have reasonably determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation
or administration thereof, or compliance by the Letter of Credit Issuer or by
such Lender (or any lending office of such Lender) or by any Affiliate of
such Lender, as the case may be, with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has the effect of reducing the
rate of return on the Letter of Credit Issuer's or such Lender's capital or
on the capital of such Lender's Affiliate, as the case may be, as a
consequence of the Letter of Credit Issuer's obligations or such Lender's
obligations under this Agreement and the Loan Documents to a level below that
which the Letter of Credit Issuer or such Lender or such Lender's Affiliate,
as the case may be, could have achieved but for such adoption, change or
compliance (taking into consideration the Letter of Credit Issuer's or such
Lender's policies or such Lender's Affiliate's policies, as the case may be,
with respect to capital adequacy) by an amount deemed by the Letter of Credit
Issuer or such Lender to be material, then, from time to time, the Borrower
shall reimburse the Letter of Credit Issuer or such Lender for such
reduction. Any amount or amounts payable by the Borrower to the Letter of
Credit Issuer or any Lender in accordance with the provisions of this Section
2.11(b) shall be paid by the Borrower to the Letter of Credit Issuer or such
Lender within ten (10) days after receipt by the Borrower from the Letter of
Credit Issuer or such Lender of a statement setting forth (i) in reasonable
detail the amount or amounts due, (ii) the basis for the determination from
time to time of such amount or amounts and (iii) that such amount(s) have
been determined in good faith, which statement shall be conclusive and
binding absent manifest error.
(c) The Letter of Credit Issuer or any Lender may
demand compensation for any increased costs or reduction in amounts received
or receivable or reduction in return on capital with respect to any period;
provided that the Letter of Credit Issuer or such Lender shall provide to the
Borrower a certificate setting forth the basis on which such demand is made.
The protection of this Section 2.11 shall be available to the Letter of
Credit Issuer or any Lender regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, guideline or
other change or condition which shall have occurred or been imposed.
2.12. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender actually sustains or incurs as a
consequence of (a) any failure by the Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article V, (b) any
failure by the Borrower to borrow any Eurodollar Loan hereunder or to convert
any Prime Loan into a Eurodollar Loan after notice of such borrowing or
conversion has been given pursuant to Section 2.03 or Section 2.14, as the
case may be,
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(c) any payment, prepayment (mandatory or optional) or conversion of a
Eurodollar Loan required by any provision of this Agreement or otherwise made
on a date other than the last day of the Interest Period applicable thereto,
(d) any default in payment or prepayment of the principal amount of any
Eurodollar Loan or any part thereof or interest accrued thereon, as and when
due and payable (at the due date thereof, by notice of prepayment or
otherwise), or (e) the occurrence of any Event of Default, including, in each
such case, any loss (including, without limitation, loss of margin) or
reasonable expense sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain such Loan or any part
thereof as a Eurodollar Loan. Such loss or reasonable expense shall include
but not be limited to an amount equal to the excess, if any, as reasonably
determined by such Lender, of (i) its cost of obtaining the funds for the
Loan being paid, prepaid or converted or not borrowed or converted (based on
the Eurodollar Rate applicable thereto) for the period from the date of such
payment, prepayment, conversion or failure to borrow or convert on the last
day of the Interest Period for such Loan (or, in the case of a failure to
borrow or convert, the last day of the Interest Period for such Loan that
would have commenced on the date of such failure to borrow or convert) over
(ii) the amount of interest (as reasonably determined by such Lender) that
would be realized by such Lender in re-employing the funds so paid, prepaid
or converted or not borrowed or converted for such Interest Period. A
certificate of any Lender setting forth in reasonable detail any amount or
amounts that such Lender is entitled to receive pursuant to this Section 2.12
and the basis for the determination of such amount or amounts shall be
delivered to the Borrower and shall be conclusive and binding absent manifest
error.
2.13. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, obtain payment (voluntary or involuntary) in respect of any Obligation
as a result of which the aggregate unpaid amount of the Obligations owing to
it shall be proportionately less than the aggregate unpaid amount of the
Obligations owing to any other Lender, it shall simultaneously purchase from
such other Lender at face value a participation in the Obligations owing to
such other Lender, so that the aggregate unpaid amount of the Obligations and
participations in Obligations held by each Lender shall be in the same
proportion to the aggregate unpaid amount of all Obligations owing to such
Lender prior to such exercise of banker's lien, setoff or counterclaim or
other event was to the aggregate unpaid amount of all Obligations outstanding
prior to such exercise of banker's lien, setoff or counterclaim or other
event; provided that if any such purchase or purchases or adjustments shall
be made pursuant to this Section 2.13 and the payment giving rise thereto
shall thereafter be recovered, such purchase or purchases or adjustments
shall be rescinded to the extent of such recovery and the purchase price or
prices or adjustments restored without interest. The Borrower expressly
consents to the foregoing arrangements and agrees that any Lender holding a
participation in an Obligation deemed to have been so purchased may exercise
any and all rights of banker's lien, setoff or counterclaim with respect to
any and all moneys owing by the Borrower to such Lender by reason thereof as
fully as if such Lender had made a loan directly to the Borrower in the
amount of such participation.
2.14. Continuation and Conversion of Loans. Subject to Section
2.03 and
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Section 2.10 hereof, the Borrower shall have the right, at any time, (i) on
three (3) Business Days' prior irrevocable written or telecopy notice to the
Agent, to continue any Eurodollar Loan or any portion thereof into a
subsequent Interest Period or, after the Syndication Date, to convert any
Prime Loan or portion thereof into a Eurodollar Loan, or (ii) on one (1)
Business Day's prior irrevocable written or telecopy notice to the Agent, to
convert any Eurodollar Loan or portion thereof into a Prime Loan, subject to
the following:
(A) in the case of a continuation of a
Eurodollar Loan or portion thereof as such or a conversion of
a Prime Loan or portion thereof into a Eurodollar Loan (1) no
Event of Default or Potential Default shall have occurred and
be continuing at the time of such continuation or conversion
and (2) Eurodollar Loans shall be limited in number as
provided in Section 2.03(d);
(B) in the case of a continuation or conversion
of less than all Loans, the aggregate principal amount of any
Eurodollar Loan continued or converted shall not be less than
$2,000,000 and in multiples of $1,000,000 if in excess
thereof;
(C) each conversion shall be effected by the
Lenders by applying the proceeds of the new Loan to the Loan
(or portion thereof) being converted; and, in the case of a
conversion from a Eurodollar Loan to a Prime Loan, accrued
interest on the Eurodollar Loan (or portion thereof) being
converted shall be paid by the Borrower at the time of
conversion;
(D) if the new Loan made in respect of a
conversion shall be a Eurodollar Loan, the first Interest
Period with respect thereto shall commence on the date of
conversion;
(E) no portion of any Loan shall be continued
or converted to a Eurodollar Loan with an Interest Period
ending later than the Termination Date; and
(F) if any conversion of a Eurodollar Loan
shall be effected on a day other than the last day of an
Interest Period, the Borrower shall reimburse each Lender on
demand for any loss incurred or to be incurred by it in the
reemployment of the funds released by such conversion as
provided in Section 2.12 hereof.
In the event that the Borrower shall not give notice to continue any
Eurodollar Loan into a subsequent Interest Period, such Loan (unless repaid)
shall automatically become a Prime Loan at the expiration of the then current
Interest Period.
2.15. Taxes. (a) All payments made by the Borrower hereunder,
under the Notes or under any Loan Document will be made without setoff,
counterclaim, deduction or other defense. All such payments shall be made
free and clear of and without deduction for
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any present or future income, franchise, sales, use, excise, stamp or other
taxes, levies, imposts, deductions, charges, fees, withholdings, restrictions
or conditions of any nature now or hereafter imposed, levied, collected,
withheld or assessed by any jurisdiction (whether pursuant to United States
Federal, state, local or foreign law) or by any political subdivision or
taxing authority thereof or therein, and all interest, penalties or similar
liabilities, excluding taxes on the overall net income of the Lenders or the
Letter of Credit Issuer (such nonexcluded taxes are hereinafter collectively
referred to as the "Taxes"). If the Borrower shall be required by law to
deduct or to withhold any Taxes from or in respect of any amount payable
hereunder, (i) the amount so payable shall be increased to the extent
necessary so that after making all required deductions and withholdings
(including Taxes on amounts payable to the Lenders or the Letter of Credit
Issuer pursuant to this sentence) the Lenders or the Letter of Credit Issuer
receive an amount equal to the sum they would have received had no such
deductions or withholdings been made, (ii) the Borrower shall make such
deductions or withholdings, and (iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxation authority in accordance with
applicable law. Whenever any Taxes are payable by the Borrower, as promptly
as possible thereafter, the Borrower shall send the Lenders, the Letter of
Credit Issuer and the Agent an official receipt showing payment. In addition,
the Borrower agrees to pay any present or future taxes, charges or similar
levies (excluding taxes on the overall net income of the Lenders or the
Letter of Credit Issuer) which arise from any payment made hereunder or from
the execution, delivery, performance, recordation or filing of, or otherwise
with respect to, this Agreement, the Notes, the Letters of Credit or any
other Loan Document (hereinafter referred to as "Other Taxes").
(b) The Borrower will indemnify the Lenders and the
Letter of Credit Issuer for the amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.15) paid by any Lender or the Letter of
Credit Issuer and any liability (including penalties, interest and expenses
for nonpayment, late payment or otherwise) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be paid within 30 days from the date on
which such Lender or such Letter of Credit Issuer makes written demand.
(c) Each Lender which is a foreign person (i.e., a
Person other than a United States Person for United States Federal income tax
purposes) hereby agrees that:
(i) it shall, no later than the Closing Date (or,
in the case of a Lender which becomes a party hereto pursuant
to Section 10.13 hereof after the Closing Date, the date upon
which such Lender becomes a party hereto) deliver to the
Borrower through the Agent:
(A) two accurate and complete signed
originals of Form 4224, or
(B) two accurate and complete signed
originals of Form 1001,
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in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the account
of its lending installation under this Agreement free from withholding of
United States Federal income tax;
(ii) if at any time such Lender changes its
lending installation or installations or selects an additional
lending installation it shall, at the same time or reasonably
promptly thereafter, deliver to the Borrower through the Agent
in replacement for, or in addition to, the forms previously
delivered by it hereunder:
(A) if such changed or additional
lending installation is located in the United
States, two accurate and complete signed
originals of Form 4224, or
(B) otherwise, two accurate and
complete signed originals of Form 1001,
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the account
of such changed or additional lending installation under this Agreement free
from withholding of United States Federal income tax; and
(iii) it shall, promptly upon the Borrower's
reasonable request to that effect, deliver to the Borrower
such other forms or similar documentation as may be required
from time to time by any applicable law, treaty, rule or
regulation in order to establish such Lender's tax status for
withholding purposes.
(d) If the Borrower fails to perform its obligations
under this Section 2.15, the Borrower shall indemnify the Agent, the Lenders
and the Letter of Credit Issuer for any incremental taxes, interest or
penalties that may become payable as a result of any such failure.
2.16. Activation of Inactive Revolving Credit Commitments.
Provided that no Potential Default or Event of Default shall have occurred
and be continuing, on any Business Day prior to the Termination Date, the
Borrower may, from time to time, upon three (3) Business Days' prior written
notice to the Agent (which shall promptly inform the Lenders), activate all
or any part (but if in part, then in a minimum aggregate amount of $5,000,000
and in integral multiples of $5,000,000) of the Inactive Revolving Credit
Commitments, such activation to be on a pro rata basis for all the Lenders in
accord with the amounts of their Inactive Revolving Credit Commitments.
2.17. Eurodollar Margin Adjustments. The initial Applicable
Eurodollar Margin specified in the definition of such term shall be subject
to quarterly adjustment (commencing with the fiscal quarter ending January,
1998) as follows:
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If as of the last day Applicable
of any fiscal quarter: Eurodollar Margin shall be:
LEVEL 1:
Fixed Charge Coverage Ratio is
less than 1.75 to 1.00 2.25%
LEVEL II:
Fixed Charge Coverage Ratio is
greater than or equal to
1.75 to 1.00 but less than
2.00 to 1.00 2.125%
LEVEL III:
Fixed Charge Coverage Ratio is
greater than or equal to
2.00 to 1.00 2.00%
On the date (each such date being hereinafter referred to as a
"Margin Redetermination Date") occurring fourteen (14) days after receipt by
the Agent of the financial statements and compliance certificate called for
by Section 7.01 hereof for the applicable quarter, the Agent shall determine
the Fixed Charge Coverage Ratio for the applicable period based on the
information contained in such financial statements and compliance certificate
and shall promptly notify the Borrower and the Lenders of such determination
and of any change in the Applicable Eurodollar Margin resulting therefrom,
any change in the Applicable Eurodollar Margin to be effective as of the
applicable Margin Redetermination Date, with such new Applicable Eurodollar
Margin to continue in effect until the next Margin Redetermination Date in
accordance with the foregoing. Each determination of the Fixed Charge
Coverage Ratio and Applicable Eurodollar Margin by the Agent in accordance
with this Section shall be conclusive and binding on the Borrower and the
Lenders absent manifest error.
Termination. Except as otherwise provided herein, the Borrower
or any Lender acting through the Agent may terminate this Agreement and the
Revolving Credit Commitments only as of the initial or any subsequent
Anniversary Date and then only by giving the other ninety (90) days prior
written notice of termination. This Agreement, unless terminated as herein
and in Section 9.02 provided, shall automatically continue from Anniversary
Date to Anniversary Date. Notwithstanding the foregoing, the Borrower may
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terminate this Agreement and the Revolving Credit Commitments at any time
prior to any applicable Anniversary Date upon ninety (90) days' prior written
notice to the Agent and the Lenders, provided that the Borrower pays to the
Agent for the pro rata benefit of the Lenders immediately upon demand, an
Early Termination Fee and amounts due the Lenders under Section 2.12 hereof,
if any. All Obligations shall become due and payable as of any termination
hereunder or under Section 9 hereof and, pending a final accounting, the
Agent and the Lenders may withhold any balances in the Company's accounts
(unless supplied with an indemnity satisfactory to the Agent to cover all of
the Company Obligations whether absolute or contingent. All of the Agent's
and Lenders' rights, liens and security interests shall continue after any
termination until all Obligations have been paid and satisfied in full. There
shall not be any partial terminations of the Revolving Credit Commitments
pursuant to this Section 2.18.
ARTICLE III
LETTERS OF CREDIT
3.01. Letters of Credit.
(a) General. In order to assist the Borrower in
establishing or opening documentary and standby letters of credit, which
shall not have expiration dates that exceed one year from the date of
issuance (the "Letters of Credit") with the Letter of Credit Issuer, the
Borrower has requested CIT to join in the applications for such Letters of
Credit, and/or guarantee payment or performance of such Letters of Credit and
any drafts or acceptances thereunder through the issuance of a Letter of
Credit Guaranty, thereby lending CIT's credit to the Borrower, and CIT has
agreed to do so. These arrangements shall be handled by CIT subject to the
terms and conditions set forth below. CIT shall have no obligation to arrange
for the issuance of Letters of Credit on or after the Termination Date or
which, when added to the aggregate amount of all outstanding and
contemporaneous Loans and the Letter of Credit Exposure at such time, would
cause the amount of all Loans and the Letter of Credit Exposure at any time
to exceed the Current Commitment at such time. In addition, CIT shall not be
required to be the issuer of any Letter of Credit. The Borrower will be the
account party for any application for a Letter of Credit, which shall be
substantially in the form of Exhibit E hereto or on a computer transmission
system approved by CIT and the Letter of Credit Issuer or such other written
form or computer transmission system as may from time to time be approved by
the Letter of Credit Issuer and CIT, and shall be duly completed in a manner
acceptable to CIT, together with such other certificates, agreements,
documents and other papers and information as the Letter of Credit Issuer or
CIT may request (the "Letter of Credit Application"). In the event of any
conflict between the terms of the Letter of Credit Application and this
Agreement, the terms of this Agreement shall control.
(i) The aggregate Letter of Credit Exposure shall
not exceed
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$5,000,000. In addition, changes to or modifications of the Letters of Credit
by the Borrower and/or the Letter of Credit Issuer or of the terms and
conditions thereof shall in all respects be subject to the prior approval of
CIT in the exercise of its sole discretion, provided, however, that (x) the
expiry date of all Letters of Credit shall be no later than five (5) Business
Days prior to the Termination Date unless on or prior to five (5) Business
Days prior to the Termination Date such Letters of Credit shall be cash
collateralized in an amount equal to at least 105% of the Stated Amount of
such Letters of Credit, (y) the Letters of Credit and all documentation in
connection therewith shall be in form and substance satisfactory to CIT and
the Letter of Credit Issuer, and (z) Letters of Credit shall not be issued
for the benefit of domestic trade creditors in connection with the purchase
of Inventory by the Borrower.
(ii) The Agent shall have the right, without
notice to the Borrower, to charge the Borrower's Account with the amount of
any and all indebtedness, liability or obligation of any kind (including
indemnification for breakage costs, capital adequacy and reserve requirement
charges) incurred by the Agent, CIT or the Lenders under the Letter of Credit
Guaranty at the earlier of (x) payment by CIT or the Lenders under the Letter
of Credit Guaranty, or (y) with respect to any Letter of Credit which is not
cash collateralized as provided in this Agreement, the occurrence of an Event
of Default. Any amount charged to the Borrower's Account shall be deemed a
Loan hereunder made by the Lenders to the Borrower, funded by the Agent on
behalf of the Lenders and subject to subsections 2.03(e) and (f) of this
Agreement. Any charges, fees, commissions, costs and expenses charged to CIT
for the account of the Borrower by the Letter of Credit Issuer in connection
with or arising out of Letters of Credit issued pursuant to this Agreement or
out of transactions relating thereto will be charged to the Borrower's
Account in full when charged to or paid by CIT and any such charges by CIT to
the Borrower's Account shall be conclusive and binding on the Borrower and
the Lenders absent manifest error. Each of the Lenders and the Borrower agree
that the Agent shall have the right to make such charges regardless of
whether any Event of Default or Potential Default shall have occurred and be
continuing or whether any of the conditions precedent in Section 5.02 have
been satisfied.
(iii) The Borrower agrees to unconditionally
indemnify the Agent, CIT and each Lender and to hold the Agent, CIT and each
Lender harmless from any and all loss, claim or liability incurred by the
Agent, CIT or any such Lender arising from any transactions or occurrences
relating to Letters of Credit established or opened for the Borrower's
account and any drafts or acceptances thereunder, and all Obligations
thereunder, including any such loss or claim due to any action taken by the
Letter of Credit Issuer, other than for any such loss, claim or liability
arising out of the gross negligence or willful misconduct of the Agent, CIT
or any Lender as determined by a final judgment of a court of competent
jurisdiction. The Borrower further agrees to hold the Agent, CIT and each
Lender harmless from any errors or omission, negligence or misconduct by the
Letter of Credit Issuer. The Borrower's unconditional obligation to the
Agent, CIT and each Lender hereunder shall not be modified or diminished for
any reason or in any manner whatsoever, other than as a result of the
Agent's, CIT's or such Lender's gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction. The
Borrower agrees that any charges incurred by CIT for the Borrower's account
by the Letter of Credit Issuer shall be
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conclusive and binding on the Borrower absent manifest error and may be
charged to the Borrower's Account.
(iv) None of the Agent, CIT, the Letter of Credit
Issuer or any of the Lenders shall be responsible for the existence,
character, quality, quantity, condition, packing, value or delivery of the
goods purporting to be represented by any documents; any difference or
variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that expressed in the documents; the validity,
sufficiency or genuineness of any documents or of any endorsements thereof
even if such documents should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged; the time, place, manner or order
in which shipment is made; partial or incomplete shipments, or failure or
omission to ship any or all of the goods referred to in the Letters of Credit
or documents; any deviation from instructions; delay, default, or fraud by
the shipper and/or anyone else in connection with any such goods or the
shipping thereof; or any breach of contract between the shipper or vendors
and the Borrower. Furthermore, without being limited by the foregoing, none
of the Agent, CIT, the Letter of Credit Issuer or any of the Lenders shall be
responsible for any act or omission with respect to or in connection with any
goods covered by Letters of Credit.
(v) The Borrower agrees that any action taken by
the Agent, CIT, the Letter of Credit Issuer or any Lender, if taken in good
faith, under or in connection with the Letters of Credit, the guarantees, the
drafts or acceptances, or the goods purported to be represented by any
documents, shall be binding on the Borrower (with respect to the Letter of
Credit Issuer, the Agent, CIT and the Lenders) and shall not put the Agent,
CIT, the Letter of Credit Issuer or the Lenders in any resulting liability to
the Borrower. In furtherance thereof, CIT shall have the full right and
authority to clear and resolve any questions of non-compliance of documents;
to give any instructions as to acceptance or rejection of any documents or
goods; to execute any and all steamship or airways guaranties (and
applications therefore), indemnities or delivery orders; to grant any
extensions of the maturity of, time of payment for, or time of presentation
of, any drafts, acceptances, or documents; and to agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Letters of Credit, drafts or
acceptances; all in CIT's sole name, and the Letter of Credit Issuer shall be
entitled to comply with and honor any and all such documents or instruments
executed by or received solely from CIT, all without any notice to or any
consent from the Borrower.
(vi) Without CIT's express consent in writing or
through a computer transmission, the Borrower agrees: (x) not to execute any
applications for steamship or airway guaranties, indemnities or delivery
orders; to grant any extensions of the maturity of, time of payment for, or
time of presentation of, any drafts, acceptances or documents; or to agree to
any amendments, renewals, extensions, modifications, changes or cancellations
of any of the terms or conditions of any of the applications, Letters of
Credit, drafts or acceptances; and (y) after the occurrence and during the
continuance of an Event of Default, not to (A) clear and resolve any
questions of non-compliance of documents, or (B) give any instructions as to
acceptances or rejection of any documents or goods.
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(vii) The Borrower agrees that any necessary and
material import, export or other license or certificates for the import or
handling of Inventory will have been promptly procured; all foreign and
domestic governmental laws and regulations in regard to the shipment and
importation of Inventory or the financing thereof will have been promptly and
fully complied with, and any certificates in that regard that CIT may at any
time reasonably request will be promptly furnished. In this connection, the
Borrower represents and warrants that all shipments made under any such
Letters of Credit are in compliance with the laws and regulations of the
countries in which the shipments originate and terminate, and are not
prohibited by any such laws and regulations. As between the Borrower, on the
one hand, and the Agent CIT, the Lenders and the Letter of Credit Issuer, on
the other hand, the Borrower assumes all risk, liability and responsibility
for, and agrees to pay and discharge, all present and future local, state,
federal or foreign taxes, duties, or levies. As between the Borrower, on the
one hand, and the Agent, CIT, the Lender and the Letter of Credit Issuer, on
the other hand, any embargo, restriction, laws, customs or regulations of any
country, state, city, or other political subdivision, where such Inventory is
or may be located, or wherein payments are to be made, or wherein drafts may
be drawn, negotiated, accepted, or paid, shall be solely the Borrower's risk,
liability and responsibility.
(viii) Upon any payments made to the Letter of
Credit Issuer under the Letter of Credit Guaranty, CIT or the Lenders, as the
case may be, shall, without prejudice to its rights under this Agreement
(including that such unreimbursed amounts shall constitute Loans hereunder),
acquire by subrogation, any rights, remedies, duties or obligations granted
or undertaken by the Borrower to the Letter of Credit Issuer in any Letter of
Credit Application, any standing agreement relating to Letters of Credit or
otherwise, all of which shall be deemed to have been granted to CIT, the
Agent and the Lenders and apply in all respect to CIT, the Agent and the
Lenders and shall be in addition to any rights, remedies, duties or
obligations contained herein.
(ix) In the event that the Borrower is required
to provide cash collateral for any Letter of Credit, the Borrower shall
deposit such cash collateral in the Letter of Credit Cash Collateral Account,
which cash collateral shall be held in the Letter of Credit Cash Collateral
Account until all Obligations have been paid in full in cash; provided, that,
when the Borrower elects, and is not required to provide cash collateral for
a Letter of Credit, the cash collateral for such Letter of Credit shall be
returned to the Borrower if at such time (A) an Event of Default or Potential
Default has not occurred and is not continuing and (B) no amounts are
available to be drawn on such Letter of Credit and all Unreimbursed Draws
have been paid in full.
(b) Request for Issuance. The Borrower may from time
to time, upon notice (an "L/C Notice") not later than 12:00 noon, Chicago,
Illinois time, at least three Business Days in advance, request CIT to assist
the Borrower in establishing or opening a Letter of Credit by delivering to
the Agent, with a copy to the Letter of Credit Issuer, a Letter of Credit
Application, together with any necessary related documents. CIT shall not
provide support, pursuant to the Letter of Credit Guaranty, if the Agent
shall have received written notice from the Majority Lenders on the Business
Day immediately preceding the proposed
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issuance day for such Letter of Credit that one or more of the conditions
precedent in Section 5.02 will not have been satisfied on such date, and
neither CIT nor the Agent shall otherwise be required to determine that, or
take notice whether, the conditions precedent set forth in Section 5.02 have
been satisfied.
3.02. Participations.
(a) Purchase of Participations. Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit in accordance
with the procedures set forth in Section 3.01, each Lender (other than CIT)
shall be deemed to have irrevocably and unconditionally purchased and
received from CIT, without recourse or warranty, an undivided interest and
participation, to the extent of such Lender's Pro Rata Share, in all
obligations of CIT with respect to such Letter of Credit (including, without
limitation, all Undrawn Letter of Credit Availability and Reimbursement
Obligations of the Borrower with respect thereto pursuant to the Letter of
Credit Guaranty or otherwise).
(b) Sharing of Letter of Credit Payments. In the event
that CIT makes any payment in respect of the Letter of Credit Guaranty and
the Borrower shall not have repaid such amount to the Agent for the account
of CIT, the Agent shall charge the Borrower's Account in the amount of the
Reimbursement Obligation, in accordance with Section 3.01(a)(ii).
(c) Obligations Irrevocable. The obligations of a
Lender to make payments to the Agent for the account of the Agent or CIT with
respect to a Letter of Credit shall be irrevocable, not subject to any
qualification or exception whatsoever and shall be made in accordance with,
but not subject to, the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of
this Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense
or other right which the Borrower may have at any time against
a beneficiary named in a Letter of Credit or any transferee of
any Letter of Credit (or any Person for whom any such
transferee may be acting), the Agent, Letter of Credit Issuer,
any Lender, or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including
any underlying transactions between the Borrower or any other
party and the beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other
document presented under the Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security
for the
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performance or observance of any of the terms of any of the
Loan Documents;
(v) any failure by the Agent to provide any
notices required
pursuant to this Agreement relating to Letters of Credit; or
(vi) the occurrence of any Event of Default or
Potential Default.
ARTICLE IV
BORROWING BASE
4.01. Condition of Lending and Assisting in Establishing or
Opening Letters of Credit 4.01. Condition of Lending and Assisting in
Establishing or Opening Letters of Credit. CIT and the other Lenders shall
have no obligation to make a Loan or assist in establishing or opening a
Letter of Credit to the extent that the aggregate unpaid principal amount of
the Loans plus the Letter of Credit Exposure exceeds, or after giving effect
to a requested Credit Extension would exceed, the Current Commitment at such
time.
4.02. Mandatory Prepayment. Concurrently with the delivery of
any Borrowing Base Certificate, the Borrower shall give notice to the Agent
of any mandatory prepayment pursuant to Section 2.04(b)(i), which notice
shall specify a prepayment date no later than the earlier of the date on
which such Borrowing Base Certificate is given and the date on which such
Borrowing Base Certificate is required to be provided to the Lenders.
4.03. Rights and Obligations Unconditional. Without limitation
of any other provision of this Agreement, the rights of the Agent, CIT and
the Lenders and the obligations of the Borrower under this Article IV are
absolute and unconditional, and the Agent, CIT and the Lenders shall not be
deemed to have waived the condition set forth in Section 4.01 hereof or their
right to payment in accordance with Section 4.02 hereof in any circumstance
whatever, including but not limited to circumstances wherein, the Agent or
the Lenders (knowingly or otherwise) make an advance hereunder in excess of
the Borrowing Base.
4.04 Borrowing Base Certificate.
(a) By 12:00 noon, Chicago, Illinois time (i) five (5)
Business Days after the Saturday of each week (and on any other date on which
the Agent reasonably requests), the Borrower shall furnish to the Agent a
certificate (a "Borrowing Base Certificate") substantially in the form
attached hereto as Exhibit F, certified as true and correct by a Designated
Financial Officer, setting forth the Borrowing Base and the other information
required therein as of the Borrower's close of business on the Saturday of
the preceding week, together with such other information with respect to any
asset included in the Borrowing Base as the Agent may request.
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(b) In the event of any dispute about the eligibility
of any asset for inclusion in the Borrowing Base or the valuation thereof,
the Agent's good faith judgment shall control.
(c) The Borrowing Base set forth in a Borrowing Base
Certificate shall be effective from and including the date such Borrowing
Base Certificate is duly received by the Agent to but not including the date
on which a subsequent Borrowing Base Certificate is duly received by the
Agent, unless the Agent disputes the eligibility of any asset for inclusion
in the Borrowing Base or the valuation thereof by notice of such dispute to
the Borrower, in which case the value of such asset shall, at the discretion
of the Borrower, either not be included in the Borrowing Base or be included
in the Borrowing Base with a value reasonably acceptable to the Agent.
(d) Each Borrowing Base Certificate shall be
accompanied by backup schedules showing the derivation thereof and containing
such detail and such other and further information as the Agent may
reasonably request from time to time.
4.05. General Provisions. Notwithstanding anything to the
contrary in this Article IV, in no event shall any single element of value or
asset be counted twice in determining the Borrowing Base.
ARTICLE V
CONDITIONS OF EFFECTIVENESS,
LETTER OF CREDIT ISSUANCE AND LENDING
5.01. Conditions Precedent to Effectiveness. This Agreement
shall become effective as of the Business Day when each of the following
conditions precedent shall have been satisfied and the obligation of any
Lender to make the initial Loan hereunder or the obligation of CIT or any
Lender to assist the Borrower in obtaining the issuance of the initial Letter
of Credit hereunder shall be subject to the satisfaction of the following
conditions precedent:
(a) Payment of Fees, Etc. The Borrower shall have paid all
fees, costs, expenses and taxes then payable by the Borrower including,
without limitation, those due and payable pursuant to Sections 2.08 and 10.06
hereof. The Borrower shall have paid to counsel to the Agent all fees and
other client charges due to such counsel on the Closing Date.
(b) Representations and Warranties; No Event of Default. The
representations and warranties contained in Article VI of this Agreement and
in each other Loan Document and certificate or other writing delivered to the
Agent, the Lenders or the Letter of Credit Issuer pursuant hereto or thereto
or prior to the Closing Date shall be correct
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on and as of the Closing Date as though made on and as of such date; and no
Potential Default or Event of Default shall have occurred and be continuing
on the Closing Date or would result from this Agreement becoming effective in
accordance with its terms.
(c) Legality. The making of the initial Loans and the
issuance of the initial Letter of Credit shall not contravene any law, rule
or regulation applicable to CIT, the Lenders or the Letter of Credit Issuer.
(d) Delivery of Documents. The Agent shall have
received on or before the Closing Date the following, each in form and
substance satisfactory to the Agent and, unless indicated otherwise, dated
the Closing Date:
(i) a Note payable to the order of each Lender,
duly executed by the Borrower;
(ii) the Security Agreement, duly executed by the
Borrower together with an Assignment for Security (Trademarks)
duly executed by the Borrower;
(iii) a Subsidiary Guaranty, duly executed by
each Subsidiary of the Borrower;
(iv) a Subsidiary Security Agreement, duly
executed by each Subsidiary of the Borrower;
(v) evidence satisfactory to the Agent that
appropriate financing statements duly executed by the Borrower
and the Subsidiaries were duly filed in such office or offices
as may be necessary or, in the opinion of the Agent, desirable
to perfect the security interests purported to be created by
the Security Documents and evidence that all necessary filing
fees and taxes or other expenses related to such filings have
been paid in full;
(vi) certified copies of requests for copies or
information on Form UCC-11, listing all effective financing
statements which name the Borrower or any Subsidiary as
debtor, tax Liens and judgment Liens and which are filed in
the offices referred to in paragraph (v) above, together with
copies of such financing statements, none of which, except as
otherwise agreed to in writing by the Agent, shall cover any
of the Collateral;
(vii) a copy of the resolutions adopted by the
Board of Directors of the Borrower and its Subsidiaries,
certified as of the Closing Date by authorized officers
thereof, authorizing (A) in the case of the Borrower, the
borrowings hereunder and the transactions contemplated by the
Loan Documents to which the Borrower or such Subsidiary is or
will be a party, and (B) the execution, delivery and
performance by such Person of each Loan Document
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and the execution and delivery of the other documents to be
delivered by such Person in connection therewith;
(viii) a Termination Agreement with respect to
the Existing Credit Agreement and related documents duly
executed by the Borrower, and the agent and the lenders party
to the Existing Credit Agreement along with terminations of
all UCC financing statements, fixture filings and mortgages,
if any, which name the Borrower or any of its Subsidiaries, as
debtor, and as secured party, and which cover any portion of
the Collateral;
(ix) a certificate of an authorized officer of
the Borrower and its Subsidiaries, certifying the names and
true signatures of the officers of such Person authorized to
sign each Loan Document to which such Person is or will be a
party and the other documents to be executed and delivered by
such Person in connection therewith and in the case of the
Borrower, the names and true signatures of those officers of
the Borrower that are authorized to provide Notices of
Borrowing and all other notices under this Agreement and the
other Loan Documents, together with evidence of the incumbency
of such authorized officers;
(x) a certificate, dated as of a date not more
than 10 Business Days prior to the Closing Date, of the
appropriate official(s) of the states of incorporation and
each state of foreign qualification of the Borrower and its
Subsidiaries, certifying as to the subsistence in good
standing of, and the payment of taxes by, such Person in such
states and listing all charter documents of such Person on
file with such official(s), together with confirmation by
telephone or telecopy on the Closing Date from such
official(s) as to such matters;
(xi) a copy of the charter of the Borrower and
its Subsidiaries certified as of a date not more than 10 days
prior to the Closing Date by the appropriate official(s) of
the state of incorporation of each such Person and as of the
Closing Date by an authorized officer of each such Person;
(xii) a copy of the by-laws of the Borrower and
its Subsidiaries, certified as of the Closing Date by an
authorized officer of each such Person;
(xiii) an opinion of Messrs. Honigman, Miller,
Xxxxxxxx & Xxxx, counsel to the Borrower and its Subsidiaries,
in form and substance satisfactory to the Agent and as to such
other matters as the Agent may reasonably request;
(xiv) a certificate of the Designated Financial
Officer of the Borrower, certifying as to the matters set
forth in subsection (b) of this
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Section 5.01;
(xv) a Borrowing Base Certificate, current as of
the close of business on the Saturday immediately preceding
the Closing Date, certified by the Designated Financial
Officer of the Borrower;
(xvi) a copy of the indenture as in effect on the
date hereof relating to the subordinated indebtedness of the
Borrower described on Schedule 8.02 hereof, certified as true
and correct by the Designated Financial Officer of the
Borrower;
(xvii) copies of each bank credit card agreement
to which the Borrower is a party, certified as true and
correct copies thereof by a Designated Financial Officer of
the Borrower;
(xviii) a certificate of insurance evidencing
insurance on the property of the Borrower and its Subsidiaries
that constitutes Collateral as is required by Section 7.07 of
this Agreement, naming the Agent as additional insured and
loss payee, using a long form loss payee endorsement, for all
insurance maintained by the Borrower and its Subsidiaries; and
(xix) such other agreements, instruments,
approvals, opinions and other documents as the Agent may
reasonably request.
(e) Proceedings; Receipt of Documents. All proceedings
in connection with the transactions contemplated by this Agreement and the
Loan Documents and all documents incidental thereto, shall be satisfactory to
the Agent and its special counsel, and the Agent and such special counsel
shall have received all such information and such counterpart originals or
certified or other copies of such documents, in form and substance reasonably
satisfactory to the Agent, as the Agent or such special counsel may
reasonably request.
(f) Cash Management System. The cash management system
of the Borrower and its Subsidiaries shall be satisfactory to the Agent. The
Borrower shall have delivered to the Agent on or before thirty (30) days from
the date hereof (1) a credit card depository account agreement, substantially
in the form of Exhibit H hereto, duly executed by each credit card servicer
of the Borrower and the Borrower, (2) a Cash Concentration Account Agreement
substantially in the form of Exhibit K hereto, duly executed by each Cash
Concentration Account Bank, and (3) original notice letters, substantially in
the form of Exhibit I hereto, duly executed by the Borrower and acknowledged
by each of the Depository Banks.
(g) Audit. The Agent shall have completed and shall be
satisfied (in its sole discretion) with the results of an audit of the
Inventory, assets and liabilities and books and records of the Borrower and
the Borrower shall have paid all fees and
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expenses payable in connection with such audit.
(h) Appraisal. The Agent shall have received reports
on the Inventory of the Borrower, prepared by Alco Capital Group, Inc. and
The Asset Support Group, which report shall be in form and substance
satisfactory to the Agent.
(i) Lien Priority. The Lien in favor of the Agent
pursuant to the Loan Documents delivered on the Closing Date shall be a valid
and perfected first priority Lien on the Collateral, which shall be subject
to no other Liens except for Permitted Liens.
(j) Compliance. The Agent shall have received evidence
reasonably satisfactory to the Agent of the Borrower's compliance with all
Environmental Laws, ERISA, tax and labor matters.
(k) Legal Restraints/Litigation. On the Closing Date,
there shall be no (1) litigation, investigation or proceeding (judicial or
administrative) pending or threatened against the Borrower or its
Subsidiaries, or their assets, by any agency, division or department of any
county, city, state or federal government arising out of the transactions
contemplated by the Loan Documents, (2) injunction, writ or restraining order
restraining or prohibiting the transactions contemplated by the Loan
Documents, or (3) suit, action, investigation or proceeding (judicial or
administrative) pending or, to the best knowledge of the Borrower, threatened
against the Borrower or its Subsidiaries, or their assets, which, in the
opinion of the Agent, if adversely determined could have a Material Adverse
Effect.
(l) Additional Availability. After giving effect to
all Credit Extensions made on the Closing Date (i) the Availability shall not
be less than $35,000,000 (but assuming for purposes of this paragraph 5.01(1)
that the Activated Revolving Credit Commitments were $100,000,000 on the
Closing Date) and (ii) all liabilities of the Borrower and its Subsidiaries
shall be current in accordance with the Borrower's customary business
practices. The Borrower shall deliver to the Agent a certificate of the
Designated Financial Officer certifying as to the matters set forth in this
paragraph 5.01(l).
5.02. Conditions Precedent to Loans and Letters of Credit. In
addition to the requirements of Section 5.01, the obligation of each Lender
to make any Loan and the obligation of CIT or any Lender to assist the
Borrower in obtaining the issuance of any Letter of Credit is subject to the
fulfillment, in a manner satisfactory to the Agent, of each of the following
conditions precedent:
(a) Payment of Fees, Etc. The Borrower shall have paid
all fees, costs, expenses and taxes then payable by the Borrower pursuant to
Sections 2.08 and 10.06 hereof.
(b) Representations and Warranties; No Event of
Default. The following statements shall be true, and the submission by the
Borrower to the Agent of a Notice of Borrowing with respect to a Loan and the
Borrower's acceptance of the proceeds of
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such Loan, or the submission by the Borrower to the Agent of an L/C Notice
with respect to a Letter of Credit and the issuance of such Letter of Credit
shall be deemed to be a representation and warranty by the Borrower on the
date of such Loan and the date of the issuance of such Letter of Credit that,
(i) the representations and warranties contained in Article VI of this
Agreement and in each other Loan Document and certificate or other writing
delivered to the Agent, the Lenders and the Letter of Credit Issuer pursuant
hereto on or prior to the date of such Loan or Letter of Credit are correct
on and as of such date as though made on and as of such date (except for
representations and warranties which relate to a specific date); and (ii) no
Potential Default or Event of Default has occurred and is continuing or would
result from the making of the Loan to be made on such date or the issuance of
the Letter of Credit to be issued on such date.
(c) Legality. The making of such Loan or the issuance
of such Letter of Credit shall not contravene any law, rule or regulation
applicable to CIT, the Lenders or the Letter of Credit Issuer.
(d) Borrowing Notice. The Agent shall have received a
Notice of Borrowing pursuant to Section 2.03 hereof no later than 12:00 noon
(New York City time) three Business Days prior to the date of the proposed
borrowing with respect to a Eurodollar Loan or on the date of a proposed
borrowing of a Prime Loan or an L/C Notice and a Letter of Credit Application
pursuant to Section 3.01 hereof not later than 12:00 noon (New York City
time) three Business Days prior to the proposed date of issuance of a Letter
of Credit.
(e) Delivery of Documents. The Agent shall have
received such other agreements, instruments, approvals and other documents,
each in form and substance satisfactory to the Agent, as the Agent may
reasonably request.
(f) Proceedings; Receipt of Documents. All proceedings
in connection with the making of such Loan or the issuance of such Letter of
Credit and the other transactions contemplated by this Agreement, and all
documents incidental thereto, shall be satisfactory to the Agent and its
special counsel, and the Agent and such special counsel shall have received
all such information and such counterpart originals or certified or other
copies of such documents, in form and substance satisfactory to the Agent, as
the Agent or such special counsel may reasonably request.
(g) Commitment. The aggregate unpaid principal amount
of the Loans and the Letter of Credit Exposure shall not exceed, and after
giving effect to the requested Credit Extension will not exceed, the Current
Commitment.
Any oral or written request by the Borrower for any Credit Extension
hereunder shall constitute a representation and warranty by the Borrower that
the conditions set forth in this Section 5.02 have been satisfied as of the
date of such request. Failure of the Agent to receive notice from the
Borrower to the contrary before such Credit Extension is made shall
constitute a further representation and warranty by the Borrower that the
conditions set forth in this Section 5.02 have been satisfied as of the date
of such Credit Extension.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Agent and
the Lenders as follows:
6.01. Organization, Good Standing, Etc. Each of the Borrower
and its Subsidiaries (i) is a corporation duly organized, validly existing
and in good standing under the laws of the state of its organization, (ii)
has all requisite power and authority to conduct its business as now
conducted and as presently contemplated and (in the case of the Borrower) to
make the borrowings hereunder and to consummate the transactions contemplated
hereby, and (iii) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned or leased by
it or in which the transaction of its business makes such qualification
necessary.
6.02. Authorization, Etc.. The execution, delivery and
performance by the Borrower and its Subsidiaries of each Loan Document to
which it is a party, (i) have been duly authorized by all necessary corporate
action, (ii) do not and will not contravene its charter or by-laws, any other
applicable law or any contractual restriction binding on or otherwise
affecting it or any of its properties or result in a default under any
agreement or instrument to which the Borrower or any of its Subsidiaries is a
party or by which they or their respective properties may be subject, (iii)
do not and will not result in or require the creation of any Lien (other than
pursuant to any such Loan Document) upon or with respect to any of its
properties, and (iv) do not and will not result in any suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
authorization or approval applicable to its operations or any of its
properties.
6.03. Governmental Approvals. No authorization, consent,
approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any Governmental
Authority is or will be necessary in connection with the execution and
delivery by the Borrower and its Subsidiaries of each Loan Document to which
it is a party, consummation of the transactions therein contemplated,
performance of or compliance with the terms and conditions thereof or to
ensure the legality, validity, enforceability and admissibility in evidence
thereof, except for the filings and recordings in respect of the Liens
created pursuant to the Security Documents.
6.04. Enforceability of Loan Documents. This Agreement is, and
each other Loan Document to which the Borrower is or will be a party, when
delivered hereunder, will be, a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms. Each
Loan Document to which a Subsidiary of the Borrower is or will be a party,
when delivered hereunder, will be a legal, valid and binding obligation of
such Subsidiary, enforceable against such Subsidiary in accordance with its
terms.
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6.05. Subsidiaries. Schedule 6.05 hereto is a complete and
correct description of the name, jurisdiction of incorporation and ownership
of the outstanding capital stock of each Subsidiary of the Borrower in
existence on the Closing Date. All shares of such stock owned by the Borrower
or one or more of its Subsidiaries, as indicated in such Schedule, are owned
free and clear of all Liens. There are no options, warrants or other rights
to acquire shares of capital stock of any Subsidiary of the Borrower.
6.06. Litigation. Except as set forth on Schedule 6.06 hereto,
there is no pending or, to the knowledge of the Borrower, threatened action,
suit or proceeding involving the Borrower or any of its Subsidiaries before
any court or other Governmental Authority or any arbitrator in existence on
the Closing Date. There is no pending or, to the knowledge of the Borrower,
threatened action, suit or proceeding involving the Borrower or any of its
Subsidiaries before any court or other Governmental Authority or any
arbitrator which may have a Material Adverse Effect.
6.07. Financial Condition.
(a) Historical Statements. The Borrower has heretofore
furnished to the Lenders a balance sheet of the Borrower and its Consolidated
Subsidiaries for the fiscal year ended January 25, 1997 and the related
statements of operations and cash flows for the fiscal year then ended, as
certified by a Designated Financial Officer and examined and reported on by
Xxxxxx Xxxxxxxx LLP, independent certified public accountants. Such financial
statements present fairly, in all material respects, the financial condition
of the Borrower as of the end of such fiscal year and the results of its
operations and the cash flows for the fiscal year then ended, all in
conformity with GAAP applied on a basis consistent with that of the preceding
fiscal year. Except as disclosed therein, the Borrower and its Subsidiaries
do not have any material contingent liabilities (including liabilities for
taxes), unusual forward or long term commitments or unrealized or anticipated
losses from unfavorable commitments.
(b) The Borrower has heretofore furnished to the
Lenders projections for the fiscal year ending January, 1998, January, 1999
and January, 2000 and such projections have been prepared in accordance with
the standard set forth in the second sentence of Section 6.17 hereof.
6.08. Compliance with Law, Etc. Each of the Borrower and its
Subsidiaries is not in violation of its charter or by-laws, any law
(including but not limited to violations pertaining to the conduct of its
business or the use, maintenance or operation of the real and personal
properties owned or possessed by it) or any material term of any agreement or
instrument binding on or otherwise affecting it or any of its properties.
6.09. ERISA. Except as disclosed on Schedule 6.09 hereto, (i)
Each Plan is in substantial compliance with ERISA and the Code, (ii) no
Termination Event has occurred nor is reasonably expected to occur with
respect to any Benefit Plan, (iii) the most recent annual report (Form 5500
Series) with respect to each Plan, including Schedule B (Actuarial
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Information) thereto, copies of which have been filed with the Internal
Revenue Service and delivered to the Agent, is complete and correct and
fairly presents the funding status of such Benefit Plan, and since the date
of such report there has been no material adverse change in such funding
status, (iv) no Benefit Plan had an accumulated or waived funding deficiency
or permitted decreases which would create a deficiency in its funding
standard account within the meaning of Section 412 of the Code at any time
during the previous 60 months, and (v) no Lien imposed under the Code or
ERISA exists or is likely to arise on account of any Benefit Plan within the
meaning of Section 412 of the Code. Neither the Borrower nor any of its ERISA
Affiliates has incurred any withdrawal liability under ERISA with respect to
any Multiemployer Plan, and the Borrower is not aware of any facts indicating
that the Borrower or any of its ERISA Affiliates may in the future incur any
such withdrawal liability. Except as required by Section 4980B of the Code,
neither the Borrower nor any of its ERISA Affiliates maintains a welfare plan
(as defined in Section 3(1) of ERISA) which provides benefits or coverage
after a participant's termination of employment. All Plans in existence on
the Closing Date are set forth on Schedule 6.09 hereto.
6.10. Taxes, Etc. All tax returns required to be filed by the
Borrower and any of its Subsidiaries have been properly prepared, executed
and filed. All taxes, assessments, fees and other governmental charges upon
the Borrower and its Subsidiaries or upon any of their respective properties,
income, sales or franchises which are shown thereon as due and payable have
been paid. The reserves and provisions for taxes, if any, on the books of the
Borrower are adequate for all open years and for its current fiscal period.
The Borrower does not know of any proposed additional assessment or basis for
any material assessment for additional taxes (whether or not reserved
against). The federal income tax liabilities of the Borrower and its
Subsidiaries have been finally determined by the Internal Revenue Service, or
the time for audit has expired, for all fiscal periods ending on or prior to
fiscal year ending January, 1993 and all such liabilities (including all
deficiencies assessed following audit) have been satisfied.
6.11. Regulations G, T,U and X.. The Borrower is not and will
not be engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations G, T,
U or X issued by the Board), and no proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
6.12. Nature of Business. Neither the Borrower nor any of its
Subsidiaries is engaged in any business other than operating specialty stores
and business incidental thereto.
6.13. Adverse Agreements, Etc. Neither the Borrower nor any of
its Subsidiaries is a party to any agreement or instrument, or subject to any
charter or other corporate restriction or any judgment, order, regulation,
ruling or other requirement of a court or other Governmental Authority or
regulatory body, which has a Material Adverse Effect, or, to the best
knowledge of the Borrower, is reasonably likely to have a Material Adverse
Effect.
6.14. Holding Company and Investment Company Acts. Neither the
Borrower
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nor any of its Subsidiaries is a (i) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended, or (ii) an "investment company" or an "affiliated person" or
"promoter" of, or "principal underwriter" of or for, an "investment company",
as such terms are defined in the Investment Company Act of 1940, as amended.
6.15. Permits, Etc. The Borrower and its Subsidiaries have all
material permits, licenses, authorizations and approvals required for them
lawfully to own and operate their business.
6.16. Priority; Title. The Liens granted under the Security
Documents constitute and shall at all times constitute perfected, first
priority Liens on the Collateral and the Borrower is the sole and absolute
owner of the Collateral with full right to pledge, sell, consign, transfer
and create a security interest therein. No Person has any right of first
refusal, option or other preferential right to purchase any Collateral. The
Borrower will at its expense forever warrant and, at the Agent's request,
defend the same from any and all claims and demands of any other Person other
than the Permitted Liens. The Borrower will not grant, create or permit to
exist, any Lien upon the Collateral, or any proceeds thereof, in favor or any
other Person other than Permitted Liens. The Borrower and its Subsidiaries
have good and marketable title or a valid leasehold interest in all of their
properties and assets, free and clear of all Liens other than Permitted
Liens.
6.17. Full Disclosure. No representation or warranty made by
the Borrower or its Subsidiaries under this Agreement or any other Loan
Document is false or misleading in any material respect and no Loan Document
or schedule or exhibit thereto and no certificate, report, statement or other
document or information furnished to the Agent or the Lenders in connection
herewith or therewith or with the consummation of the transactions
contemplated hereby and thereby, contains any material misstatement of fact
or omits to state a material fact or any fact necessary to make the
statements contained herein or therein not misleading. To the extent the
Borrower furnishes any projections of the financial position and results of
operations of the Borrower and its Subsidiaries for, or as at the end of,
certain future periods, such projections were believed at the time furnished
to be reasonable, have been or will have been prepared on a reasonable basis
and in good faith by the Borrower, and have been or will be based on
assumptions believed by the Borrower to be reasonable at the time made and
upon the best information then reasonably available to the Borrower. There is
no fact materially adversely affecting the condition or operations, financial
or otherwise, or the business or prospects of the Borrower or any of its
Subsidiaries which has not been set forth in a footnote included in the
financial statements referred to in Section 6.07(a) hereof or a Schedule
hereto.
6.18. Operating Lease Obligations. On the Closing Date, the
Borrower and its Subsidiaries do not have any Operating Lease Obligations
other than (i) with respect to Material Leases, the Operating Lease
Obligations set forth in Schedule 6.18 hereto and (ii) other Operating Lease
Obligations not exceeding $250,000 per year in aggregate amount.
6.19. Environmental Matters. Except as disclosed in Schedule
6.19 hereto (i) none of the operations of the Borrower or its Subsidiaries
are the subject of any federal,
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state or local investigation to determine whether any Remedial Action is
needed to address the presence or disposal of Hazardous Materials, Release or
threatened Release, (ii) the Borrower and its Subsidiaries do not have any
contingent liability in connection with any Release, (iii) the operations of
the Borrower and its Subsidiaries are in compliance with all Environmental
Laws; (iv) there has been no Release at any of the properties owned or
operated by the Borrower, its Subsidiaries or any predecessor in interest or
title, or at any disposal or treatment facility which received Hazardous
Materials generated by the Borrower, its Subsidiaries or any predecessor in
interest or title which is reasonably likely to result in Environmental
Liabilities and Costs of $100,000 or more; (v) no Environmental Actions have
been asserted against the Borrower, its Subsidiaries or any predecessor in
interest or title nor does the Borrower or its Subsidiaries have knowledge or
notice of any threatened or pending Environmental Action against the
Borrower, its Subsidiaries or any predecessor in interest or title which, if
adversely determined, is reasonably likely to result in Environmental
Liabilities and Costs of $100,000 or more; (vi) the Borrower and its
Subsidiaries have obtained all permits, approvals, authorizations and
licenses required by Environmental Laws necessary for their operations, and
all such permits, approvals, authorizations and licenses are in effect and
the Borrower and its Subsidiaries are in compliance with all terms and
conditions of such permits, approvals, authorizations and licenses, (vii) no
Environmental Actions have been asserted against any facilities that may have
received Hazardous Materials generated by the Borrower, its Subsidiaries or
any predecessor in interest or title which, if adversely determined, is
reasonably likely to result in Environmental Liabilities and Costs of
$100,000 or more.
6.20. Schedules. All of the information which is required to
be scheduled to this Agreement is set forth on the Schedules attached hereto,
is correct and accurate and does not omit to state any information material
thereto.
6.21. Insurance. The Borrower and its Subsidiaries keep their
properties adequately insured and maintain (i) insurance to such extent and
against such risks, including fire, as is customary with companies in the
same or similar businesses, (ii) workmen's compensation insurance in the
amount required by applicable law, (iii) public liability insurance in the
amount customary with companies in the same or similar business against
claims for personal injury or death on properties owned, occupied or
controlled by it, and (iv) such other insurance as may be required by law or
by the Loan Documents. Schedule 6.21 hereto sets forth a list of all
insurance maintained by the Borrower and its Subsidiaries on the Closing
Date. All such insurance complies with the requirements of the Security
Documents.
6.22. Use of Proceeds. The proceeds of the Loans shall be used
as provided in Section 2.09, provided however, it is expressly understood and
agreed that the maximum amount of Loan proceeds hereunder which may be used
by the Borrower to prepay the Comerica Mortgage Loan is limited to
$6,000,000. The Letters of Credit will be used to support insurance policies
and customs bonds and to purchase Inventory in the ordinary course of the
Borrower's business.
6.23. Security Documents. The Security Documents create and
grant to the
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Agent, for the benefit of the Lenders, a legal, valid and perfected first
priority Lien on the Collateral, subject to no other Liens except for
Permitted Liens.
6.24. Financial Accounting Practices, Etc..
(a) The Borrower and its Subsidiaries make and keep
books, records and accounts which, in reasonable detail, accurately and
fairly reflect their respective transactions and dispositions of their
respective assets and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization,
(ii) transactions are recorded as necessary (A) to permit preparation of
financial statements in conformity with GAAP except as previously disclosed
to the Agent and (B) to maintain accountability for assets, and (iii) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(b) The Borrower and its Subsidiaries maintain a
system of internal procedures and controls sufficient to provide reasonable
assurance that the information required to be set forth in each Borrowing
Base Certificate (including, without limitation, information relating to the
identification of assets which are Inventory and the valuation thereof) is
accurate.
6.25. No Material Adverse Effect. Since January 25, 1997 there
has not occurred any Material Adverse Effect or any event which could have a
Material Adverse Effect.
6.26. Real Property; Leases.
(a) Schedule 6.26 hereto sets forth a complete and
accurate description and list as of the Closing Date of the location, by
state and street address, of all real property owned and leased by the
Borrower and its Subsidiaries, together with, in the case of real property
that is owned, a statement as to whether such real property is the subject of
a contract of sale (and, if so, a statement as to the status of such sale).
(b) As of the Closing Date, the Borrower and its
Subsidiaries have valid leasehold interests in the Leases described in
Schedule 6.26 hereto. None of the Leases is subject to any Lien except Liens
granted to the Agent pursuant to the Security Documents and Permitted Liens.
Each of the Borrower and its Subsidiaries have duly effected all recordings,
filings and other actions necessary to perfect the Borrower's and its
Subsidiaries' right, title and interest in and to all real property owned by
them. Schedule 6.26 hereto sets forth with respect to each Material Lease,
the commencement date, termination date, renewal options (if any) and annual
base rents. Each such Lease is valid and enforceable in accordance with its
terms in all material respects and is in full force and effect. The Borrower
will and will cause its Subsidiaries to, make true and complete copies of
each such Lease and all documents affecting the rights or obligations of the
Borrower or any of its Subsidiaries thereunder including, without limitation,
all non-disturbance and recognition agreements,
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estoppel certificates, subordination agreements, attornment agreements and
agreements regarding the term or rental of any of the Leases available for
inspection by the Agent or its representatives or agents upon request by the
Agent or any Lender. No consent or approval of any landlord or other third
party in connection with the Leases is necessary for the Borrower or any of
its Subsidiaries to enter into and execute the Loan Documents, except as set
forth on Schedule 6.26 hereto. Neither the Borrower nor any of its
Subsidiaries or, to the knowledge of the Borrower or any of its Subsidiaries,
any other party to any Lease is in default of its obligations thereunder and
neither the Borrower nor any of its Subsidiaries nor any other party to any
such Lease has at any time delivered or received any notice of default which
remains uncured under any such Lease and, as of the Closing Date, no event
has occurred which, with the giving of notice or the passage of time, or
both, would constitute a default under any such Lease, except for defaults
the consequence of which in the aggregate would have no Material Adverse
Effect.
(c) All permits required to have been issued to the
Borrower or its Subsidiaries with respect to the real property owned or
leased by the Borrower or any of its Subsidiaries to enable such property to
be lawfully occupied and used for all of the purposes for which it is
currently occupied and used (separate and apart from any other properties),
have been lawfully issued and are in full force and effect, other than such
permits which, if not obtained, would not have a Material Adverse Effect, and
all such real property complies with all applicable legal and insurance
requirements.
(d) Neither the Borrower nor any of its Subsidiaries
has received any notice, nor has any knowledge, of any pending, threatened or
contemplated condemnation proceeding affecting any real property owned or
leased by the Borrower or any Subsidiary.
(e) No portion of any real property owned or leased by
the Borrower or any of its Subsidiaries has suffered any damage by fire or
other casualty loss which has not heretofore been completely repaired and
restored to its condition existing prior to such casualty or which if not so
repaired or restored is not reasonably likely to result in a Material Adverse
Effect. Except for the Borrower's store located in Sarasota, Florida or as
disclosed to the Agent in writing, no portion of any of the real property
owned or leased by the Borrower or any of its Subsidiaries is located in a
special flood hazard area as designated by any Governmental Authority and
with respect to any of such real property which is located in such special
flood hazard area, the Borrower will maintain flood insurance reasonably
acceptable to the Agent.
6.27. Location of Bank Accounts. Schedule 6.27 hereto sets
forth a complete and accurate list as of the Closing Date of all deposit and
other accounts, including all Cash Concentration Accounts and all Depository
Accounts (in each case designated as such), maintained by the Borrower and
its Subsidiaries together with a description thereof (i.e. the bank at which
such deposit or other account is maintained and the account number and the
purpose thereof).
6.28. No Event of Default. No event has occurred and is
continuing and no
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condition exists which constitutes an Event of Default or Potential Default.
6.29. Capitalized Leases. As of the Closing Date, Capitalized
Lease Obligations of the Borrower and its Subsidiaries do not exceed
$1,200,000 in aggregate amount.
6.30. Tradenames. Schedule 6.30 hereto sets forth a complete
and accurate list as of the Closing Date of all tradenames used by the
Borrower and its Subsidiaries.
6.31. Solvency. After giving effect to the transactions
contemplated by this Agreement and the Loan Documents and each Credit
Extension, the Borrower is, individually and together with its Subsidiaries,
Solvent.
6.32. Inventory. There is no location at which the Borrower
has any Inventory (except for Inventory in transit) other than (i) those
locations listed on Schedule 1.01A hereto and (ii) any other locations
approved in writing by the Agent pursuant to the definition of "Eligible
Inventory". Schedule 1.01A hereto contains a true, correct and complete list,
as of the Closing Date, of the legal names and addresses of each warehouse at
which Inventory of the Borrower is stored. None of the receipts received by
the Borrower from any warehouse states that the goods covered thereby are to
be delivered to bearer or to the order of a named Person or to a named Person
and such named Person's assigns.
6.33. Intellectual Property. Each of the Borrower and its
Subsidiaries owns or licenses or otherwise has the right to use all material
licenses, permits, patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, copyright applications,
franchises, authorizations and other intellectual property rights that are
necessary for the operations of their businesses and, to the knowledge of the
Borrower or such Subsidiary, without infringement upon or conflict with the
rights of any other Person with respect thereto, except for such
infringements and conflicts which, individually or in the aggregate, could
not have a Material Adverse Effect. To the best knowledge of the Borrower and
its Subsidiaries, no slogan or other advertising device, product, process,
method, substance, part or other material now employed, or now contemplated
to be employed, by the Borrower or any of its Subsidiaries infringes upon or
conflicts with any rights owned by any other Person, and no claim or
litigation regarding any of the foregoing is pending or threatened, except
for such infringements and conflicts which could not have, individually or in
the aggregate, a Material Adverse Effect. To the knowledge of the Borrower
and its Subsidiaries, no patent, invention, device, application, principle or
any statute, law, rule, regulation, standard or code is pending or proposed,
which, individually or in the aggregate, could have a Material Adverse
Effect.
6.34. Material Contracts. Set forth in Schedule 6.34 hereto is
a complete and accurate list as of the Closing Date of all Material Contracts
of the Borrower and its Subsidiaries, showing the parties and subject matter
thereof and amendments and modifications thereto. Each such Material Contract
(i) is in full force and effect and is binding upon and enforceable against
the Borrower or its Subsidiaries, as the case may be, and, to the best of the
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Borrower's knowledge, all other parties thereto in accordance with its terms,
(ii) has not been otherwise amended or modified in any material respect, and
(iii) there exists no default under any Material Contract by the Borrower or
any of its Subsidiaries or, to the Borrower's knowledge, any other party
thereto which has not been cured or waived.
6.35. Labor Relations; Collective Bargaining Agreements.
(a) Set forth on Schedule 6.35 hereto is a list
(including dates of termination) of all Collective Bargaining Agreements
between or applicable to the Borrower or any of its Subsidiaries and any
union, labor organization or other bargaining agent in respect of the
employees of Borrower or any of its Subsidiaries.
(b) Neither the Borrower nor any Subsidiary is engaged
in any unfair labor practice that is reasonably likely to have a Material
Adverse Effect. There is (i) no significant unfair labor practice complaint
pending against the Borrower or any of its Subsidiaries or, to the best
knowledge of the Borrower or any of its Subsidiaries, threatened against any
of them, before the National Labor Relations Board, and no significant
grievance or significant arbitration proceeding arising out of or under any
Collective Bargaining Agreement is now pending against the Borrower or any of
its Subsidiaries or, to the best knowledge of the Borrower or any of its
Subsidiaries, threatened against any of them, (ii) no strike, labor dispute,
slowdown or stoppage is pending against Borrower or any of its Subsidiaries
or, to the best knowledge of the Borrower or any of its Subsidiaries,
threatened against the Borrower or any of its Subsidiaries, and (iii) to the
best knowledge of the Borrower or any of its Subsidiaries, no union
representation question existing with respect to the employees of the
Borrower or any of its Subsidiaries, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as is not reasonably likely to have a Material Adverse
Effect.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any principal of or interest on the Loans or the
Reimbursement Obligations or any other Obligations (whether or not due) shall
remain unpaid or the Lenders shall have any Revolving Credit Commitment
hereunder, the Borrower will, unless the Majority Lenders shall otherwise
consent in writing:
7.01. Reporting Requirements. Furnish to the Lenders:
(a) As soon as practicable and in any event within 90
days after the close of each fiscal year of the Borrower, a consolidated
statement of operations and cash flows of the Borrower and its Consolidated
Subsidiaries for such fiscal year and a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the close of such fiscal
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year, and notes to each, all in reasonable detail, setting forth in
comparative form the corresponding figures for the preceding fiscal year,
which statements and balance sheet shall be certified by Xxxxxx Xxxxxxxx LLP
or other independent certified public accountants of recognized national
standing selected by the Borrower and reasonably satisfactory to the Agent.
The certificate or report of such accountants (the "Accountant's Opinion")
shall be without a "going concern" qualification or like qualification or
exception or qualification arising out of the scope of the audit with respect
to such statements and balance sheet being prepared in compliance with GAAP
and shall in any event contain a written statement of such accountants
substantially to the effect that (i) such accountants examined such
statements and balance sheet in accordance with generally accepted auditing
standards and accordingly made such tests of accounting records and such
other auditing procedures as such accountants considered necessary in the
circumstances and (ii) in the opinion of such accountants such statements and
balance sheet present fairly, in all material respects, the financial
position of the Borrower and its Consolidated Subsidiaries as of the end of
such fiscal year and the results of their operations and their cash flows for
such fiscal year, in conformity with GAAP applied on a basis consistent with
that of the preceding fiscal year (except for changes in application in which
such accountants concur). A copy of the Accountant's Opinion shall be
delivered to the Agent and each Lender and signed by such independent public
accountants. Each set of statements and balance sheets delivered pursuant to
this Section 7.01(a) shall be accompanied by a certificate dated the date of
the delivery of such statements and balance sheet by the Designated Financial
Officer stating in substance that he has reviewed this Agreement and that in
making the examination necessary for this certification, he did not become
aware of any Event of Default or Potential Default, or if he did become so
aware, such certificate shall state the nature and period of existence
thereof if determinable, in form and substance satisfactory to the Agent.
(b) As soon as practicable and in any event within 45
days after the close of each of the first three fiscal quarters of each of
the Borrower's fiscal years, unaudited consolidated statements of operations
and cash flows of the Borrower and its Consolidated Subsidiaries and a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
as of the close of such fiscal quarter, all in reasonable detail setting
forth in comparative form the corresponding figures for the corresponding
fiscal quarter for the preceding fiscal year (except for the balance sheet
which shall set forth in comparative form the balance sheet as of the prior
year end), which statements and balance sheets shall be certified by a
Designated Financial Officer of the Borrower as presenting fairly, in all
material respects, the financial position of the Borrower and the
Consolidated Subsidiaries as of the end of such quarter and the results of
their operations and cash flows for such quarter, in conformity with GAAP
applied in a manner consistent except as otherwise disclosed therein with
that of the most recent audited financial statements furnished to the
Lenders, subject to year-end adjustments and to the lack of full footnotes.
Each set of statements and balance sheets delivered pursuant to this Section
7.01(b) shall be accompanied by a certificate of a Designated Financial
Officer dated the date of the delivery of such statements and balance sheet
stating that he has reviewed this Agreement and that to the best of his
knowledge he did not become aware of any Event of Default or Potential
Default, or if he did become so aware, such certificate shall state the
nature and period of existence thereof, if determinable, in form and
substance satisfactory to
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the Agent.
(c) As soon as practicable and in any event within
thirty (30) days after the end of each fiscal month (including the fiscal
month in which this Agreement is executed), the Borrower shall furnish to the
Lenders a monthly inventory report in form and substance reasonably
satisfactory to the Agent and certified by a Designated Financial Officer of
the Borrower, which shall be accompanied by a reconciliation from the monthly
inventory report delivered by the Borrower to the Lenders pursuant to
paragraph (e) of this Section 7.01.
(d) As soon as practicable and in any event within
five (5) Business Days after the Saturday of each week (including the week in
which this Agreement is executed), a weekly sales report, a weekly inventory
report, Receivables aging, Credit Card Receivable sales and collection
reports (which reports shall be in form and substance satisfactory to the
Agent and shall, among other things, detail the creation, collection and
application of all Credit Card Receivables) and a Borrowing Base Certificate,
each as of the Borrower's close of business on Saturday of the preceding week
and in form and substance reasonably satisfactory to the Agent and certified
by a Designated Financial Officer of the Borrower.
(e) As soon as possible, and in any event within 3
Business Days after the occurrence of a Potential Default or an Event of
Default or a Material Adverse Effect, the written statement of the Designated
Financial Officer of the Borrower, setting forth the details of such
Potential Default or Event of Default, Material Adverse Effect and the action
which the Borrower proposes to take with respect thereto.
(f) Upon the request of the Agent and to the extent
the same have been furnished to Borrower, copies of all consultants' reports,
investment bankers' reports, accountants' management letters, business plans
and similar documents.
(g) Promptly upon their becoming available, a copy of
(1) all reports, financial statements or other information delivered by the
Borrower to its shareholders, (2) all reports, proxy statements, financial
statements and other information generally distributed by the Borrower to its
creditors or the financial community in general, and (3) any audit or other
reports submitted to the Borrower by independent accountants in connection
with any annual, interim or special audit of the Borrower.
(h) (1) As soon as possible and in any event (A)
within 10 days after the Borrower or any of its ERISA Affiliate knows or has
reason to know that any Termination Event described in clause (i) of the
definition of Termination Event with respect to any Benefit Plan has
occurred, and (B) within 10 days after the Borrower or any of its ERISA
Affiliates knows or has reason to know that any other Termination Event with
respect to any Benefit Plan has occurred, or that the Borrower or any of its
ERISA Affiliates has failed to make a required installment payment to a
Benefit Plan within the meaning of Section 412(m) of the Code, a statement of
the Designated Financial Officer of the Borrower describing such Termination
Event and the action, if any, which the Borrower or such ERISA Affiliate
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proposes to take with respect thereto, (2) promptly and in any event within
two Business Days after receipt thereof by the Borrower or any of its ERISA
Affiliates from the PBGC, copies of each notice received by the Borrower or
any of its ERISA Affiliates of the PBGC's intention to terminate any Plan or
to have a trustee appointed to administer any Plan, (3) promptly and in any
event within 30 days after the filing thereof with the Internal Revenue
Service, copies of each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) with respect to each Plan and Multiemployer Plan,
(4) promptly and in any event within five Business Days after receipt thereof
by the Borrower or any of its ERISA Affiliates from a sponsor of a
Multiemployer Plan or from the PBGC, a copy of each notice received by the
Borrower or any of its ERISA Affiliates concerning the imposition or amount
of withdrawal liability under Section 4202 of ERISA or indicating that such
Multiemployer Plan may enter reorganization status under Section 4241 of
ERISA, and (5) promptly and in any event within 10 days after the Borrower or
any ERISA Affiliate takes action to establish an employee benefit plan as
defined in Section 3(3) of ERISA, a statement of the Designated Financial
Officer of the Borrower describing such employee benefit plan and a copy of
such employee benefit plan.
(i) As soon as possible and in any event no later than
January 31st of each year, a financial plan of the Borrower containing
financial projections for the subsequent fiscal year of the Borrower prepared
by management of the Borrower, in form and substance satisfactory to the
Agent;
(j) Promptly after, and in any event within five (5)
Business Days after, an officer of the Borrower learns of any of the
following, notice thereof;
(k) the receipt by the Borrower or any of its
Subsidiaries of notification that any real or personal property of the
Borrower or such Subsidiary is subject to any Environmental Lien;
(i) notice of violation of any Environmental Law
which could reasonably be expected to subject the Borrower or any of its
Subsidiaries to Environmental Liabilities and Costs of $100,000 or more; or
(ii) notice of the commencement of any judicial
or administrative proceeding or investigation alleging a violation by the
Borrower or any of its Subsidiaries of any Environmental Law, which if
adversely determined, could reasonably be expected to subject the Borrower or
any of its Subsidiaries to Environmental Liabilities and Costs of $100,000 or
more.
(l) Promptly after the commencement thereof but in any
event not later than 5 days after service of process with respect thereto on,
or the obtaining of knowledge thereof by, the Borrower or any of its
Subsidiaries, notice of each action, suit or proceeding involving the
Borrower or any of its Subsidiaries before any court or other Governmental
Authority or other regulatory body or any arbitrator which could have a
Material Adverse Effect.
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(m) Promptly after submission to any Governmental
Authority all documents and information furnished to such Governmental
Authority in connection with any investigation of the Borrower or any of its
Subsidiaries if such investigation could reasonably be expected to either
subject the Borrower or any of its Subsidiaries to liabilities and costs of
at least $100,000 or have a Material Adverse Effect.
(n) Promptly upon request, such other information
concerning the condition or operations, financial or otherwise, of the
Borrower or any of its Subsidiaries as the Agent or any Lender from time to
time may request.
7.02. Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders (including, without limitation, Environmental
Laws and compliance in respect of their businesses, or use, maintenance or
operation of real and personal properties owned or leased by them), such
compliance to include, without limitation, (i) paying before the same become
delinquent all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits or upon any of its properties, and (ii)
paying all lawful claims which if unpaid might become a Lien or charge upon
any of its properties, except to the extent contested in good faith by proper
proceedings which stay the imposition of any penalty, fine or Lien resulting
from the non-payment thereof and with respect to which adequate reserves in
accordance with GAAP have been set aside for the payment thereof.
7.03. Preservation of Existence, Etc. Maintain and preserve,
and cause each of its Subsidiaries to maintain and preserve, its existence,
rights and privileges, and become or remain duly qualified and in good
standing in each jurisdiction in which the character of the properties owned
or leased by them or in which the transaction of their business makes such
qualification necessary.
7.04. Keeping of Records and Books of Account. Keep, and cause
each of its Subsidiaries to keep, adequate records and books of account, with
complete entries made in accordance with GAAP.
7.05. Inspection Rights, Verification and Contracts. Permit,
and cause each of its Subsidiaries to permit, the Agent or any Lender, or any
agents or representatives thereof or such professionals or other Persons as
the Agent may designate (i) to examine and inspect the books and records of
the Borrower and its Subsidiaries and take copies and extracts therefrom at
reasonable times and during normal business hours, (ii) to verify Credit Card
Receivables, Inventory and other materials, leases, notes, receivables,
deposit accounts and other assets and liabilities of the Borrower and its
Subsidiaries from time to time, and (iii) to conduct Inventory and Credit
Card Receivables appraisals and/or valuations at the distribution center and
retail stores of the Borrower. The Borrower agrees to cooperate, and agrees
to cause each of its subsidiaries to cooperate, with the Agent in connection
with any such verification or inspection. In addition, the Borrower and its
Subsidiaries shall cause to be conducted at least one physical Inventory
count in the 12 month period commencing on each of (A) the Closing Date and
(B) the 12 month anniversary of the Closing Date, and shall promptly
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after each count becomes available provide to the Agent a copy of the written
results of such physical Inventory count. The Borrower further agrees upon
the Agent's request to make true and correct copies of all (1) material
documents and agreements relating to Indebtedness described on Schedule 8.02
hereof, (2) Leases, (3) Material Contracts, (4) Collective Bargaining
Agreements and (5) Plans to which the Borrower or any Subsidiary is a party.
7.06. Maintenance of Properties, Etc. Maintain and preserve,
and cause each of its Subsidiaries to maintain and preserve, all of their
properties (including all real properties leased or owned by them) which are
necessary or useful in the proper conduct of their business in good working
order and condition, ordinary wear and tear excepted, and comply, and cause
each of its Subsidiaries to comply, at all times with the provisions of all
Leases to which each of them is a party as lessee or under which each of them
occupies property, so as to prevent any loss or forfeiture thereof or
thereunder. The provisions of this Section 7.06 are subject to any provisions
in the Security Agreement which may impose additional or greater obligations
on the Borrower.
7.07. Maintenance of Insurance. Maintain, and cause each of
its Subsidiaries to maintain, with responsible and reputable insurance
companies or associations insurance (including, without limitation,
comprehensive general liability, hazard and business interruption insurance)
with respect to their properties (including all real properties leased or
owned by them) and business, in such amounts and covering such risks, as is
required by any Governmental Authority or other regulatory body having
jurisdiction with respect thereto or as is carried generally in accordance
with sound business practice by companies in similar businesses similarly
situated and in any event in amount, adequacy and scope reasonably
satisfactory to the Agent (the Agent acknowledges that Borrower's current
insurance is satisfactory) and with such deductible or self-insured retention
as are in accordance with normal industry practice and all applicable laws,
rules and regulations, provided that in no event will any such deductible or
self-insured retention in respect of liability claims or in respect of
casualty damage exceed, in each such case, an amount per occurrence not
exceeding 5% of Borrower's consolidated tangible net worth (as computed in
accordance with GAAP). All policies covering the Collateral are to be made
payable to the Agent with respect to the Collateral, in case of loss, under a
standard non-contributory "lender" or "secured party" clause and are to
contain such other provisions as the Agent may require to fully protect the
Agent's interest in the Collateral and to any payments to be made with
respect to the Collateral under such policies. All original policies or true
copies thereof covering Collateral are to be delivered to the Agent, premium
paid, with the loss payable and additional insured endorsement in the Agent's
favor, and shall provide for not less than thirty (30) days prior written
notice to the Agent of the exercise of any right of cancellation. At the
Borrower's request, or if the Borrower fails to maintain such insurance, the
Agent may arrange for such insurance, but at the Borrower's expense and
without any responsibility on the Agent's part for: obtaining the insurance,
the solvency of the insurance companies, the adequacy of the coverage, or the
collection of claims. Upon the occurrence of an Event of Default, the Agent
shall have the sole right, in the name of the Agent and the Borrower, to file
claims under any insurance policies, to receive, receipt and give acquittance
for any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments,
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reassignments or other documents that may be necessary to effect the
collection, compromise or settlement of any claims under any such insurance
policies. The provisions of this Section 7.07 are subject to any provisions
in the Security Agreement which may impose additional or greater obligations
on the Borrower.
7.08. Environmental. Comply, and cause each of its
Subsidiaries to comply in all material respects, with the requirements of all
Environmental Laws and provide to the Agent all documentation in connection
with such compliance that the Agent may reasonably request; and not cause or
permit the Collateral or any property or facility owned, operated or occupied
by the Borrower or any of its Subsidiaries to be used for any activities
involving, directly or indirectly, the use, generation, treatment, storage,
release or disposal of any Hazardous Materials except in compliance with
applicable laws. On behalf of the Borrower and its Subsidiaries, the Borrower
hereby agrees to defend, indemnify, and hold harmless the Agent, the Lenders
and the Letter of Credit Issuer, their employees, agents, officers, and
directors, from and against any claims, demands, penalties, fines,
liabilities (including strict liability), settlements, damages, costs, or
expenses (including, without limitation, attorney and consultant fees,
investigation and laboratory fees, court costs, and litigation expenses) and
Environmental Liabilities and Costs arising out of (i) any Release, or
threatened Release on any property presently or formerly owned or occupied by
the Borrower or any of its Subsidiaries (or their predecessors in interest or
title) or at any disposal facility which received Hazardous Materials
generated by the Borrower or any of its Subsidiaries; (ii) any violation of
Environmental Laws, (iii) any Environmental Actions, (iv) any personal injury
(including wrongful death) or property damage (real or personal) arising out
of or related to exposure to Hazardous Materials used, handled, generated,
transported or deposited by the Borrower or any of its Subsidiaries (or any
predecessor in interest or title); and/or (v) the breach of any
representation or warranty made by the Borrower in Section 6.19 hereof or the
breach of any covenant made by any of the Borrower or its Subsidiaries in
this Section 7.08. This Environmental Indemnity shall survive the repayment
of the Obligations and discharge or release of any security interest granted
under the Loan Documents. The provisions of this Section 7.08 are subject to
any provisions in the Environmental Indemnity Agreement which may impose
additional or greater obligations on the Borrower.
7.09. Further Assurances. Do, execute, acknowledge and
deliver, and cause each of its Subsidiaries to do, execute, acknowledge and
deliver, at the sole cost and expense of the Borrower all such further acts,
deeds, conveyances, mortgages, assignments, estoppel certificates, financing
statements, notices of assignment, transfers and assurances as the Agent may
require from time to time in order (a) to carry out more effectively the
purposes of this Agreement or any other Loan Document, (b) to subject to
valid and perfected first priority Liens all the Collateral, (c) to perfect
and maintain the validity, effectiveness and priority of any of the Loan
Documents and the Lien intended to be created thereby, and (d) to better
assure, convey, grant, assign, transfer and confirm unto the Agent, the
Lenders and the Letter of Credit Issuer the rights now or hereafter intended
to be granted to the Agent, the Lenders and the Letter of Credit Issuer under
this Agreement, any Loan Document or any other instrument under which the
Borrower or any Subsidiary may be or may hereafter become bound to convey,
mortgage or assign to the Agent, the Lenders and the Letter of Credit Issuer.
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7.10. Borrowing Base. Maintain all Loans and Letter of Credit
Exposure in compliance with the then current Borrowing Base.
7.11. Change in Collateral; Collateral Records. Give the Agent
(i) not less than thirty days' prior written notice of any change in the
location of any Collateral, other than to locations, that as of the date
hereof, are known to the Agent and at which the Agent has filed financing
statements ("Permitted Locations") and has a perfected, first priority Lien
thereon and (ii) prompt notice of any other change in the location of any
Collateral other than Collateral which is moved to another Permitted
Location. The Borrower shall also advise the Agent promptly of any other
change in the location of any Collateral. The Borrower shall also advise the
Agent promptly, in sufficient detail, of any material adverse change relating
to the type, mix, quantity or quality of the Collateral or the security
interests granted therein. The Borrower agrees to execute and deliver to the
Agent for the benefit of the Agent from time to time, solely for the Agent's
convenience in maintaining a record of the Collateral, such written
statements and schedules as the Agent may reasonably require, designating,
identifying or describing the Collateral. The Borrower's failure, however, to
promptly give the Agent such statements or schedules shall not affect,
diminish, modify or otherwise limit the Agent's security interest in the
Collateral.
7.12. Financial Accounting Practices, Etc.
(a) Make and keep books, records and accounts which,
in reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets of the Borrower and its Subsidiaries and maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorization, (ii) transactions are recorded as
necessary (A) to permit preparation of financial statements in conformity
with GAAP and (B) to maintain accountability for assets, and (iii) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(b) Maintain a system of internal procedures and
controls sufficient to provide reasonable assurance that the information
required to be set forth in each Borrowing Base Certificate (including,
without limitation, information relating to the identification of assets
which are Eligible Inventory and Eligible Credit Card Receivables as provided
herein and the valuation thereof) is accurate in all material respects.
7.13. Cash Management System.
(a) The Borrower agrees and covenants to, and to cause
each Subsidiary to, (i) cause all cash and all proceeds from accounts
receivable and the sale of assets (including, without limitation, Inventory)
or other proceeds of Collateral to be deposited into the Depository Accounts
in the ordinary course of business of the Borrower consistent with past
practice, (ii) cause all remittances on credit card sales to be transferred
into a Cash
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Concentration Account or a Depository Account on a daily basis, (iii) cause
all funds in the Depository Accounts to be transferred into a Cash
Concentration Account on a daily basis, (iv) from and after the occurrence of
a Cash Management Triggering Event, cause all cash deposited in the Cash
Concentration Accounts to be sent by wire transfer to the Agent Account on a
daily basis, (v) from and after the occurrence of a Cash Management
Triggering Event, instruct the Agent to cause all funds transferred to the
Agent Account to be credited to the Borrower's Account and applied to reduce
the Obligations outstanding from time to time, (vi) from and after the
occurrence of a Cash Management Triggering Event, take all such actions as
the Agent deems necessary or advisable to send all cash, all proceeds from
Receivables and from the sale of Inventory, all remittances or other proceeds
of Collateral to the Agent Account to be applied to the Obligations, (vii)
within the times specified in Section 5.01(f) hereof execute and deliver to
the Agent an original notice letter for each Depository Bank listed on
Schedule 6.27, substantially in the form of Exhibit I hereto which is
acceptable to the Agent, which will shall have been executed by the Borrower
and acknowledged by each such Depository Bank, (viii) within the times
specified in Section 5.01(f) hereof deliver to the Agent a Cash Concentration
Account Agreement for each Cash Concentration Account, substantially in the
form of Exhibit K hereto executed by the Borrower and each Cash Concentration
Account Bank, (ix) deliver to the Agent within the times specified in Section
5.01(f) hereof a credit card bank depository account agreement, substantially
in the form of Exhibit H hereto and acceptable to the Agent, duly executed by
the Borrower and each credit card bank, and (x) from and after the occurrence
of a Cash Management Triggering Event, take such actions as the Agent deems
necessary or advisable to grant to the Agent dominion and control over the
funds in each Cash Concentration Account. If the Borrower is unable to obtain
either an acknowledged notice letter substantially in the form of Exhibit I
hereto which is acceptable to the Agent, in the case of a Depository Account
or an executed Cash Concentration Account Agreement in the case of a Cash
Concentration Account from any financial institution that receives
remittances or other proceeds of Receivables or sales of Inventory within the
times specified in Section 5.01(f) hereof, the Borrower shall promptly
thereafter terminate such accounts and establish new accounts at a financial
institution that will execute and deliver such notice letter or Cash
Concentration Account Agreement, as the case may be.
(b) The Borrower shall not, nor shall it permit any
Subsidiary to, open any new depository or cash concentration accounts into
which amounts of a type described in paragraph (a) of this Section 7.13 are
to be deposited unless substantially concurrently with the opening of any
such account, it shall have delivered to the Agent an original notice letter
substantially in the form of Exhibit I hereto and acceptable to the Agent
executed by the Borrower or Subsidiary, as the case may be, and acknowledged
by the financial institution at which such account is to be maintained in the
case of an account which is to constitute a Depository Account hereunder, or
a Cash Concentration Account Agreement substantially in the form of Exhibit H
hereto and acceptable to the Agent duly executed by the Borrower or such
Subsidiary, as the case may be, and the financial institution at which such
account is to be maintained.
(c) The Borrower shall promptly, and in any event not
later than five
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(5) days after the establishment of any new credit card depositary
relationship, notify the Agent in writing of the creation of such new
relationship and shall use its best efforts (but not requiring any payment to
be made by the Borrower) to deliver to the Agent a credit card bank
depository account agreement, substantially in the form of Exhibit H hereto,
duly executed by the Borrower and such new credit card servicer.
(d) Upon receipt by the Borrower of collections of
cash and any proceeds of the sale of Inventory, the Borrower shall
immediately deposit all such payments into the Cash Concentration Account or
any Depository Account. The Borrower shall cause all funds in the Depository
Accounts and all remittances or other proceeds of credit card sales to be
promptly transferred from the financial institution that receives such
remittances or other proceeds or from the Depository Accounts to the Cash
Concentration Account.
(e) Notwithstanding anything herein to the contrary
Borrower agrees to maintain a Cash Management System which continues to be
acceptable to the Agent in all respects in its sole discretion.
7.14. Leases. If requested by the Agent or upon direction to
do so by the Required Banks, provide the Agent with a copy of each Lease to
which the Borrower or any of its Subsidiaries is a party, whether as lessor
or lessee. The Borrower shall, and shall cause each of its Subsidiaries to,
(i) comply in all material aspects with all of their respective obligations
under Leases; (ii) not modify, amend, extend or otherwise change any of the
terms, covenants or conditions of any such Leases if such modification,
amendment, extension or other change could have a Material Adverse Effect;
(iii) not assign, sublease, terminate or cancel any Lease not encumbered by a
leasehold Mortgage if such assignment, sublease, termination or cancellation
could have a Material Adverse Effect; (iv) provide the Agent with a copy of
each notice of default under any Lease received by the Borrower or such
Subsidiary immediately upon receipt thereof and deliver to the Agent a copy
of each notice of default sent by the Borrower or such Subsidiary under any
Lease simultaneously with its delivery of such notice under such Lease; (v)
notify the Agent, not later than 60 days prior to the last date on which the
Borrower or any of its Subsidiaries may exercise any renewal or extension
option granted to the Borrower or such Subsidiary under any Lease, that the
Borrower or such Subsidiary has exercised its right to renew or extend such
Lease or not to renew or extend any such Lease, and, if the Borrower or such
Subsidiary intends to renew such Lease, the terms and conditions of such
renewal and (vi) notify the Agent at least 14 days prior to the date the
Borrower or such Subsidiary becomes liable under any new Lease.
7.15. Additional Subsidiaries. If a Person shall become a
Subsidiary of the Borrower, the Borrower shall (i) notify the Agent promptly
after such Person becomes a Subsidiary of the Borrower, (ii) promptly, and in
any event within ten (10) Business Days of such Person becoming a Subsidiary,
cause such Subsidiary to execute and deliver a Subsidiary Guaranty and a
Subsidiary Security Agreement (together which such financing statements or
other instruments or documents which the Agent deems necessary or advisable
to perfect the liens and security interests provided for thereby) in respect
of the Obligations and to deliver proof of corporate action, incumbency of
officers, opinions of counsel and other documents as
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the Agent may reasonably request, and (iii) promptly, and in any event within
ten (10) Business Days of such Person becoming a Subsidiary, cause such
Subsidiary to make such representations and warranties to the Lenders and
undertake such obligations as the Agent may reasonably request. Except as
permitted by the Loan Documents, the Borrower shall not sell, transfer or
otherwise dispose of any shares of stock in any of its Subsidiaries, nor
permit any of its Subsidiaries to issue any shares of stock of any class
whatsoever to any Person (other than to the Borrower).
7.16 Cardholder Agreement Changes. The Borrower will give the
Agent thirty (30) days notice of any amendment, modification or other change
to the Cardholder Agreement. The Agent reserves the right to conduct a Credit
Card Receivables appraisal and reduce the advance rate against the
Outstanding Balance of Net Credit Card Receivables, which in its sole
discretion it deems appropriate as a result of any such amendment,
modification or other change.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any principal of or interest on the Loans or the
Reimbursement Obligations or any Obligations (whether or not due) shall
remain unpaid or any Lender shall have any Revolving Credit Commitment
hereunder, the Borrower will not, without the prior written consent of the
Majority Lenders:
8.01. Liens, Etc. Create or suffer to exist, or permit any of
its Subsidiaries to create or suffer to exist, any Lien upon or with respect
to any of their properties, rights or other assets, whether now owned or
hereafter acquired, or assign or otherwise transfer, or permit any of its
Subsidiaries to assign or otherwise transfer, any right to receive income,
other than the following ("Permitted Liens"):
(a) Liens created pursuant to the Loan Documents;
(b) Liens existing on the date hereof, as set forth in
Schedule 8.01 hereto, and the renewal or replacement of such Liens, provided
that any such renewal or replacement Lien shall be limited to the property or
assets covered by the Lien renewed or replaced and the Indebtedness secured
by any such renewal or replacement Lien shall be in an amount not greater
than the amount of Indebtedness secured by the Lien renewed or replaced;
(c) Liens for taxes, assessments or governmental
charges or levies to the extent that the payment thereof shall not be
required by Section 7.02 hereof;
(d) Liens created by operation of law other than
Environmental Liens, such as materialmen's liens, mechanics' liens and other
similar liens, arising in the
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ordinary course of business which secure amounts not overdue for a period of
more than 60 days or which are being contested in good faith by appropriate
proceedings;
(e) deposits, pledges or Liens (other than Liens
arising under ERISA or the Code) securing (1) obligations incurred in respect
of workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, (2) the performance of bids, tenders,
leases, contracts (other than for the payment of money) and statutory
obligations, or (3) obligations on surety or appeal bonds, but only to the
extent such deposits, pledges or Liens are incurred or otherwise arise in the
ordinary course of business and secure obligations which are not past due;
(f) restrictions on the use of real property and minor
irregularities in the title thereto which do not (1) secure obligations for
the payment of money or (2) materially impair the value of such property or
its use by the Borrower or any of its Subsidiaries in the normal conduct of
such Person's business;
(g) Liens on or security interests in equipment or
real property securing Indebtedness permitted under Section 8.02 (b) or (c)
hereof.
8.02. Indebtedness. Create, incur or suffer to exist, or
permit any of its Subsidiaries to create, incur or suffer to exist, any
Indebtedness, other than:
(a) Indebtedness created hereunder or under the Notes
or any Letter of Credit;
(b) Indebtedness existing on the date hereof, as set
forth in Schedule 8.02 hereto, and any extension of maturity, refinancing or
other modification of the terms thereof, provided, however, that such
extension, refinancing or modification (A) is pursuant to terms that are not
less favorable to the Borrower and its Subsidiaries than the terms of the
Indebtedness being extended, refinanced or modified, (B) after giving effect
to the extension, refinancing or modification of such Indebtedness, the
amount of such Indebtedness outstanding is not greater than the amount of
such Indebtedness outstanding immediately prior to such extension,
refinancing or modification and (C) is pursuant to documentation on such
terms acceptable to the Agent;
(c) Indebtedness in addition to that otherwise
permitted hereunder in an amount not exceeding the sum of (i) $10,000,000
plus (ii) the amount of principal payments made by the Borrower on the
Indebtedness permitted under Section 8.02(b) hereof pursuant to documentation
on such terms acceptable to the Agent; and
(d) Guaranties permitted under Section 8.03 hereof.
8.03. Guarantees, Etc. Become liable, or permit any of its
Subsidiaries to become liable, under any Guarantee in connection with any
Indebtedness of any other Person, other than:
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(a) guaranties by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business;
(b) guaranties existing on the date hereof, as set
forth in Schedule 8.03 hereto, but not any renewal or other modification
thereof; and
(c) guaranties of any Indebtedness permitted under
Section 8.02 hereof.
8.04. Merger, Consolidation, Sale of Assets, Etc.
(a) Merge or consolidate with any Person, or permit
any of its Subsidiaries to merge or consolidate with any Person; provided,
however, that any Subsidiary of the Borrower may be merged into the Borrower
or another such Subsidiary, or may consolidate with another such Subsidiary,
so long as (i) in the case of a merger into the Borrower, the Borrower is the
surviving entity, (ii) both before and after giving effect to such merger or
consolidation, no Potential Default or Event of Default shall have occurred,
and (iii) the Borrower gives the Agent at least 30 days' prior written notice
of such merger or consolidation.
(b) Sell, assign, lease or otherwise transfer or
dispose of, or permit any of its Subsidiaries to sell, assign, lease or
otherwise transfer or dispose of, whether in one transaction or in a series
of related transactions, any of its properties, rights or other assets
whether now owned or hereafter acquired to any Person, provided that (i) the
Borrower may sell Inventory in the ordinary course of business, (ii) the
Borrower and its Subsidiaries may dispose of obsolete or worn-out property in
the ordinary course of business and may dispose of nonoperating assets having
an aggregate value not exceeding $500,000, (iii) the Borrower may sell or
discount without recourse its accounts receivable only in connection with the
compromise thereof or the assignment of past due accounts receivable for
collection, (iv) the Borrower may sell Inventory and other assets for fair
market value in connection with the closings of its stores located in
Kalamazoo, Dearborn and Jackson, Michigan (the "Michigan Store Closings") and
in connection with other store closings, provided that the net decrease in
retail stores of the Borrower after giving effect to all stores opened and
all stores closed (other than the Michigan Store Closings) by the Borrower
after the Closing Date shall not exceed five (5) retail stores, and (v) the
Borrower may sell or otherwise dispose of assets, other than Inventory and
other than sales or dispositions of assets in connection with store closings,
for fair market value, provided that the Net Proceeds of all such sales,
transfers and other dispositions permitted by this Section 8.04(b)(v) are no
more than $1,000,000 during any fiscal year of the Borrower and proceeds of
such asset sales are paid to the Agent pursuant to the terms of Section
2.04(b)(i) hereof. It is expressly understood and agreed that nothing
contained in this Section 8.04 shall be construed to permit the sale or other
transfer of any assets of the Borrower to any of its Subsidiaries.
8.05. Change in Nature of Business. Make, or permit any of its
Subsidiaries
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to make, any change in the nature of its business as carried on at the date
hereof.
8.06. Loans, Advances and Investments, Etc. Make, or permit
any of its Subsidiaries to make, any loan or advance to any Person or make
any investment in or purchase or otherwise acquire, or permit any of its
Subsidiaries to purchase or otherwise acquire, any capital stock, properties,
assets (except for purchases of assets used or sold in the ordinary course of
business) or obligations of, or any interest in, any Person, except:
(a) Permitted Investments;
(b) the existing investments of the Borrower in its
Subsidiaries existing as of the date hereof and intercompany transactions
between the Borrower and its Subsidiaries solely in connection with (i) the
satisfaction of rental obligations owing by the Borrower to such Subsidiaries
under Leases permitted hereunder; and (ii) other transactions in the ordinary
course of business.
(c) investments existing on the date hereof, as set
forth in Schedule 8.06 hereto;
(d) receivables owing to the Borrower or any of its
Subsidiaries, if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms of the
Borrower or its applicable Subsidiary, as the case may be; and
(e) loans and advances to employees in the ordinary
course of business in an aggregate principal amount not to exceed $250,000 at
any time outstanding; and
(f) guaranties permitted by Section 8.03 hereof; and
(g) purchases of debentures permitted by Section 8.09
hereof.
8.07. Lease Obligations. Create, incur or suffer to exist, or
permit any of its Subsidiaries to create, incur or suffer to exist, any
obligations as lessee (i) for the payment of rent for any real or personal
property in connection with any sale and leaseback transaction, or (ii) for
Operating Lease Obligations other than Operating Lease Obligations which
would not cause the aggregate amount of all Operating Lease Obligations in
respect of leases entered into after the date hereof owing by the Borrower
and its Subsidiaries in any fiscal year to exceed $8,000,000 for the fiscal
year ending January, 1998, $10,000,000 for the fiscal year ending January,
1999 and $12,000,000 for each fiscal year thereafter.
8.08. Capital Expenditures. Make or be committed to make, or
permit any of its Subsidiaries to make or be committed to make, any
expenditure (by purchase or capitalized lease) for fixed or capital assets
other than expenditures (including obligations under Capitalized Leases)
which would not cause the aggregate amount of all such expenditures to exceed
during any fiscal year the Maximum Permitted Amount. For purposes of this
Section
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8.08, the term "Maximum Permitted Amount" shall mean (i) $10,000,000 if
Availability of at least $30,000,000 (computed assuming the Activated
Revolving Credit Commitments are $100,000,000) exists at all times during
such fiscal year and for sixty (60) days after such fiscal year ends after
giving effect thereto, (ii) $7,500,000 if Availability of at least
$20,000,000 (computed as provided above) exists at all times during such
fiscal year and for sixty (60) days after such fiscal year ends after giving
effect to such expenditure and (iii) $5,000,000 at all other times, provided
in each case no Event of Default or Potential Default shall have occurred and
be continuing.
8.09. Dividends, Prepayments, Etc. Declare or pay any
dividends, purchase or otherwise acquire for value any of its capital stock
now or hereafter outstanding, return any capital to its stockholders as such,
or make any other payment or distribution of assets to its stockholders as
such, or permit any of its Subsidiaries to do any of the foregoing or to
purchase or otherwise acquire for value any stock of the Borrower or make any
payment or prepayment of principal of, premium, if any, or interest on, or
redeem, defease or otherwise retire, any other Indebtedness of the Borrower
before its scheduled due date other than required prepayments of any
Indebtedness, and sinking fund payments (or purchases of debentures to
satisfy such payments) under the Article Thirteen of the Indenture referred
to in Section 5.01(d)(xvi) hereof; provided however, that the Company may (a)
declare and pay dividends in an aggregate amount not exceeding the lesser of
(i) 50% of net income (computed in accordance with GAAP) for the immediately
preceding fiscal year or (ii) $.50/outstanding share] so long as (a) no Event
of Default or Potential Default shall have occurred and be continuing or
would occur as a result thereof and (b) Availability shall all times during
the twelve (12) months prior to such declaration and for sixty (60) days
after such declaration and after giving effect thereto be at least
$20,000,000 (computed assuming the amount of the Activated Revolving Credit
Commitments is $100,000,000).
8.10. Federal Reserve Regulations. Permit any Loan or the
proceeds of any Loan under this Agreement to be used for any purpose which
violates or is inconsistent with the provisions of Regulations G, T, U or X
of the Board of Governors of the Federal Reserve System.
8.11. Transactions with Affiliates. Enter into or be a party
to, or permit any of its Subsidiaries to enter into or be a party to, any
transaction with any Affiliate of the Borrower except as otherwise provided
herein or in the ordinary course of business in a manner and to an extent
consistent with past practice and necessary or desirable for the prudent
operation of its business for fair consideration and on terms no less
favorable to the Borrower or such Subsidiary as are available from
unaffiliated third parties.
8.12. Markup and Markdown Policies. Engage in policies or
procedures with respect to markups or markdowns of Inventory which policies
and procedures, including the timing, amount and implementation of such
markups and markdowns, are inconsistent in any material respect with the past
practices of the Borrower absent the prior written consent of the Agent.
8.13. Environmental. Permit the use, handling, generation,
storage, treatment,
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Release or disposal of any Hazardous Material at property owned or leased by
the Borrower or such Subsidiary except in compliance with Environmental Laws
and so long as such use, handling, generation, storage, treatment, Release or
disposal of Hazardous Materials would not result in Environmental Liabilities
and Costs in excess of $100,000.
8.14. ERISA.
(a) Engage in any prohibited transaction described in
Section 406 of ERISA or 4975 of the Code for which a statutory or class
exemption is not available or a private exemption has not previously been
obtained from the Department of Labor;
(b) permit, or permit any ERISA Affiliate to permit,
any enforceable Lien from arising under Section 412(n) of the Code;
(c) amend or permit any ERISA Affiliate to amend or
convert any Benefit Plan in a manner that would require security under
Section 307 of ERISA. The Borrower further agrees to give the Lenders prior
notice of any material amendment or any conversion of any Benefit Plan
together with such information as any Lender may request in connection
therewith, and, without the prior written consent of the Agent, which consent
will not be unreasonably withheld, amend or convert any Benefit Plan in a
manner that would have a Material Adverse Affect on the assets or the balance
sheet or profitability of the Borrower.
(d) request or permit any ERISA Affiliate to request a
waiver of the minimum funding requirements under Section 412 of the Code in
respect of any Benefit Plan.
8.15 Consigned Inventory. Inventory held on consignment at any
time shall be no more than $4,000,000 at FIFO cost.
ARTICLE IX
DEFAULTS
9.01. Events of Default. An Event of Default shall mean the
occurrence or existence of one or more of the following events or conditions
(whatever the reason for such Event of Default and whether voluntary,
involuntary or effected by operation of law):
(a) The Borrower shall fail to make any payment of
principal under this Agreement on any Loan or any Reimbursement Obligation
when due; or the Borrower shall fail to pay when due any other amount payable
under this Agreement or any other Loan Document (including but not limited to
the making of deposits in the Depository Accounts, the Cash Concentration
Account or the Letter of Credit Cash Collateral Account), including any
interest or fee due hereunder or under the Fee Letter or any other Loan
Document; or
(b) Any representation or warranty made by the
Borrower under this
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Agreement or any other Loan Document or any statement made by the Borrower in
any financial statement, certificate, report or document furnished to the
Agent or the Lenders pursuant to or in connection with this Agreement or any
other Loan Document, shall prove to have been false or misleading in any
material respect as of the time when made (including by omission of material
information necessary to make such representation, warranty or statement, in
light of the circumstances under which it was made, not misleading); or
(c) The Borrower shall default in the performance or
observance of any covenant contained in Article VII or Article VIII hereof or
Section 5 of the Security Agreement or Sections 2(b) and/or 2(c) of the
Environmental Indemnity Agreement or Section 6 of the Pledge Agreement; or
(d) The Borrower shall default in the performance or
observance of any other covenant, agreement or duty under this Agreement or
any other Loan Document (to the extent not otherwise set forth in this
Section 9.01) and such default shall have continued unremedied for a period
of ten (10) days; or
(e) The Borrower or any Subsidiary shall have entered
into any consent or settlement decree or agreement or similar arrangement
with a Governmental Authority or any judgment, order, decree or similar
action shall have been entered against any such Person based on or arising
from the violation of or pursuant to any Environmental Law, or the
generation, storage, transportation, treatment, disposal or Release of any
Hazardous Material and, in connection with any of the foregoing, any such
Person shall incur Environmental Liabilities and Costs which are unstayed,
due and owing in an amount in excess of $100,000; or
(f) The Borrower or any Subsidiary shall fail to pay
any principal or interest on any of its Indebtedness (excluding Indebtedness
evidenced by the Notes) in excess of $1,000,000, or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Indebtedness, or any other default under any agreement or
instrument relating to any such Indebtedness, or any other event, shall occur
and shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such
Indebtedness in excess of $1,000,000; or any such Indebtedness in excess of
such amount shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof;
(g) The Borrower or any Subsidiary (i) shall institute
any proceeding or voluntary case seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency, reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for the Borrower or
any Subsidiary or for any
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substantial part of its property, (ii) shall be generally not paying its
debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, (iii) shall make a general assignment for the
benefit of creditors, or (iv) shall take any action to authorize or effect
any of the actions set forth above in this subsection (g); or
(h) Any proceeding shall be instituted against the
Borrower or any Subsidiary seeking to adjudicate it a bankrupt or insolvent,
or seeking dissolution, liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, custodian or other
similar official for the Borrower or any Subsidiary or for any substantial
part of its property, and either such proceeding shall remain undismissed or
unstayed for a period of 30 days or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against it or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property) shall
occur; or
(i) Any material 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 the Borrower or any
Guarantor, or a proceeding shall be commenced by the Borrower, or by any
Governmental Authority or other regulatory body having jurisdiction over the
Borrower, seeking to establish the invalidity or unenforceability thereof, or
the Borrower or any Guarantor shall deny in writing that the Borrower or such
Guarantor has any liability or obligation purported to be created under any
Loan Document; or
(j) The Security Agreement, the Pledge Agreement, or
any other Security Document, after delivery thereof pursuant hereto, 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 any Collateral purported to be covered thereby; or
(k) One or more judgments or orders (other than a
judgment described in subsections (g) or (h) of this Section 9.01) for the
payment of money exceeding any applicable insurance or bond coverage by more
than $500,000 in the aggregate shall be rendered against the Borrower or any
Subsidiary and either (i) enforcement proceedings shall have been commenced
by any creditor upon any such judgment or order, or (ii) there shall be any
period of 20 consecutive days during which a stay of enforcement of any such
judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; or
(l) The Borrower or any of its ERISA Affiliates shall
have made a complete or partial withdrawal from a Multiemployer Plan, and, as
a result of such complete or partial withdrawal, the Borrower or such ERISA
Affiliate incurs a withdrawal liability in an annual amount exceeding
$100,000; or a Multiemployer Plan enters reorganization status under Section
4241 of ERISA, and, as a result thereof, the Borrower's or such ERISA
Affiliate's annual contribution requirement with respect to such
Multiemployer Plan increases in an annual amount exceeding $100,000; or
(m) Any Termination Event with respect to any Benefit
Plan shall
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have occurred, and, 30 days after notice thereof shall have been given to the
Borrower by the Agent, (i) such Termination Event (if correctable) shall not
have been corrected, and (ii) the then current value of such Benefit Plan's
vested benefits exceeds the then current value of assets allocable to such
benefits in such Benefit Plan by more than $100,000 (or in the case of a
Termination Event involving liability under Section 515, 4062, 4063, 4064,
4069, 4201 or 4204 of ERISA, the liability is in excess of such amount).
9.02. Consequences of an Event of Default. If an Event of
Default shall occur and be continuing or shall exist the Agent may, and upon
the direction of the Majority Lenders shall by notice to the Borrower,
(a) declare the Revolving Credit Commitment of each
Lender and the Current Commitment terminated, whereupon the Revolving Credit
Commitment of each Lender and the Current Commitment will terminate
immediately without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived, and an action therefor shall
immediately accrue; and/or
(b) declare the unpaid principal amount of the Notes,
interest accrued thereon, the total amount of the Letter of Credit Exposure
that is not cash collateralized in accordance with this Agreement, any fees
due hereunder and all other amounts owing by the Borrower hereunder or under
the Notes to be immediately due and payable without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly
waived, and an action therefor shall immediately accrue; and/or
(c) give notice to the Borrower of the occurrence and
continuance of an Event of Default; and/or
(d) at any time when there are no Loans outstanding,
maintain cash collateral (to the extent the Borrower has or receives cash)
equal to 105% of all outstanding Letters of Credit; and/or
(e) apply all funds deposited in the Letter of Credit
Cash Collateral Account to the payment, in whole or in part, of the
Obligations; and/or
(f) set-off amounts in the Letter of Credit Cash
Collateral Account or any other account under the dominion and control of the
Agent and apply such amounts to the Obligations of the Borrower hereunder and
under the Loan Documents;
provided, however, that upon the occurrence of any Event of Default described
in subsections (g) or (h) of Section 9.01, the Loans and all Reimbursement
Obligations, all interest thereon and all other amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are expressly waived by the Borrower.
9.03. Deposit for Letters of Credit. Upon demand by the Agent
after the
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occurrence of any Event of Default, the Borrower shall deposit with the Agent
for the benefit of CIT, the Lenders and the Letter of Credit Issuer with
respect to each Letter of Credit then outstanding cash in an amount equal to
the greatest amount for which such Letter of Credit may be drawn. Such
deposits shall be held by the Agent for the benefit of CIT, the Lenders and
the Letter of Credit Issuer in the Letter of Credit Cash Collateral Account
as security for, and to provide for the payment of, the Letter of Credit
Exposure.
9.04. Certain Remedies. If an Event of Default occurs, each of
the Agent and the Lenders may exercise all rights and remedies which it may
have hereunder or under any other Loan Document or at law or in equity or
otherwise. All such remedies shall be cumulative and not exclusive.
ARTICLE X
MISCELLANEOUS
10.01. Holidays. Except as otherwise provided herein, whenever
any payment or action to be made or taken hereunder or under the Notes shall
be stated to be due on a day which is not a Business Day, such payment or
action shall be made or taken on the next following Business Day and such
extension of time shall be included in computing interest or fees, if any, in
connection with such payment or action.
10.02. Records. The unpaid principal amount of the Notes, the
unpaid interest accrued thereon, the interest rate or rates applicable to
such unpaid principal amount, the duration of such applicability, the Current
Commitment, the Stated Amount of each Letter of Credit, the principal amount
of all Reimbursement Obligations, the Letter of Credit Exposure, and the
accrued and unpaid Agent's fees, Unused Line Fee and Letter of Credit Fees
shall at all times be ascertained from the records of the Agent, which shall
be conclusive and binding absent manifest error.
10.03. Amendments and Waivers. (a) No amendment or
modification of any provision of this Agreement or of any of the Notes or of
any other Loan Document shall be effective without the written agreement of
the Majority Lenders and the Borrower and no termination or waiver of any
provision of this Agreement or of any of the Notes, or consent to any
departure by the Borrower therefrom, shall in any event be effective without
the written concurrence of Majority Lenders, which Majority Lenders shall
have the right to grant or withhold at their sole discretion; except that any
amendment, modification, or waiver (i) of any provision of Article II or III
which amendment, modification or waiver increases the Revolving Credit
Commitment of any Lender, reduces the principal of, or interest on, the Loans
or the Reimbursement Obligations payable to any Lender, reduces the amount of
any fee payable for the account of any Lender, or postpones or extends any
date fixed for any payment of principal of, or interest or fees on, the Loans
or Letter of Credit Exposure payable to any Lender, (ii) that increases the
aggregate amount of the Revolving Credit Commitments of the Lenders,
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(iii) of the definitions of "Termination Date", "Majority Lenders" or "Pro
Rata Shares", (iv) of the definition of "Borrowing Base" (or any defined term
which is a component thereof) if the effect of such amendment, modification
or waiver is to increase the Borrowing Base Availability of the Borrower, (v)
of any provision of this Agreement or any Loan Document that would release
all or a substantial portion of Collateral or the Guarantors (other than
inactive Guarantors) (except as set forth in Section 11.08 hereof or except
as otherwise permitted in a Loan Document) or (vi) of the provisions
contained in this Section 10.03, shall be effective only if evidenced by a
writing signed by or on behalf of (A) any Lender affected thereby in the case
of the amendments, modifications or waivers described in clause (i) above or
(B) all Lenders in the case of the amendments, modifications or waivers
described in clauses (ii) through (vi) above. No amendment, modification,
termination, or waiver of any provision of Article XI or any other provision
referring to the Agent shall be effective without the written concurrence of
the Agent. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, waiver or consent effected in accordance with this Section
10.03 shall be binding on each Lender, each future Lender, and, if signed by
the Borrower, on the Borrower.
(b) Notwithstanding anything to the contrary contained
in subsection 10.03(a), in the event that the Borrower requests that this
Agreement or any other Loan Document be amended or otherwise modified in a
manner which would require the unanimous consent of all of the Lenders and
such amendment or other modification is agreed to by the Majority Lenders,
then, with the consent of the Borrower and the Majority Lenders, the Borrower
and the Majority Lenders may amend this Agreement without the consent of the
Lender or Lenders which did not agree to such amendment or other modification
(collectively the "Minority Lenders") to provide for (i) the termination of
the Revolving Credit Commitment of each of the Minority Lenders, (ii) the
addition to this Agreement of one or more other Lenders, or an increase in
the Revolving Credit Commitment of one or more of the Majority Lenders, so
that the Revolving Credit Commitments after giving effect to such amendment
shall be in the same aggregate amount as the Revolving Credit Commitments
immediately before giving effect to such amendment, (iii) if any Loans are
outstanding at the time of such amendment, the making of such additional
Loans by such new Lenders or Majority Lenders, as the case may be, as may be
necessary to repay in full the outstanding Loans of the Minority Lenders
immediately before giving effect to such amendment and (iv) the payment of
all interest, fees and other Obligations payable or accrued in favor of the
Minority Lenders and such other modifications to this Agreement as the
Borrower and the Majority Lenders may determine to be appropriate.
10.04. No Implied Waiver; Cumulative Remedies. No course of
dealing and no delay or failure of the Lenders or the Agent in exercising any
right, power or privilege under this Agreement, the Notes or any other Loan
Document shall affect any other or future exercise thereof or exercise of any
other right, power or privilege; nor shall any single or partial exercise of
any such right, power or privilege or any abandonment or discontinuance of
steps to enforce such a right, power or privilege preclude any further
exercise thereof or of any
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other right, power or privilege. The rights and remedies of the Lenders or
the Agent under this Agreement, the Notes and the other Loan Documents are
cumulative and not exclusive of any rights or remedies which the Lenders or
the Agent have thereunder or at law or in equity or otherwise. The Lenders or
the Agent may exercise their rights and remedies against the Borrower and the
Collateral as the Lenders and the Agent may elect, and regardless of the
existence or adequacy of any other right or remedy.
10.05. Notices.
(a) All notices, requests, demands, directions and
other communications (collectively "Notices") under the provisions of this
Agreement or the Notes shall be in writing and shall be mailed (by certified
mail, postage prepaid and return receipt requested), telecopied, or delivered
and shall be effective (i) if mailed, three days after being deposited in the
mails, (ii) if telecopied, when sent, confirmation received and (iii) if
delivered, upon delivery. All notices shall be sent to the applicable party
at the address stated on the signature page hereof together with, in the case
of a letter of credit request and Letter of Credit Application sent pursuant
to Section 3.01(a), a copy to the Agent at the address for the Agent provided
on the signature page hereof, or in accordance with the last unrevoked
written direction from such party to the other parties hereto.
(b) The Lenders and the Agent may rely, and shall be
fully protected in relying, on any notice purportedly made by or on behalf of
the Borrower and the Lenders and the Agent shall have no duty to verify the
identity or authority of any Person giving such notice. The preceding
sentence shall apply to all notices whether or not made in a manner
authorized or required by this Agreement or any other Loan Document.
10.06. Expenses; Taxes; Attorneys' Fees; Indemnification. The
Borrower agrees to pay or cause to be paid, on demand, and to save the Agent
(and, in the case of clauses (c) through (m) below, the Lenders) harmless
against liability for the payment of, all reasonable out-of-pocket expenses,
regardless of whether the transactions contemplated hereby are consummated,
including but not limited to reasonable fees and expenses of counsel for the
Agent (and, in the case of clauses (c) through (m) below, the Lenders),
accounting, due diligence, periodic field audits, appraisals (limited in the
case of appraisals to $50,000 per year provided no Event of Default or
Potential Default shall have occurred and be continuing), lien, judgment and
title searches, filing fees, investigations, monitoring of assets,
syndication, miscellaneous disbursements, examination, travel, lodging and
meals, incurred by the Agent (and, in the case of clauses (c) through (m)
below, the Lenders) from time to time arising from or relating to: (a) the
negotiation, preparation, execution, delivery, performance and administration
of this Agreement and the other Loan Documents, (b) any requested amendments,
waivers or consents to this Agreement or the other Loan Documents whether or
not such documents become effective or are given, (c) the preservation and
protection of any of the Agent's and the Lenders' rights under this Agreement
or the other Loan Documents, (d) the defense of any claim or action asserted
or brought against the Agent or the Lenders by any Person that arises from or
relates to this Agreement, any other Loan Document, the Agent's or the
Lenders' claims against the Borrower, or any and all matters in connection
therewith, (e) the commencement or defense of, or intervention in, any court
proceeding
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arising from or related to this Agreement or any other Loan Document, (f) the
filing of any petition, complaint, answer, motion or other pleading by the
Agent or the Lenders, or the taking of any action in respect of the
Collateral or other security, in connection with this Agreement or any other
Loan Document, (g) the protection, collection, lease, sale, taking possession
of or liquidation of, any Collateral or other security in connection with
this Agreement or any other Loan Document, (h) any attempt to enforce any
Lien or security interest in any Collateral or other security in connection
with this Agreement or any other Loan Document, (i) any attempt to collect
from the Borrower, (j) the receipt of any advice with respect to any of the
foregoing, provided that this clause (j) shall apply to all Lenders only with
respect to the matters described in clauses (c) through (i) and clauses (k)
through (m) of this Section 10.06, (k) all Environmental Liabilities and
Costs arising from or in connection with the past, present or future
operations of the Borrower or any of its Subsidiaries involving any damage to
real or personal property or natural resources or harm or injury alleged to
have resulted from any Release of Hazardous Materials on, upon or into such
property, (l) any costs or liabilities incurred in connection with the
investigation, removal, cleanup and/or remediation of any Hazardous Materials
present or arising out of the operations of any facility of the Borrower or
any of its Subsidiaries, or (m) any costs or liabilities incurred in
connection with any Environmental Lien. Without limitation of the foregoing
or any other provision of any Loan Document: (x) the Borrower agrees to pay
all stamp, document, transfer, recording or filing taxes or fees (including,
without limitation, recording taxes) and similar impositions now or hereafter
determined by the Agent or any of the Lenders to be payable in connection
with this Agreement or any other Loan Document, and the Borrower agrees to
save the Agent and the Lenders harmless from and against any and all present
or future claims, liabilities or losses with respect to or resulting from any
omission to pay or delay in paying any such taxes, fees or impositions, and
(y) if the Borrower fails to perform any covenant or agreement contained
herein or in any other Loan Document, the Agent may itself perform or cause
performance of such covenant or agreement, and the expenses of the Agent
incurred in connection therewith shall be reimbursed on demand by the
Borrower. The Borrower agrees to indemnify and defend the Agent and the
Lenders and their directors, officers, agents, employees and affiliates
(collectively, the "Indemnified Parties") from, and hold each of them
harmless against, any and all losses, liabilities, claims, damages, costs or
expenses of any nature whatsoever (including reasonable attorneys' fees and
amounts paid in settlement) incurred by, imposed upon or asserted against any
of them arising out of or by reason of any investigation, litigation or other
proceeding or claim brought or threatened relating to, or otherwise arising
out of or relating to, the execution of this Agreement or any other Loan
Document, the transactions contemplated hereby or thereby or any Loan or
proposed Loan or Letter of Credit or proposed Letter of Credit hereunder
(including, but without limitation, any use made or proposed to be made by
the Borrower of the proceeds of any thereof, or the delivery or use or
transfer of or the payment or failure to pay under any Loan or Letter of
Credit) but excluding any such losses, liabilities, claims, damages, costs or
expenses to the extent finally judicially determined to have resulted from
the gross negligence or willful misconduct of the Indemnified Party.
10.07. Application. Except to the extent, if any, expressly
set forth in this Agreement or in the Loan Documents, the Agent and the
Lenders shall have the right to apply
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any payment received or applied by it in connection with the Obligations to
such of the Obligations then due and payable as it may elect.
10.08. Severability. The provisions of this Agreement are
intended to be severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction such
provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the
validity or enforceability thereof in any other jurisdiction or the remaining
provisions hereof in any jurisdiction.
10.09. Governing Law. This Agreement and the Notes shall be
deemed to be contracts under the laws of the State of Illinois, without
regard to choice of law principles, and for all purposes shall be governed by
and construed and enforced in accordance with the laws of said State.
10.10. Prior Understandings. This Agreement supersedes all
prior understandings and agreements, whether written or oral, among the
parties hereto relating to the transactions provided for herein other than
the Fee Letter.
10.11. Duration; Survival. All representations and warranties
of the Borrower contained herein or made in connection herewith shall survive
the making of the Loans and the issuance of any Letter of Credit and shall
not be waived by the execution and delivery of this Agreement, the Notes or
any other Loan Document, any investigation by or knowledge of the Agent or
the Lenders, the making of any Loan or the issuance of any Letter of Credit
hereunder, or any other event whatsoever. All covenants and agreements of the
Borrower contained herein shall continue in full force and effect from and
after the date hereof so long as the Borrower may borrow hereunder and until
the Obligations have been paid in full and no Letters of Credit remain
outstanding. Without limitation, it is understood that all obligations of the
Borrower to make payments to or indemnify the Agent and the Lenders
(including, without limitation, obligations arising under Section 10.06
hereof) shall survive the payment in full of the Notes and all Reimbursement
Obligations and of all other obligations of the Borrower thereunder and
hereunder, termination of this Agreement and all other events whatsoever and
whether or not any Loans are made or Letters of Credit issued hereunder.
10.12. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed an original,
but all such counterparts shall constitute but one and the same instrument.
10.13. Assignments; Participations. (a) Each Lender may with
the written consent of the Agent, which consent shall not be unreasonably
withheld, assign to one or more commercial banks or other financial
institutions a portion of its rights and obligations under this Agreement
(including, without limitation, a portion of its Revolving Credit Commitment,
the Loans owing to it and its rights and obligations as a Lender with respect
to Letters of Credit) and the other Loan Documents; provided, however, that
(i) each such assignment shall
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be in a principal amount of not less than $5,000,000 and in multiples of
$1,000,000 in excess thereof (or the remainder of such Lender's Revolving
Credit Commitment), (ii) no such assignment shall be made, other than by CIT,
prior to the Syndication Date, and (iii) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in
the Register (as hereinafter defined), an Assignment and Acceptance. Upon
such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, (A) the assignee
thereunder shall be a party hereto and to the other Loan Documents and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations
(including, without limitation, the obligation to participate in Letters of
Credit) of a Lender hereunder and thereunder and (B) the Assigned Lender
shall, to the extent that rights and obligations hereunder have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights and
be released from its obligations under this Agreement.
(b) By executing and delivering an Assignment and
Acceptance, the assigning Lender and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than
as provided in such Assignment and Acceptance, the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Document furnished pursuant hereto; (ii) the assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any of its Subsidiaries
or the performance or observance by the Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement
and the other Loan Documents, together with such other documents and
information it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee
will, independently and without reliance upon the Assigning Lender or any
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under this Agreement and the other Loan Documents; (v)
such assignee appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers under this Agreement and the other
Loan Documents as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; and (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Loan Documents
are required to be performed by it as a Lender.
(c) The Agent shall maintain at its address referred
to on the signature page hereto, a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the
names and addresses of the Lenders and the Revolving Credit Commitment of,
and principal amount of the Loans owing to and the participation interest in
the Letters of Credit, of each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower, the Agent and the Lenders may treat
each Person
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whose name is recorded in the Register as a Lender hereunder for all purposes
of this Agreement. The Register shall be available for inspection by the
Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender, an assignee and the Borrower, together with
the Note subject to such Assignment, the Agent shall, if the Agent consents
to such assignment and if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit G hereto, (i) accept such
Assignment and Acceptance, (ii) give prompt notice thereof to the Borrower
and (iii) record the information contained therein in the Register. Within
five Business Days after its receipt of such notice, the Borrower, at its own
expense, shall execute and deliver to the Agent in exchange for the
surrendered Note a new Note to the order of such assignee Lender in an
aggregate principal amount equal to the Revolving Credit Commitment assumed
by it pursuant to such Assignment and Acceptance, and if the assigning Lender
has retained any Revolving Credit Commitment hereunder, a new Note to the
order of the assigning Lender in an aggregate principal amount equal to the
Revolving Credit Commitment retained by it hereunder, in each case prepared
by the Agent. Such new Notes shall be in an aggregate principal amount equal
to the aggregate principal amount of such surrendered Note, shall be dated
the date of the Agent's acceptance of such Assignment and Acceptance and
shall otherwise be in substantially the form of Exhibit A hereto.
(e) Each Lender may sell participations to one or more
banks or other entities in or to all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of its Revolving Credit Commitment and
the Loans owing to it and its participation in Letters of Credit); provided,
that (i) such Lender's obligations under this Agreement (including, without
limitation, its Revolving Credit Commitment hereunder) and the other Loan
Documents shall remain unchanged; (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, and the Borrower, the Agent and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Loan Documents; and
(iii) a participant shall not be entitled to require such Lender to take or
omit to take any action hereunder except (A) action directly effecting an
extension of the maturity dates or decrease in the principal amount of the
Loans or Reimbursement Obligations, or (B) action directly effecting an
extension of the due dates or a decrease in the rate of interest payable on
the Loans or the fees payable under this Agreement, or (C) actions directly
effecting a release of all or a substantial portion of the Collateral or any
Guarantor (other than inactive Guarantors) (except as set forth in Section
11.08 of this Agreement or any Loan Document).
(f) Notwithstanding the foregoing provisions of this
Section 10.13, each Lender may at any time sell, assign, transfer, or
negotiate all or any part of its rights and obligations under this Agreement
and the Loan Documents to any Affiliate of such Lender.
10.14. Successors and Assigns. This Agreement and the other
Loan Documents shall be binding upon and inure to the benefit of the parties
hereto and their
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respective successors and assigns except that the Borrower may not assign or
transfer any of its rights hereunder or thereunder without the prior written
consent of all of the Lenders.
10.15. Confidentiality. Upon delivering to any Lender or the
Agent, or permitting any Lender or the Agent to inspect, any written
information pursuant to this Agreement or the other Loan Documents, each
Lender and the Agent shall treat such information as confidential to the
extent such information is conspicuously marked confidential. Each Lender and
the Agent agrees to hold such information in confidence from the date of
disclosure thereof. Subject to the other provisions of this Section 10.15,
each Lender and the Agent may disclose confidential information to its
officers, directors, employees, attorneys, accountants or other professionals
engaged by any Lender or the Agent only after determining that such third
party has been instructed to hold such information in confidence to the same
extent as if it were a Lender. Notwithstanding the foregoing, the provisions
of this Section 10.15 shall not apply to information within any one of the
following categories or any combination thereof: (i) information the
substance of which, at the time of disclosure by any Lender or the Agent, has
been disclosed to or is known to any creditor (other than information as to
which such creditor is then under an obligation of nondisclosure), or any
Person other than (A) a director, officer, employee or agent of the Borrower
or a professional engaged by the Borrower or (B) a Person who is then under
an obligation of nondisclosure (otherwise than as a consequence of a wrongful
act of any Lender or the Agent), (ii) information which any Lender or the
Agent had in its possession prior to receipt thereof from the disclosing
party, or (iii) information received by any Lender or the Agent from a third
party having no obligations of nondisclosure with respect thereto. Nothing
contained in this Section 10.15 shall prevent any disclosure: (x) believed in
good faith by any Lender or the Agent to be required by any law or guideline
or interpretation or application thereof by any Governmental Authority,
arbitrator or grand jury charged with the interpretation or administration
thereof or compliance with any request or directive of any Governmental
Authority, arbitrator or grand jury (whether or not having the force of law),
(y) determined by counsel for any Lender or the Agent to be necessary or
advisable in connection with enforcement or preservation of rights under or
in connection with this Agreement or any other Loan Document or (z) of any
information which has been made public by a Person other than any Lender or
the Agent who, to the Agent's or such Lender's actual knowledge, was then
under an obligation of nondisclosure. The Lenders and the Agent shall have
the right to disclose any confidential information described in this Section
10.15 to the Letter of Credit Issuer and to an assignee or prospective
assignee or to a participant or prospective participant in Loans hereunder,
provided that the assigning or selling Lender shall have obtained from such
assignee or prospective assignee or participant or prospective participant an
agreement to hold such information in confidence to the same extent as if it
were a Lender.
10.16. Waiver of Jury Trial. BY ITS EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE AGENT, EACH LENDER AND THE BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR
IN CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT, ANY
OF THE
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TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT,
THE LENDERS, OR THE BORROWER IN CONNECTION HEREWITH OR THEREWITH. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS TO ENTER
INTO THIS AGREEMENT.
10.17. Right of Setoff. Upon the occurrence and during the
continuance of any Event of Default any Lender, the Agent and the Letter of
Credit Issuer may, and is hereby authorized to, at any time from time to
time, without notice to the Borrower (any such notice being expressly waived
by the Borrower) and to the fullest extent permitted by law, set off and
apply any and all deposits (general or special, time or demand, provision or
final) at any time held and other indebtedness at any time owing by such
Lender, the Agent or the Letter of Credit Issuer to or for the credit or the
account of the Borrower against any and all Obligations of the Borrower now
or hereafter existing under the Loan Documents, irrespective of whether or
not any Lender, the Agent and the Letter of Credit Issuer shall have made any
demand hereunder or thereunder and although such Obligations may be
contingent or unmatured. Each Lender, the Agent and the Letter of Credit
Issuer agrees promptly to notify the Borrower after any such setoff and
application made by such Lender, the Agent or the Letter of Credit Issuer;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Lender, the Agent
and the Letter of Credit Issuer under this Section 10.17 are in addition to
the other rights and remedies (including, without limitation, other rights of
setoff under applicable law or otherwise) which such Lender, the Agent or the
Letter of Credit Issuer may have.
10.18. Headings. Section headings herein are included for
convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
10.19. Forum Selection and Consent to Jurisdiction. Any
litigation based hereon, or arising out of, under or in connection with, this
Agreement or any other Loan Document, or any course of conduct, course of
dealing, statement (whether verbal or written) or action of the Agent, any
Lender, the Letter of Credit Issuer or the Borrower may be brought and
maintained exclusively in the courts of the State of Illinois or the United
States District Court for the Southern District of Illinois; provided,
however, that any suit seeking enforcement against any Collateral or other
property may be brought, at the Agent's option, in the courts of any
jurisdiction where such Collateral or other property may be found. The
Borrower hereby expressly and irrevocably submits to the jurisdiction of the
courts of the State of Illinois and of the United States District Court for
the Southern District of Illinois for the purpose of any such litigation and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with such litigation. The Borrower further irrevocably consents to the
service of process (i) by registered or certified mail, postage prepaid, to
the Borrower at its address for notices contained in Section 10.05 hereof,
such service to become effective five days after such mailing, or (ii) by
personal service within or without the State of Illinois. Nothing herein
shall affect the right of the Agent, any Lender or the Letter of Credit
Issuer to service of process in any other manner permitted by law. The
Borrower hereby expressly and
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irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of venue of any such
litigation brought in any such court referred to above and any claim that any
such litigation has been brought in an inconvenient forum. To the extent that
the Borrower has or hereafter may acquire any immunity from jurisdiction of
any court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution or otherwise)
with respect to itself or its property, the Borrower hereby irrevocably
waives such immunity in respect of its obligations under this Agreement and
the other Loan Documents.
ARTICLE XI
THE AGENT
11.01. Appointment. Each Lender (and each subsequent holder of
any Note by its acceptance thereof) hereby irrevocably appoints and
authorizes CIT, in its capacity as Agent (i) to receive on behalf of each
Lender any payment of principal of or interest on the Notes outstanding
hereunder and all other amounts accrued hereunder for the account of the
Lenders and paid to the Agent, and, subject to Section 2.03 of this
Agreement, to distribute promptly to each Lender its Pro Rata Share of all
payments so received, (ii) to distribute to each Lender copies of all
material notices and agreements received by the Agent and not required to be
delivered to each Lender pursuant to the terms of this Agreement, provided
that the Agent shall not have any liability to the Lenders for the Agent's
inadvertent failure to distribute any such notice or agreements to the
Lenders, and (iii) subject to Section 10.03 of this Agreement, to take such
action as Agent deems appropriate on its behalf to administer the Loans,
Letters of Credit and the Loan Documents and to exercise such other powers
delegated to the Agent by the terms hereof or the Loan Documents (including,
without limitation, the power to give or to refuse to give notices, waivers,
consents, approvals and instructions and the power to make or to refuse to
make determinations and calculations) together with such powers as are
reasonably incidental thereto to carry out the purposes hereof and thereof.
As to any matters not expressly provided for by this Agreement and the other
Loan Documents (including, without limitation, enforcement or collection of
the Notes), the Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Lenders, and such instructions of the Majority
Lenders shall be binding upon all Lenders and all holders of Notes; provided,
however, that the Letter of Credit Issuer shall not be required to refuse to
honor a drawing under any Letter of Credit and the Agent shall not be
required to take any action which, in the reasonable opinion of the Agent,
exposes the Agent to liability or which is contrary to this Agreement or any
Loan Document or applicable law.
11.02. Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of the Agent shall be mechanical and
administrative in nature. The Agent shall not have by
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reason of this Agreement or any Loan Document a fiduciary relationship in
respect of any Lender. Nothing in this Agreement or any of the Loan
Documents, express or implied, is intended to or shall be construed to impose
upon the Agent any obligations in respect of this Agreement or any of the
Loan Documents except as expressly set forth herein or therein. Each Lender
shall make its own independent investigation of the financial condition and
affairs of the Borrower in connection with the making and the continuance of
the Loans hereunder and with the issuance of the Letters of Credit and shall
make its own appraisal of the creditworthiness of the Borrower and the value
of the Collateral, and the Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the initial Credit Extension hereunder or at any time or times
thereafter, provided that, upon the reasonable request of a Lender, the Agent
shall provide to such Lender any documents or reports delivered to the Agent
by the Borrower pursuant to the terms of this Agreement or any Loan Document.
If the Agent seeks the consent or approval of the Majority Lenders to the
taking or refraining from taking any action hereunder, the Agent shall send
notice thereof to each Lender. The Agent shall promptly notify each Lender
any time that the Majority Lenders have instructed the Agent to act or
refrain from acting pursuant hereto.
11.03. Rights, Exculpation, Etc. The Agent and its directors,
officers, agents or employees shall not be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement
or the other Loan Documents, except for their own gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction. Without limiting the generality of the foregoing, the Agent (i)
may treat the payee of any Note as the holder thereof until the Agent
receives written notice of the assignment or transfer thereof, pursuant to
Section 10.13 hereof, signed by such payee and in form satisfactory to the
Agent; (ii) may consult with legal counsel (including, without limitation,
counsel to the Agent or counsel to the Borrower), independent public
accountants, and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iii) makes no warranty
or representation to any Lender and shall not be responsible to any Lender
for any statements, certificates, warranties or representations made in or in
connection with this Agreement or the other Loan Documents; (iv) shall not
have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement or the other
Loan Documents on the part of any Person, the existence or possible existence
of any Potential Default or Event of Default, or to inspect the Collateral or
other property (including, without limitation, the books and records) of any
Person; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; and (vi) shall not be deemed to have
made any representation or warranty regarding the existence, value or
collectibility of the Collateral, the existence, priority or perfection of
the Agent's Lien thereon, or the Borrowing Base or any certificate prepared
by the Borrower in connection therewith, nor shall the Agent be responsible
or liable to the Lenders for any failure to monitor or maintain the Borrowing
Base or any portion of the Collateral. The Agent shall not be liable for any
apportionment or distribution of payments made by it in good faith pursuant
to Section 2.08(c), and if any such
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apportionment or distribution is subsequently determined to have been made in
error the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the amount
which they are determined to be entitled. The Agent may at any time request
instructions from the Lenders with respect to any actions or approvals which
by the terms of this Agreement or of any of the Loan Documents the Agent is
permitted or required to take or to grant, and if such instructions are
promptly requested, the Agent shall be absolutely entitled to refrain from
taking any action or to withhold any approval under any of the Loan Documents
until it shall have received such instructions from the Majority Lenders.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining
from acting under this Agreement, the Notes, or any of the other Loan
Documents in accordance with the instructions of the Majority Lenders.
11.04. Reliance. The Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and
to have been signed, sent or made by the proper Person, and with respect to
all matters pertaining to this Agreement or any of the Loan Documents and its
duties hereunder or thereunder, upon advice of counsel selected by it.
11.05. Indemnification. To the extent that the Agent is not
reimbursed and indemnified by the Borrower, the Lenders will reimburse and
indemnify the Agent for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses,
advances or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Agent in any way relating to
or arising out of this Agreement or any of the Loan Documents or any action
taken or omitted by the Agent under this Agreement or any of the Loan
Documents, in proportion to each Lender's Pro Rata Share, including, without
limitation, advances and disbursements made pursuant to Section 11.08;
provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, advances or disbursements for which there has been a
final judicial determination that such resulted from the Agent's gross
negligence or willful misconduct. The obligations of the Lenders under this
Section 11.05 shall survive the payment in full of the Loans and
Reimbursement Obligations and the termination of this Agreement.
11.06. CIT Individually. With respect to its Pro Rata Share of
the Revolving Credit Commitments hereunder, the Loans made by it and the Note
issued to or held by it, CIT shall have and may exercise the same rights and
powers hereunder and is subject to the same obligations and liabilities as
and to the extent set forth herein for any other Lender or holder of a Note.
The terms "Lenders" or "Majority Lenders" or any similar terms shall, unless
the context clearly otherwise indicates, include CIT in its individual
capacity as a Lender or one of the Majority Lenders. CIT and its Affiliates
may accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with the Borrower or any of its Subsidiaries
as if it were not acting as Agent pursuant hereto without any duty to account
to the Lenders. The Lenders acknowledge and agree that Chase Manhattan Bank,
as the Letter of Credit Issuer, is an Affiliate of the Agent, and may take
actions which are not in the interests
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of, or may have an adverse effect on, the Lenders, or may omit to take
actions which would be in the interests of, or would have a favorable
effect on, the Lenders, and the Lenders will not assert any claim against
the Agent based on actions or omissions by the Letter of Credit Issuer
and will not assert any such actions or omissions as a defense or
offset to the Lenders' obligations hereunder.
11.07. Successor Agent.
(a) The Agent may resign from the performance of all
its functions and duties hereunder and under the other Loan Documents at any
time by giving at least thirty (30) Business Days' prior written notice to
the Borrower and each Lender. Such resignation shall take effect upon the
acceptance by a successor Agent of appointment pursuant to clauses (b) and
(c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Majority
Lenders shall appoint a successor Agent who shall be reasonably satisfactory
to the Borrower. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any
Agent's resignation hereunder as the Agent, the provisions of this Article XI
shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement and the other Loan Documents.
(c) If a successor Agent shall not have been so
appointed within said thirty (30) Business Day period, the retiring Agent,
with the consent of the Borrower, shall then appoint a successor Agent who
shall serve as Agent until such time, if any, as the Majority Lenders, with
the consent of the Borrower, appoint a successor Agent as provided above.
11.08. Collateral Matters.
(a) The Agent may from time to time, during the
occurrence and continuance of an Event of Default, make such disbursements
and advances ("Agent Advances") which the Agent, in its sole discretion,
deems necessary or desirable to preserve or protect the Collateral or any
portion thereof, to enhance the likelihood or maximize the amount of
repayment by the Borrower of the Loans and other Obligations or to pay any
other amount chargeable to the Borrower pursuant to the terms of this
Agreement, including, without limitation, costs, fees and expenses as
described in Section 10.06. The Agent Advances shall be repayable on demand
and be secured by the Collateral. The Agent Advances shall not constitute
Loans but shall otherwise constitute Obligations hereunder. The Agent shall
notify
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each Lender and the Borrower in writing of each such Agent Advance, which
notice shall include a description of the purpose of such Agent Advance.
Without limitation to its obligations pursuant to Section 11.05, each Lender
agrees that it shall make available to the Agent, upon the Agent's demand, in
Dollars in immediately available funds, the amount equal to such Lender's Pro
Rata Share of each such Agent Advance. If such funds are not made available
to the Agent by such Lender the Agent shall be entitled to recover such
funds, on demand from such Lender together with interest thereon, for each
day from the date such payment was due until the date such amount is paid to
the Agent, at the customary rate set by the Agent for the correction of
errors among banks for three Business Days and thereafter at the Regular
Rate.
(b) The Lenders hereby irrevocably authorize the
Agent, at its option and in its discretion, to release any Lien granted to or
held by the Agent upon any Collateral upon termination of the Revolving
Credit Commitments and payment and satisfaction of all Loans, Reimbursement
Obligations, other Letter of Credit Exposure (whether or not due) and all
other Obligations which have matured and which the Agent has been notified in
writing are then due and payable; or constituting property being sold or
disposed of if the Borrower certifies to the Agent that the sale or
disposition is made in compliance with Section 8.04 (b) hereof (and the Agent
may rely conclusively on any such certificate, without further inquiry); or
constituting property in which the Borrower owned no interest at the time the
Lien was granted or at any time thereafter; or if approved, authorized or
ratified in writing by the Majority Lenders. Upon request by the Agent at any
time, the Lenders will confirm in writing the Agent's authority to release
particular types or items of Collateral pursuant to this Section 11.08(b).
(c) Without in any manner limiting the Agent's
authority to act without any specific or further authorization or consent by
the Majority Lenders (as set forth in Section 11.08(b)), each Lender agrees
to confirm in writing, upon request by the Agent, the authority to release
Collateral conferred upon the Agent under Section 11.08(b). So long as no
Event of Default is then continuing, upon receipt by the Agent of
confirmation from the Majority Lenders of its authority to release any
particular item or types of Collateral, and upon prior written request by the
Borrower, the Agent shall (and is hereby irrevocably authorized by the
Lenders to) execute such documents as may be necessary to evidence the
release of the Liens granted to the Agent for the benefit of the Lenders upon
such Collateral; provided, however, that (i) the Agent shall not be required
to execute any such document on terms which, in the Agent's opinion, would
expose the Agent to liability or create any obligations or entail any
consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Lien upon (or obligations of the Borrower in
respect of) all interests in the Collateral retained by the Borrower.
(d) The Agent shall have no obligation whatsoever to
any Lenders to assure that the Collateral exists or is owned by the Borrower
or is cared for, protected or insured or has been encumbered or that the Lien
granted to the Agent pursuant to the Security Documents has been properly or
sufficiently or lawfully created, perfected, protected or
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enforced or is 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 the Agent in this Section 11.08 or in any of the Loan
Documents, it being understood and agreed that in respect of the Collateral,
or any act, omission or event related thereto, the Agent may act in any
manner it may deem appropriate, in its sole discretion, given the Agent's own
interest in the Collateral as one of the Lenders and that the Agent shall
have no duty or liability whatsoever to any other Lender.
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed and delivered this Agreement as of
the date first above written.
BORROWER:
XXXXXXXX STORES INC.
By: /s/ XXXX X. XXXXXXX
------------------------------------
Xxxx X. Xxxxxxx
Vice Chairman of the Board
Address for Notices:
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: 000-000-0000
Telecopier: 000-000-0000
AGENT AND LENDER:
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ XXXXXXX X. XXXX
------------------------------------
Xxxxxxx X. Xxxx
Vice President and Regional Manager
Address for Notices:
The CIT Group/Business Credit, Inc.
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Regional Manager
Telephone: 000-000-0000
Telecopier: 000-000-0000
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