EXHIBIT 10.5
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DEBTOR-IN-POSSESSION REVOLVING CREDIT AGREEMENT
dated as of October 16, 2000
among
WEINER'S STORES, INC.
AS BORROWER,
THE FINANCIAL INSTITUTIONS PARTY HERETO,
AS LENDERS
and
THE CIT GROUP/BUSINESS CREDIT, INC.,
AS AGENT AND AS LENDER
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$35,000,000
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80289.0003
Table of Contents
Section Title Page
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ARTICLE I DEFINITIONS; CONSTRUCTION........................................................................................2
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1.01. Certain Definitions............................................................................................2
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1.02. Construction..................................................................................................20
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1.03. Accounting Principles.........................................................................................20
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ARTICLE II THE CREDITS....................................................................................................20
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2.01. Revolving Credit Loans........................................................................................20
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2.02. Notes.........................................................................................................21
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2.03. Notice of Borrowing; Making of Loans..........................................................................21
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2.04. Termination or Reduction of Commitment; Mandatory Prepayment; Optional Prepayment.............................24
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2.05. Interest Rate.................................................................................................26
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2.06. Interest Payment Dates........................................................................................26
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2.07. Amortization..................................................................................................26
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2.08. Payments......................................................................................................26
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2.09. Use of Proceeds...............................................................................................29
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2.10. Eurodollar Rate Not Determinable; Inability to Determine Interest Rate; Illegality or Impropriety.............29
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2.11. Reserve Requirements; Capital Adequacy Circumstances..........................................................30
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2.12. Indemnity.....................................................................................................32
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2.13. Right of Set-Off; Sharing of Set-Offs.........................................................................32
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2.14. Continuation and Conversion of Loans..........................................................................33
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2.15. Taxes.........................................................................................................34
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2.16. Payment of Pre-Petition Obligations...........................................................................36
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ARTICLE III LETTERS OF CREDIT.............................................................................................36
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3.01. Letters of Credit.............................................................................................36
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3.02. Participations................................................................................................40
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ARTICLE IV BORROWING BASE.................................................................................................41
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4.01. Condition of Lending and Assisting in Establishing or Opening Letters of Credit...............................41
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4.02. Mandatory Prepayment..........................................................................................41
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4.03. Rights and Obligations Unconditional..........................................................................42
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4.04. Borrowing Base Certificate....................................................................................42
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4.05. General Provisions............................................................................................42
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ARTICLE V SECURITY; ADMINISTRATIVE PRIORITY...............................................................................43
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5.01. Grant of Lien and Security Interest...........................................................................43
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5.02. Perfection of Security Interests..............................................................................46
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5.03. Performance by the Lenders of Borrower's Obligations..........................................................47
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5.04. Limitation on the Lenders' Duty in Respect of Collateral......................................................47
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5.05. Remedies, Rights Upon Default.................................................................................47
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5.06. Automatic Stay................................................................................................48
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5.07. The Agent's Appointment as Attorney-in-Fact...................................................................49
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ARTICLE VI REPRESENTATIONS AND WARRANTIES.................................................................................50
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6.01. Organization, Good Standing, Etc..............................................................................50
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6.02. Authorization, Etc............................................................................................51
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6.03. Governmental Approvals........................................................................................51
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6.04. Enforceability of Loan Documents..............................................................................51
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6.05 Subsidiaries...................................................................................................51
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6.06. Absence of Conflicts..........................................................................................51
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6.07. Financial Statements..........................................................................................52
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6.08. No Event of Default...........................................................................................52
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6.09. Litigation....................................................................................................52
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6.10. ERISA.........................................................................................................52
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6.11. Taxes, Etc....................................................................................................53
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6.12. Regulation U..................................................................................................53
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6.13. Adverse Agreements, Etc.......................................................................................53
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6.14. Holding Company and Investment Company Acts...................................................................53
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6.15 Permits, Etc...................................................................................................53
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6.16. Priority Title................................................................................................53
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6.17. Financial Accounting Practices, Etc...........................................................................54
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6.18. Power To Carry On Business....................................................................................54
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6.19. No Material Adverse Change....................................................................................54
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6.20. Existing Liens; Capitalized Leases; Unpaid Rent...............................................................54
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6.21. Compliance with Laws..........................................................................................55
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6.22. Accurate and Complete Disclosure..............................................................................55
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6.23. Insurance.....................................................................................................55
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6.24. Operating Lease Obligations...................................................................................55
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6.25. Environmental Matters.........................................................................................55
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6.26. Schedules.....................................................................................................57
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6.27. Administrative Priority; Lien Priority........................................................................57
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6.28. Bankruptcy Court Order........................................................................................58
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6.29. Real Property.................................................................................................58
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6.30. Location of Bank Accounts.....................................................................................59
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6.31. Use of Proceeds...............................................................................................59
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6.32. Inventory.....................................................................................................59
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6.33. Intellectual Property.........................................................................................59
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6.34. Nature of Business............................................................................................60
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ARTICLE VII CONDITIONS OF CREDIT EXTENSIONS...............................................................................60
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7.01. Conditions Precedent to Initial Credit Extension..............................................................60
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7.02. Conditions Precedent to Each Credit Extension.................................................................61
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ARTICLE VIII AFFIRMATIVE COVENANTS........................................................................................63
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8.01. Reporting Requirements........................................................................................63
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8.02. Preservation of Existence and Franchises......................................................................67
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8.03. Keeping of Records and Books of Account.......................................................................68
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8.04. [INTENTIONALLY OMITTED].......................................................................................68
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8.05. Maintenance of Insurance......................................................................................68
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8.06. Maintenance of Properties, Etc................................................................................68
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8.07. Environmental Indemnity.......................................................................................69
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8.08. Financial Accounting Practices, Etc...........................................................................70
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8.09. Compliance with Laws..........................................................................................70
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8.10. Further Assurances............................................................................................70
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8.11. Cash Management System........................................................................................71
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8.12. Taxes.........................................................................................................72
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8.13. Borrowing Base................................................................................................72
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8.14. Change in Collateral; Collateral Records......................................................................72
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8.15. Leases........................................................................................................72
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8.16. New Real Estate...............................................................................................73
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8.17. Subsidiaries..................................................................................................73
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8.18. Sales Tax Escrow Account......................................................................................74
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ARTICLE IX NEGATIVE COVENANTS.............................................................................................74
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9.01. Interim Bankruptcy Court Order; Final Bankruptcy Court Order; Administrative Priority; Lien
Priority; Payment of Claims.....................................................................74
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9.02. Liens.........................................................................................................74
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9.03. Indebtedness..................................................................................................75
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9.04. Guarantees, Etc...............................................................................................76
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9.05. Loans, Advances and Investments, Etc..........................................................................76
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9.06. Dividends, Prepayments, Etc...................................................................................77
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9.07. Merger, Consolidation, Sale of Assets, Etc....................................................................77
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9.08. Transactions With Affiliates..................................................................................77
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9.09. Continuation of or Change in Business.........................................................................78
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9.10 Lease Obligations..............................................................................................78
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9.11. Capital Expenditures..........................................................................................78
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9.12. Markup and Markdown Policies..................................................................................78
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9.13. Federal Reserve Regulations...................................................................................78
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9.14. Environmental.................................................................................................78
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9.15. ERISA.........................................................................................................78
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9.16. Maintenance of Inventory......................................................................................79
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9.17. Cumulative FIFO EBITDA........................................................................................79
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9.18. Payments......................................................................................................80
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ARTICLE X DEFAULTS........................................................................................................81
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10.01. Events of Default............................................................................................81
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10.02. Consequences of an Event of Default..........................................................................83
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10.03. Deposit for Letters of Credit................................................................................84
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10.04. Certain Remedies.............................................................................................84
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ARTICLE XI MISCELLANEOUS..................................................................................................85
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11.01. Holidays.....................................................................................................85
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11.02. Records......................................................................................................85
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11.03. Amendments and Waivers.......................................................................................85
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11.04. No Implied Waiver; Cumulative Remedies.......................................................................86
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11.05. Notices......................................................................................................86
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11.06 Expenses; Taxes; Attorneys' Fees; Indemnification.............................................................87
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11.07. Application..................................................................................................88
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11.08. Severability.................................................................................................88
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11.09. Governing Law................................................................................................88
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11.10. Prior Understandings.........................................................................................88
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11.11. Duration; Survival...........................................................................................88
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11.12. Counterparts.................................................................................................89
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11.13. Assignment; Participations...................................................................................89
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11.14. Successors and Assigns.......................................................................................91
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11.15. Confidentiality..............................................................................................91
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11.16. The Agent and the Lenders as Party in Interest...............................................................92
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11.17. Waiver of Jury Trial.........................................................................................92
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11.18. Right of Setoff..............................................................................................92
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11.19. Headings.....................................................................................................93
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ARTICLE XII THE AGENT.....................................................................................................93
12.01. Appointment..................................................................................................93
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12.02. Nature of Duties.............................................................................................93
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12.03. Rights, Exculpation, Etc.....................................................................................94
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12.04. Reliance.....................................................................................................94
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12.05. Indemnification..............................................................................................94
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12.06. CIT Individually.............................................................................................95
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12.07. Successor Agent..............................................................................................95
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12.08. Collateral Matters...........................................................................................95
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Exhibit A Assignment and Acceptance
Exhibit B Depository Accounts Agreements
Exhibit C Interim Bankruptcy Court Order
Exhibit D Promissory Note(s)
Exhibit E Restricted Account Agreement
Exhibit F Subsidiary Guaranty
Exhibit G Letter of Credit Application
Exhibit H Borrowing Base Certificate
Exhibit I Credit Card Bank Depository Account Agreement
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Schedule 1.01(A) Inventory Locations (distribution centers, warehouse, retail)
Schedule 3.01(c) Letters of Credit issued pursuant to the Pre-Petition Loan Agreement
and outstanding on Entry Date
Schedule 5.01(a)(v) Trademark Licenses
Schedule 5.01(a)(vi) Patent Licenses
Schedule 5.01(a)(vii) Accounts List
Schedule 6.09 Litigation
Schedule 6.10 ERISA Plans
Schedule 6.23 Insurance
Schedule 6.24 Operating Lease Obligations
Schedule 6.25 Environmental Matters
Schedule 6.29(a) Real Property
Schedule 6.30 Location of Bank Accounts
Schedule 9.02 Liens
Schedule 9.03 Indebtedness
Schedule 9.04 Guarantees
Schedule 9.07(b) List of Stores to be Closed
Schedule 9.18 Allowed Payments of Secured Indebtedness
v
DEBTOR-IN-POSSESSION REVOLVING CREDIT AGREEMENT
THIS AGREEMENT, dated as of October 16, 2000, between
WEINER'S STORES, INC., a Delaware 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").
INTRODUCTION
WHEREAS, the Borrower, the Agent and the Lenders are party
to a Revolving Credit Agreement dated as of August 26, 1997 (as may have been
amended from time to time prior to the date hereof, the "Pre-Petition Loan
Agreement"); and
WHEREAS, on October 16, 2000 (the "Filing Date"), the
Borrower filed a voluntary petition for relief under chapter 11 of the
Bankruptcy Code with the United States Bankruptcy Court for the District of
Delaware; and
WHEREAS, the Borrower is continuing to operate its
businesses and manage its properties as a debtor-in-possession pursuant to
sections 1107 and 1108 of the Bankruptcy Code; and
WHEREAS, certain capitalized terms used herein but not
defined above are defined in Article I; and
WHEREAS, the Borrower hereby acknowledges, confirms and
agrees that it is indebted to CIT for the Pre-Petition Obligations, both
absolute and contingent, as of October 16, 2000, in respect of the loans and
advances made to Borrower and letters of credit caused to be issued for the
account of Borrower pursuant to the Pre-Petition Loan Agreement in the aggregate
principal amount of approximately $28,686,210 together with interest accrued and
accruing thereon, letter of credit guaranty fees, and costs, expenses, fees
(including attorneys' fees) and other charges now or hereafter owed by the
Borrower to the Lenders, all of which is unconditionally owing by the Borrower
to the Lenders, without offset, defense or counterclaim of any kind, nature and
description whatsoever; and
WHEREAS, the Borrower hereby acknowledges, confirms and
agrees that, subject only to the prior liens on its property existing on the
Filing Date, but only to the extent that such liens are valid, perfected and
non-voidable in accordance with applicable law ("Existing Valid Liens"), CIT has
and the Lenders shall continue to have valid, enforceable and perfected first
priority and senior liens upon and security interests in all Pre-Petition
Collateral heretofore granted to Lender pursuant to the Pre-Petition Loan
Documents as in effect prior to the date hereof to secure all of the
Obligations, as well as valid and enforceable first priority and senior liens
upon and in all Collateral granted to the Lenders under the Interim Bankruptcy
Court Order, the Final Bankruptcy Court Order or hereunder or under any Loan
Document or otherwise granted to or held by the Lenders; and
WHEREAS, an immediate and on-going need exists for the
Borrower to obtain additional funds in order to continue the operation of its
business as a debtor-in-possession under chapter 11 of the Bankruptcy Code and,
accordingly, the Borrower requested that the Lenders extend post-petition
financing and make revolving credit and term loan advances and assist the
Borrower in establishing, opening or maintaining letters of credit and the
Lenders are willing to provide such post-petition financing and incur such
additional obligations pursuant to sections 364(c)(1), (c)(2) and (c)(3) of the
Bankruptcy Code but only for the purposes and upon the terms and conditions set
forth in this Agreement; and
WHEREAS, it is contemplated by the parties hereto that on
or after the Filing Date, the Bankruptcy Court will enter the Interim Bankruptcy
Court Order and the Final Bankruptcy Court Order, which will approve this
Agreement and will authorize the Borrower, pursuant to section 364 of the
Bankruptcy Code, to incur secured and super-priority indebtedness under the
terms and conditions of this Agreement; and
WHEREAS, in accordance with the Interim Bankruptcy Court
Order, the Final Bankruptcy Court Order (when entered by the Bankruptcy Court)
and this Agreement, the Lenders will make post-petition loans and other
financial accommodations to the Borrower;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, 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:
"Affiliate" of a Person shall mean any Person which
directly or indirectly controls, or 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; provided, however, that Chase Bank
of Texas, N.A. shall not be deemed to be an "Affiliate" of the Borrower under
clause (a) hereof.
"Agent" shall have the meaning given that term in the
Introduction to this Agreement.
"Agent Account" shall mean an account in the name of the
Agent, initially in New York, New York, designated to the Borrower from time to
time into which the Borrower shall make all payments to the Agent under this
Agreement.
2
"Agreed Administrative Expense Priorities" shall mean these
administrative expenses with respect to the Borrower and, with respect to clause
(ii) of clause "first" below, any official committee appointed by the Bankruptcy
Court in the Chapter 11 Case, shall have the following order of priority:
first, (i) amounts payable pursuant to 28 U.S.C. ss.
1930(a)(6) and (ii) allowed fees and expenses of attorneys,
accountants, financial advisors, consultants and other professionals
retained by the Debtor or any official unsecured creditors' committee
appointed in the Chapter 11 Case pursuant to Sections 327 and 1103 of
the Bankruptcy Code, as the case may be (including any accrued and
unpaid fees and expenses), whether incurred prior to or following an
Event of Default (collectively, the "Professional Expenses");
provided, that after the occurrence and during the continuance of an
Event of Default or the Termination Date the aggregate amount of
Professional Expenses entitled to priority under clause "(ii)" shall
not exceed the amount necessary to pay Professional Expenses for a
thirty (30) day period (calculated based upon the 30 day period
immediately prior to such Event of Default or Termination Date, as
the case may be) up to $300,000 plus the amount then available in the
Professional Expense Reserve to pay Professional Expenses (the
"Professional Expense Cap"); provided, further, that the following
Professional Expenses shall not be entitled to priority under this
clause "(ii)": Professional Expenses incurred in connection with the
assertion or joinder in any claim, counterclaim, action, proceeding,
application, motion, objection, defenses or other contested matter,
the purpose of which is to seek any order, judgment, determination or
similar relief (A) invalidating, setting aside, avoiding,
subordinating, in whole or in part, (i) the Pre-Petition Obligations
or the Obligations or (ii) the Lenders' liens in the Collateral or
the Pre-Petition Liens or (B) preventing, hindering or delaying,
whether directly or indirectly, the Lenders' assertions or
enforcement of its liens, security interests or realization upon any
Collateral or the Pre-Petition Lenders' assertion or enforcement of
the Pre-Petition Liens; and provided, further, that the agreement to
a limited priority for Professional Expenses shall not waive any
right of the Lenders or the Agent to object to fees and expenses
constituting such Professional Expenses or be construed as consent to
the allowance of any fees and expenses and nothing herein shall be
construed to obligate the Lenders or the Agent, in any way, to pay
the Professional Expenses or to assure that the Debtors have
sufficient funds on hand to pay such Professional Expenses.
second, all Obligations, and
third, all other allowed administrative expenses.
"Agreement" shall mean this Debtor-in-Possesion Revolving
Credit Agreement as amended, modified, supplemented or restated from time to
time.
"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 A hereto.
3
"Availability" shall mean, at any time, the difference
between (i) the lesser of (A) the Borrowing Base and (B)
the Current Commitment and (ii) the sum of (A) the aggregate outstanding
principal amount of all Loans and (B) the Letter of Credit Exposure.
"Availability Date" shall mean the first date on which each
of the conditions set forth in Section 7.01 shall have been satisfied.
"Bank" shall mean The Chase Manhattan Bank, its successors
or any other bank designated by Borrower to the Agent from time to time that is
reasonably acceptable to the Agent.
"Bankruptcy Code" shall mean Xxxxx 00, Xxxxxx Xxxxxx Code,
11 U.S.C.ss.ss.101 et seq., as amended, or any successor statute thereto.
"Bankruptcy Court" shall mean the United States Bankruptcy
Court for the District of Delaware or such other court having original
jurisdiction over the Chapter 11 Case.
"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 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) or (ii) market value (both cost and market
value being determined in accordance with GAAP calculated on the first in first
out basis), excluding adjustments relating to the uniform capitalization of
inventory.
"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 the
difference between (i) the sum of (A) the lesser of (1) 70% of the Book Value of
Eligible Inventory and (2) 90% of the net recovery (liquidation value) of
Eligible Inventory as determined by the most recent inventory appraisal
conducted by Hilco Appraisal Services, LLC (or any other appraisal service
acceptable to the Agent) on behalf of the Lenders and (B) $2,700,000 less (ii)
$750,000 (which amount can be reduced in the Agent's sole discretion), provided
that the dollar amount of such $750,000 reduction shall be decreased by $10,000
for each landlord waiver delivered prior to the Filing Date in accordance with
the Pre-Petition Loan Agreement with respect to a retail store location of the
Borrower.
4
"Borrowing Base Certificate" shall have the meaning given
that term in Section 4.04(a) hereof.
"Borrowing Date" shall mean any date on which a Loan is
made pursuant to Section 2.03, which date shall be a Business Day.
"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 an Interbank
Market.
"Capital Expenditures" shall mean, for any period, the sum,
without duplication, of (i) the aggregate amount of all expenditures during such
period which, in accordance with GAAP, are required to be included in property,
plant or equipment or similar fixed asset accounts plus (ii) the entire
principal amount of any debt obligations (including, without limitation,
Capitalized Lease Obligations) assumed in connection with any such 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.
"Carve-Out Expenses" shall mean those amounts, fees,
expenses and claims set forth in, and subject to, clause "first" of the
definition of the term "Agreed Administrative Expense Priorities."
"Cash Concentration Account" shall mean the deposit account
maintained by the Borrower at the Cash Concentration Account Bank which deposit
account shall be under the sole dominion and control of the Agent.
"Cash Concentration Account Bank" shall mean the Chase Bank
of Texas, N.A. or such other bank as the Borrower may select with the written
approval of the Agent.
"Cash Concentration Account Blockage Date" shall mean the
date on which the Agent, after the occurrence and during the continuance of an
Event of Default, instructs the Cash Concentration Account Bank, pursuant to the
Restricted Account Agreement, to remit all amounts deposited in the Cash
Concentration Account to the Agent Account or as the Agent shall direct.
"Chapter 11 Case" shall mean the Borrower's case under
chapter 11 of the Bankruptcy Code, pending in the Bankruptcy Court.
"CIT" shall have the meaning given that term in the
introductory paragraph to this Agreement.
5
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to sections
of the Code shall be construed also to refer to any successor sections.
"Collateral" shall have the meaning given that term in
Section 5.01 hereof.
"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.
"Contaminant" means any waste, pollutant, hazardous
substance, toxic substance or hazardous waste, including any such substance
regulated under any Environmental Law.
"Contracts" shall mean all contracts, undertakings, or
other agreements (other than rights evidenced by chattel paper, documents or
instruments) in or under which the Borrower may now or hereafter have any right,
title or interest, including, without limitation, with respect to an account, or
any agreement relating to the terms of payment or the terms of performance
thereof.
"Credit Extension" shall mean (a) the making of any Loan by
the Lenders or the Agent on behalf of the Lenders or (b) the issuance, or
extension of the expiration date of, any Letter of Credit which the Agent or any
Lender assists the Borrower in opening or establishing.
"Cumulative FIFO EBITDA" shall mean with respect to the
fiscal quarter ending on October 28, 2000 and each fiscal quarter thereafter,
the aggregate FIFO EBITDA for such fiscal quarter and the preceding three fiscal
quarters (i.e., a rolling twelve (12) month basis).
"Current Commitment" shall have the meaning assigned to
that term in Section 2.01 hereof.
"Depository Accounts" shall mean the lock-box or blocked
depository accounts maintained by the Borrower for the collection of the cash of
the Borrower and the proceeds from the sale of the Inventory of the Borrower.
"Depository Accounts Agreements" shall mean each agreement,
substantially in the form of Exhibit B hereto, among a Depository Bank, the
Borrower and the Agent delivered to the Agent pursuant to Section 8.11 hereof,
as each such Agreement may be modified and supplemented and in effect from time
to time.
"Depository Bank" shall mean each financial institution at
which a Depository Account is maintained.
"Designated Borrowing Officer" shall mean Xxxxxxx X. Xxxxxx
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
6
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).
"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.
"Eligible Inventory" shall mean finished goods Inventory of
the Borrower which at the time of determination meets all the following
qualifications:
(i) it is lawfully owned by the Borrower and not subject
to any Lien, security interest or prior assignment,
other than (x) the Lien, security interest and
assignment in favor of the Agent that secures the
payment of the Obligations and (y) in the case of
such Inventory which constitutes Pre-Petition
Collateral, the Lien, security interest and
assignment in favor of the Agent under the
Pre-Petition Loan Documents, and it is not held on
consignment and may be lawfully sold;
(ii) it is (A) located in the Borrower's distribution
center, 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, reasonably
satisfactory to the Agent, of (1) the Agent's
perfected, first priority (except that in the case of
such Inventory which constitutes Pre-Petition
Collateral, second priority Lien subject only to the
Lien in favor of the Agent under the Pre-Petition
Loan Documents) Lien on all Inventory of the Borrower
located in such locations and (2) the absence of any
other Liens on any Inventory of the Borrower located
in such locations other than the Liens in favor of
the Agent under the Pre-Petition Loan Documents;
(iii) it is determined in the reasonable judgment of the
Agent to be, when taken as a whole, substantially
similar in quality and mix to the Inventory
maintained by the Borrower in recent historical
operations prior to the Filing Date; and
(iv) it is Inventory that has been valued after deducting
reserves for (a) markdowns, (b) shrinkage, (c)
lay-a-ways, (d) pack-a-ways, (e) displays and open
stock to the extent such stock is the type of stock
that is customarily sold in a package, (f) rejected,
damaged, aged or otherwise unusable Inventory and (g)
other reserves required by the Agent in the exercise
of its reasonable business judgment;
7
provided, that any Inventory in respect of which a Letter of Credit has been
issued at the Borrower's request, payment and performance of which is guaranteed
by a Letter of Credit Guarantee, shall be deemed "Eligible Inventory" for all
purposes hereof subject to the qualifications set forth in clauses (iii) and
(iv) above.
"Entry Date" shall mean the date the Interim Bankruptcy
Court Order is entered.
"Environmental Actions" shall mean any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, hearing,
proceeding, judgment, letter or other communication from any Governmental
Authority or any third party relating to any Environmental Matter, including,
without limitation, a Release (i) from or onto any of the properties presently
or formerly owned, leased, operated or controlled by the Borrower or its
Subsidiaries or (ii) from or onto any facilities which received Hazardous
Materials from the Borrower or its Subsidiaries, or any violation of any
Environmental Law.
"Environmental Laws" shall mean, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42
X.X.X.xx.xx. 9601 et seq., the Emergency Planning and Community Right-to-Know
Act of 1986, 42 X.X.X.xx.xx. 11001 et seq., the Resource Conservation and
Recovery Act, 42 X.X.X.xx.xx. 6901 et seq., the Toxic Substances Control Act, 15
X.X.X.xx.xx. 2601 et seq., the Federal Insecticide, Fungicide, and Rodenticide
Act, 7 X.X.X.xx.xx. 136 et seq., the Clean Air Act, 42 X.X.X.xx.xx. 7401 et.
seq., the Clean Water Act (Federal Water Pollution Control Act), 33 X.X.X.xx.xx.
1251 et seq., the Safe Drinking Water Act, 42 U.S.C. xx.xx. 300f et seq., the
Occupational Safety and Health Act, 29 X.X.X.xx.xx. 641, et seq., the Hazardous
Materials Transportation Act, 49 X.X.X.xx.xx. 1801, et seq., as any of the above
statutes have been or may be amended from time to time, all rules and
regulations promulgated pursuant to any of the above statutes, and any other
foreign, federal, state or local law, statute, ordinance, rule or regulation
governing Environmental Matters, as the same have been or may be amended from
time to time, including any common law cause of action providing any right or
remedy relating to Environmental Matters, and all applicable judicial and
administrative decisions, orders, and decrees relating to Environmental Matters.
"Environmental Liabilities and Costs" shall mean, without
limitation, any actual or potential investigation, cleanup, remediation,
removal, or other response costs (which without limitation shall include costs
to cause the Borrower and its Subsidiaries to come into compliance with
Environmental Laws), expenses (including, without limitation, fees and
disbursements of consultants, counsel, and other experts in connection with any
environmental investigation, testing, audits or studies, response actions, or
litigation), losses, liabilities or obligations (including without limitation,
liabilities or obligations under any lease or other contract), payments, damages
(including without limitation any actual, punitive or consequential damages
under any statutory laws, common law cause of action or contractual obligations
or otherwise, including without limitation damages (a) of third parties for
personal injury or property damage, or (b) to natural resources), civil or
criminal fines or penalties, judgments, and amounts paid in settlement arising
out of or relating to or resulting from any Environmental Matter.
8
"Environmental Matter" shall mean any matter arising out
of, relating to, or resulting from pollution, contamination, protection of the
environment, human health or safety, health or safety of employees, sanitation,
and any matters relating to Releases or threatened Releases of Hazardous
Materials into the air (indoor and outdoor), surface water, groundwater, soil,
land surface or subsurface, buildings, facilities, real or personal property or
fixtures or otherwise arising out of, relating to, or resulting from the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of Hazardous Materials.
"Environmental Lien" shall mean any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute of similar import, and
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed also to refer to any successor sections.
"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 Chase
Manhattan 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 10.01 hereof.
9
"Fee Letter" shall mean the letter agreement, dated October
13, 2000, between the Borrower and the Agent obligating the Borrower to pay
certain fees 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 (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 such extraordinary or unusual losses, (a) do not
at any time result in a cash outlay by the Borrower or any Consolidated
Subsidiary and (b) do not result from the write down of the Inventory, except
for any write downs related to the closure of stores set forth on Schedule
9.07(b), of the Borrower), which include the cumulative effect on earnings from
the adoption of GAAP pronouncements, and (G) expenses relating to the uniform
capitalization of inventory, less (ii) extraordinary non-cash gains and the
income effect of the uniform capitalization of inventory for the Borrower and
its Consolidated Subsidiaries.
"Filing Date" shall mean the date on which the Chapter 11
Case was commenced.
"Final Bankruptcy Court Order" shall mean the order of the
Bankruptcy Court approving the Loans made and to be made to the Borrower in
accordance with this Agreement in form and substance satisfactory to the Agent
in its sole and absolute discretion substantially in the form of the Interim
Bankruptcy Court Order, as the same may be amended, modified or supplemented
from time to time with the express written consent of the Agent.
"Final Hearing Date" shall mean the date set by the
Bankruptcy Court, in the Interim Bankruptcy Court Order, for the hearing on the
Final Bankruptcy Court Order.
"Final Order" shall mean an order or judgment of the
Bankruptcy Court as entered on the docket that has not been reversed, stayed,
modified or amended, and as to which the time to appeal, petition for
certiorari, or seek reargument or rehearing has expired and as to which no
appeal, reargument, petition for certiorari, or rehearing is pending or as to
which any right to appeal, reargue, petition for certiorari or seek rehearing
has been waived in writing in a manner satisfactory to the Agent or, if an
appeal, reargument, petition for certiorari, or rehearing thereof has been
sought, the order or judgment of the Bankruptcy Court has been affirmed by the
highest court to which the order was appealed or from which the reargument or
rehearing was sought, or certiorari has been denied, the time to take any
further appeal or to seek certiorari or further reargument has expired.
"GAAP" shall mean generally accepted accounting principles
as such principles shall be in effect in the United States at the Relevant Date.
10
"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 any pollutants,
contaminants, toxic or hazardous or extremely hazardous substances, materials,
wastes, constituents, compounds, chemicals, natural or man-made elements or
forces (including, without limitation, petroleum or any by-products or fractions
thereof, any form of natural gas, lead, asbestos and asbestos-containing
materials ("ACM"), building construction materials and debris, polychlorinated
biphenyls ("PCBs") and PCB-containing equipment, radon and other radioactive
elements, ionizing radiation, electromagnetic field radiation and other
non-ionizing radiation, infectious, carcinogenic, mutagenic, or etiologic
agents, pesticides, defoliants, explosives, flammables, corrosives and urea
formaldehyde foam insulation) that are regulated by, or may now or in the future
form the basis of liability under, any Environmental Laws.
"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 property -- including, without limitation,
Inventory -- and services purchased in the ordinary course of business); (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, claim or encumbrance, upon property owned by such Person (other than
property -- including, without limitation, Inventory -- and services purchased
in the ordinary course of business), 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; (vii) Capitalized Lease Obligations; and (viii)
all liabilities in respect of letters of credit, acceptances and similar
obligations created for the account of such Person.
11
"Indemnified Parties" shall have the meaning given that
term in Section 11.06 hereof.
"Interest Period" shall mean, with respect to any
Eurodollar Loan, the period commencing on the Borrowing Date or the date of any
continuation or conversion for such Eurodollar Loan, as the case may be, and
ending one, three or six months thereafter as a Borrower may elect in the
applicable notice given to the Agent pursuant to Section 2.03; 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.
"Interim Bankruptcy Court Order" shall mean the order of
the Bankruptcy Court with respect to the Borrower in the form of Exhibit C
hereto, as the same may be amended, modified or supplemented from time to time
with the express written consent of the Agent.
"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;
provided that Inventory shall not include inventory held by the Borrower on
consignment.
"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 Chase Manhattan Bank in New York, New York or
such other bank as the Agent may select, which deposit account shall be under
the sole dominion and control of the Agent.
12
"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).
"Letter of Credit Guaranty" shall mean the guaranty
delivered by the Agent 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 a Letter
of Credit, which issuer shall be either The Chase Manhattan Bank or Dai-Ichi
Kangyo Bank.
"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
(including Unreimbursed Draws) made by the Lenders or by the Agent on behalf of
the Lenders to the Borrower under this Agreement.
"Loan Documents" shall have the meaning given to that term
in the definition of "Related Documents" set forth in this Section 1.01.
"Majority Lenders" shall mean, at any time, the Agent and
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) the business, operations, condition (financial or otherwise) or
properties of the Borrower and its Subsidiaries, taken as a whole, (ii) the
ability of the Borrower to perform its obligations hereunder or under the Fee
Letter, the Notes or any other Related Document, (iii) the legality, validity or
enforceability of this Agreement or any Related Document, (iv) the perfection or
priority of the Liens granted pursuant to this Agreement, (v) the rights and
remedies of the Lenders or the Agent under this Agreement or the Related
Documents or (vi), the aggregate value of the property included in the
calculations of the Borrowing Base.
"Minority Lenders" shall have the meaning given to that
term in Section 11.03(b).
"Mortgages" shall mean, collectively, each mortgage, deed
of trust, assignment of rents, security agreement and fixture filing and similar
instrument executed by the Borrower or any Subsidiary in favor of the Agent from
time to time, acting for the benefit of the Lenders, as each mortgage, deed of
trust, assignment of rents, security agreement and fixture filing shall be
modified and supplemented and in effect from time to time.
13
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) 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 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 reasonable expenses
incurred by the Borrower and/or its Subsidiaries in connection therewith and
transfer taxes paid by the Borrower and/or its Subsidiaries in connection
therewith.
"Notes" shall mean the promissory notes of the Borrower
executed and delivered to the Lenders under this Agreement and substantially in
the form of Exhibit D 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 post-Filing Date indebtedness,
obligations and liabilities of the Borrower to any Lender or the Agent incurred
under or related to this Agreement, the Notes, the Fee Letter or any other
Related 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, 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 11.06 hereof and similar agreements contained
in the other Related 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 Related Document, including but
not limited to the principal amount of Loans
outstanding, together with interest thereon, the
amount of the Letter of Credit Exposure, together
with interest thereon and all expenses, fees and
indemnities hereunder or under any other Related
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 herein. If and
to the extent any amounts in any account (including,
without limitation, the Agent Account, the Letter of
Credit Cash Collateral Account, the Depository
Accounts and the Cash Concentration Account)
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
14
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 maintained by the Borrower
with any Lender or the Agent, including but not
limited to all Reimbursement Obligations, service
charges 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 investment
services, 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 Related Document.
"Office" when used in connection with the Agent shall mean
its office located at 1211 Avenue of the Americas, Xxx Xxxx, Xxx Xxxx 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 The 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.
"Other Taxes" shall have the meaning given to that term in
Section 2.15(a).
"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 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 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 AAAm or
AAAm-G by S&P and P-1 by Moody's.
"Permitted Liens" shall have the meaning given that term in
Section 9.02 hereof.
15
"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.
"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.
"Pre-Petition Collateral" means all property and interests
in property and proceeds thereof now owned or hereafter acquired by the
Borrowers in or upon which a Lien has been granted to the Agent under any of the
Pre-Petition Loan Documents.
"Pre-Petition Letters of Credit Loans" shall mean any
outstanding Letters of Credit issued under the Pre-Petition Loan Agreement.
"Pre-Petition Lenders" shall mean the Lenders under the
Pre-Petition Loan Agreement.
"Pre-Petition Liens" shall mean the Liens granted to the
Lenders by the Borrower in the Pre-Petition Collateral.
"Pre-Petition Loan Agreement" shall have the meaning set
forth in the recitals of this Agreement.
"Pre-Petition Loan Documents" means the Pre-Petition Loan
Agreement, each, "Loan Document" under and defined in the Pre-Petition Loan
Agreement and any other instrument, agreement, or other writing or filing
executed by or on behalf of any Borrower in connection with or contemplated by
the Pre-Petition Loan Agreement including, without limitation, mortgages, deeds
of trust, chattel mortgages, pledges, powers of attorney, financing statements
and all other written matter executed by or on behalf of Borrower and/or
delivered to the Agent (as therein defined) in connection with the Pre-Petition
Loan Agreement.
"Pre-Petition Obligations" shall mean loans, advances,
debts, liabilities and obligations for monetary amounts (whether or not such
amounts are liquidated or determinable) owing by the Borrower prior to the
Filing Date, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by a note, agreement or
other instrument, arising under any of the Pre-Petition Loan Documents. This
term includes, without limitation, all interest, charges, expenses, attorney's
fees and any other sum chargeable or payable under any of the Pre-Petition Loan
Documents.
"Pre-Petition Revolving Credit Loans" shall mean all
outstanding revolving credit loan obligations under the Pre-Petition Loan
Agreement.
16
"Professional Expense Cap" shall have the meaning set forth
in clause (ii) of the clause "first" of the definition of the term "Agreed
Administrative Expense Priorities."
"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 11.13
hereof, provided that, if the Revolving Credit Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and Letter of
Credit Exposure and the denominator shall be the aggregate amount of all of the
Lenders' unpaid Loans and Letter of Credit Exposure.
"Professional Expenses" shall mean those expenses set forth
in clause (ii) of the clause "first" of the definition of the term "Agreed
Administrative Expense Priorities."
"Professional Expense Reserve" shall mean the escrow
reserve to be established and maintained by Borrower, pursuant to the Interim
Bankruptcy Court Order and the Final Bankruptcy Court Order, out of proceeds
from the Loans in an amount equal to the aggregate amount of all accrued and
unpaid Professional Expenses (whether or not such Professional Expenses have
been allowed by order of the Bankruptcy Court) as of the end of each month in
order to fund the payment of Professional Expenses, provided, that, no
additional amounts shall be reserved or deposited into such escrow from and
after the occurrence and continuation of an Event of Default or the Termination
Date.
"Reference Loan" shall mean a Loan bearing interest at the
Regular Rate.
"Reference Rate" shall mean the interest rate per annum
publicly announced from time to time by The Chase Manhattan Bank in New York,
New York as its Reference Rate, such interest rate to change automatically from
time to time effective as of the announced effective date of each change in the
Reference Rate. The Reference Rate is not intended to be the lowest rate of
interest charged by The Chase Manhattan Bank to its borrowers.
"Register" shall have the meaning given that term in
Section 11.13(c) hereof.
"Regular Rate" shall mean, for any day, the Reference Rate
for such day plus .75%.
"Reimbursement Obligation" shall mean the obligation of the
Borrower to reimburse the Agent or any Lender for amounts payable by the Agent
or any Lender under a Letter of Credit Guaranty in respect of any drawings made
under any Letter of Credit issued by the Letter of Credit Issuer, together with
interest thereon and all fees and expenses related thereto.
"Related Documents" or "Loan Documents" means this
Agreement, the Notes, the Letters of Credit, each Letter of Credit Application,
the Letter of Credit Guaranty, the Interim Bankruptcy Court Order, the Final
Bankruptcy Court Order, the Fee Letter, the Depository Account Agreements, each
notice letter delivered to a Depository Bank or other financial institution
17
pursuant to Section 8.11 hereof and the other documents, instruments and
agreements referred to in Section 7.01 hereof, and all other instruments,
agreements and documents from time to time delivered in connection with or
otherwise relating to any Related Document.
"Release" shall mean any past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
depositing, dumping, escaping, leaching or migrating of Hazardous Materials.
"Relevant Date" shall mean the time a relevant computation
or determination is to be made or the date of relevant financial statements.
"Remedial Action" shall mean all actions required by a
Governmental Authority to (i) monitor, assess, evaluate, investigate, clean up,
remove or treat any Release or threatened Release of Hazardous Materials; (ii)
prevent, mitigate or minimize any Release or threatened Release so that the
Release or threatened Release does not migrate or endanger or threaten to
endanger public health or welfare or the environment; (iii) perform any
pre-remedial studies and investigations and post-remedial monitoring and care,
or (iv) come into compliance with Environmental Law.
"Reportable Event" shall mean any of the events described
in Sections 4043(b) of ERISA (other than events for which the notice
requirements have been waived).
"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.
"Restricted Account Agreement" shall have the meaning given
to that term in Section 8.11, substantially in the form of Exhibit E hereto.
"Revolving Credit Commitment" shall mean the commitment of
the Agent and the Lenders to make Loans to the Borrower pursuant to Section
2.01(a) hereof, in an aggregate principal amount of up to $35,000,000 (as such
amount may be reduced from time to time pursuant to the terms of this
Agreement), less the unpaid amount (as such amount may be reduced from time to
time after the Entry Date) of the Pre-Petition Revolving Credit Loans and the
Stated Amount of the Pre-Petition Letters of Credit and all material unpaid
reimbursement or repayment obligations thereunder.
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"Stated Amount" of a Letter of Credit or Pre-Petition
Letters of Credit Loan shall mean the face amount thereof, drawn or undrawn,
regardless of the existence or satisfaction of any conditions or limitations on
drawing.
"Subsidiary" means, 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 Guaranty" shall mean each Subsidiary Guaranty,
substantially in the form of Exhibit F hereto, made by the Subsidiaries of the
Borrower existing on the date hereof in favor of the Agent and the Subsidiary
Guaranty, substantially in the form of Exhibit F hereto, executed and delivered
to the Agent pursuant to Section 8.17 hereof by each Subsidiary of the Borrower
created after the date hereof, in each case in favor of the Agent, as modified
and supplemented and in effect from time to time.
"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, other than the commencement of the Chapter 11 Case;
(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: (v)
the partial or complete withdrawal of the Borrower or any ERISA Affiliate from a
Multiemployer Plan or (vi) the entry of an order of the Bankruptcy Court or
other Court of competent jurisdiction authorizing or directing the termination
of a Benefit Plan.
"Undrawn Letter of Credit Availability" shall mean with
respect to an outstanding Letter of Credit, at any time, the maximum amount
available to be drawn under such Letter of Credit at such time, 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 a
Letter of Credit Issuer or payments made by the Agent 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.
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"Unused Line Fee" shall have the meaning given to that term
in Section 2.08(e).
"WARN" shall mean the Worker Adjustment and Retraining
Notification Act, as amended, and any successor statute of similar import, and
regulations thereunder, in each case as in effect from time to time.
"Westview Advertising" shall mean Westview Advertising,
Inc., a Texas corporation, a wholly-owned Subsidiary of the Borrower, engaged
solely in the business of placing advertisements for the Borrower.
"Westview Facility" shall mean the warehouse, corporate
offices and distribution center of the Borrower located on Westview Drive in
Houston, Texas.
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 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 Agent
so as to reflect such change in GAAP.
ARTICLE II
THE CREDITS
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2.01. Revolving Credit Loans.
(a) The Revolving Credit Commitment. Subject to the terms
and conditions and relying upon the representations and warranties herein set
forth and subject to the Interim Bankruptcy Court Order and the Final Bankruptcy
Court Order, each Lender severally agrees to make loans to the Borrower at any
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time and from time to time on or after the date hereof and to, but not
including, the Termination Date (as defined below), in an aggregate principal
amount not exceeding at any one time its Pro Rata Share of the outstanding
Current Commitment at such time. The "Current Commitment" at any time shall be
equal to the lesser of (A) the Revolving Credit Commitment, as such amount may
have been reduced under Section 2.04(a) hereof at such time, 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. The "Termination Date" means
the date on which the Revolving Credit Commitment expires, which shall be the
earliest of (i) November 1, 2000 if the Interim Bankruptcy Court Order has not
been entered on or prior to such date, (ii) two years after the Filing Date,
(iii) 30 days from the Entry Date if the Final Bankruptcy Court Order shall not
have been entered during such 30-day period, (iv) the date of the substantial
consummation (as defined in Section 1101(2) of the Bankruptcy Code) of a plan of
reorganization in the Chapter 11 Case that has been confirmed by an order of the
Bankruptcy Court and (v) the date on which such Revolving Credit Commitment is
otherwise terminated in accordance with this Agreement.
(b) Revolving Credit. 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 the
initial Credit Extension in the principal amount of such Lender's Revolving
Credit Commitment with the blanks appropriately filled in. The executed Note for
each Lender shall be delivered by the Borrower to the Agent on the Entry Date.
2.03. Notice of Borrowing; Making of Loans.
(a) Whenever the Borrower desires to borrow, the Borrower
shall provide notice 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 Reference 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 Reference 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 promptly on or before the date on which such Loan is to be made), a
notice 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
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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 2:00 p.m. (New York City 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. (New York City 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 the 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.
(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 Reference Loan shall be in a minimum amount of
$100,000 and in multiples of $100,000 if in excess thereof, and each Eurodollar
Loan shall be in a minimum amount of $1,000,000 and in multiples of $1,000,000
if in excess thereof. Notwithstanding any other provision of this Agreement, no
more than five separate Interest Periods in respect of Eurodollar Loans may be
outstanding 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 subsection 2.01(a), subject to the procedures for settlement set
forth in subsection 2.03(f); provided, however, that (a) the Agent shall in no
22
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 7.02 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 7.02 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 Related 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.
(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 15 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
23
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 the
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 Related 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 against any Lender as a result of any default by such Lender hereunder.
2.04. Termination or Reduction of Commitment; Mandatory
Prepayment; Optional Prepayment.
(a) Termination or Reduction of the Commitment. Optional
Reduction of the Commitment. The Borrower may (i) upon not less than five
Business Days' notice to the Agent, terminate the Revolving Credit Commitments,
subject to the early termination fees provided for in Section 2.08(h) hereof, or
(ii) at any time or from time to time and without penalty or premium reduce the
amount of the Revolving Credit Commitments of the Lenders, provided that no such
termination or reduction shall be permitted if, after giving effect thereto, 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,
would exceed the amount of the Revolving Credit Commitments then in effect. Any
reduction shall be in an amount which is an integral multiple of $1,000,000.
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). Termination or reductions of the Revolving Credit
Commitments of the Lenders are irrevocable and may not be reinstated. Each such
24
reduction shall reduce the Revolving Credit Commitment of each Lender
proportionately in accordance with its Pro Rata Share. No termination of the
Revolving Credit Commitment shall relieve or discharge the Borrower of its
respective duties, obligations and covenants under this Agreement and the
Related Documents until all Obligations have been fully and finally discharged
and paid, and the Agent's continuing security interest in the Collateral and the
rights and remedies of the Agent and each Lender hereunder, under the Related
Documents and any applicable law, shall remain in effect until all such
Obligations have been fully and finally discharged and paid.
(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 immediately prepay the Loans in an amount of 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 Commitment 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
Commitment.
(ii) Failure to Obtain Final Bankruptcy Court Order.
Without limiting any other provision of this Agreement or any other Related
Document permitting or requiring prepayment of the Loans in whole or part, the
Borrower shall prepay the Loans in whole without premium or penalty on the
thirtieth (30th) day following the Entry Date in the event the Final Bankruptcy
Court Order shall not have been entered on or before such date and shall provide
cash collateral to the Agent in an amount equal to 105% of the stated amount of
all outstanding Letters of Credit, which cash collateral shall be deposited and
held in the Letter of Credit Cash Collateral Account until all Obligations have
been paid in full in cash.
(iii) Asset Sales. Simultaneously with the consummation of
any sale or disposition of assets permitted under Section 9.07(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, other than such sales or dispositions the Net Proceeds from
which do not exceed $50,000 individually or $200,000 in the aggregate.
(iv) Loss Event. If there shall occur any Destruction or
Taking (as defined in the Mortgages) with respect to any Mortgaged Property, the
Borrower shall promptly repay the Loans in an amount equal to the net proceeds
received by the Borrower or any Subsidiary in respect of such Destruction or
Taking required to be applied to the Loans pursuant to the terms of the
Mortgages.
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(v) Other Mandatory Prepayments. The Agent may, on the Cash
Concentration Account Blockage Date and on each Business Day thereafter, apply
all funds deposited in the Cash Concentration Account to the payment, in whole
or in part, of the Obligations outstanding.
(c) Optional Prepayment. The Borrower may without penalty
or premium at any time or from time to time prepay, in whole or in part, any or
all Loans then outstanding. Any such prepayment (i) shall be in an aggregate
principal amount equal to $100,000 or an integral multiple of $100,000, provided
that no Eurodollar Loan shall be prepaid in part.
(d) Prepayment Penalty. Subject to Section 2.08(h) hereof,
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 Reference Loan shall bear interest for each day
until paid at a rate per annum for each day 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 for the Interest Period in effect for such
Eurodollar Loan plus 2.75%, together with any additional interest owing pursuant
to Section 2.14 hereof.
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 Reference Loan, monthly in arrears on the first
Business Day of each month, commencing November 1, 2000, 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, and all accrued and unpaid interest, shall be due
and payable on the Termination Date.
2.08. Payments.
(a) Time, Place and Manner. Except as otherwise provided in
Section 2.04(b) hereof, all payments and prepayments to be made in respect of
principal, interest, commitment fee, facility fee or other amounts due from the
Borrower hereunder, under the Fee Letter, the Notes or any other Related
Document shall be payable at or before 1:00 p.m., New York City 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 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
26
Borrower's name 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 hereby authorizes the Agent to, and the Agent may, from time to
time charge the Borrower's Account with any interest, fees, or expenses and
other Obligations that are due and payable under this Agreement or any Related
Documents. 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 7.02 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. The
Agent shall use reasonable efforts to provide the Borrower with copies or other
evidence of all charges to the Borrower's Account promptly after such charges
are made, provided that the failure to provide such copies or other evidence to
the Borrower shall not relieve the Borrower of any of its obligations under this
Agreement. 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) Application and Apportionment of Payments. Except as
otherwise provided in this subsection, aggregate principal and interest payments
shall be apportioned among all outstanding Loans to which such payments relate
and payments of the fees required to be paid by the Borrower under subsections
2.08(e), (f) and (h) shall, as applicable, be apportioned ratably among the
27
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 as to
the Borrower shall be applied subject to the provisions of this Agreement first,
to pay principal of and interest on the Pre-Petition Revolving Credit Loans,
Prepetition Letters of Credit Loans and all other Pre-Petition Obligations, to
the extent outstanding, second, 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; third, to
pay any fees, expense reimbursements or indemnities then due to the Lenders or
the Letter of Credit Issuer hereunder; fourth, to pay interest due in respect of
Loans and Unreimbursed Draws under Letters of Credit; and fifth, 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 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 10.01 of this Agreement, any
and all principal, interest, commitment fees, facility fees, indemnities or any
other amounts due from the Borrower hereunder, under the Fee Letter or under the
Note or any other Related Document (and including interest accrued under this
Section 2.08(d)) shall compound on a daily basis as provided in this Section
2.08(d) and shall bear interest for each day until paid (before and after
judgment), payable on demand, at a rate per annum of 4.50% above the Eurodollar
Rate for such day in the case of Eurodollar Loans and 2.50% above the Regular
Rate for such day in the case of Reference Loans, such interest rate relating to
Reference Loans to change automatically from time to time effective as of the
announced effective date of each change in the Regular Rate.
(e) Unused Line Fee. 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-quarter
of one percent (0.25%) per annum from and after the Entry Date until the
Termination Date, on the excess, if any, of the Revolving Credit Commitment over
28
the sum of the Loans and Letter of Credit Exposure outstanding from time to
time. All Unused Line Fees accruing after the Entry Date shall be payable
monthly in arrears on the first day of each month commencing November 1, 2000.
(f) Letter of Credit Fees. 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") accruing at the rate
of 1.25% per annum from and after the Entry Date until the Termination Date on
the average daily Undrawn Letter of Credit Availability. All Letter of Credit
Fees accruing after the Entry Date shall be payable monthly in arrears on the
first day of each month commencing November 1, 2000. The Borrower shall also pay
the normal and customary letter of credit fees and charges of the Letter of
Credit Issuer for the administration, issuance and processing of any Letters of
Credit issued by such 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 an amount equal to the difference between (A)
the amount of the Letter of Credit Fees received by the Agent and (B) the Letter
of Credit Fees payable to the Letter of Credit Issuer in connection with the
issuance of the Letters of Credit
(g) Administration Fee. So long as this Agreement has not
been terminated under the terms hereof, the Borrower shall pay to the Agent an
annual administration fee of $50,000 payable $14,000 (which provides a credit
against such annual fee for the $36,000 administration fee that was paid by the
Borrower under the Prepetition Loan Agreement in August, 2000) on the date of
the initial Credit Extension and $50,000 on each anniversary of the Entry Date.
(h) 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 and
deposits required to be paid to the Agent pursuant to the Fee Letter, this
Agreement and any other Related Document shall be paid as required therein. All
fees under this Agreement, the Fee Letter and the other Related Documents are
non-refundable under all circumstances.
2.09. Use of Proceeds. Except as otherwise provided by
order of the Bankruptcy Court or in this Section 2.09, all Loans and Letters of
Credit provided by the Lenders to Borrower hereunder shall be used exclusively
for general operating and working capital purposes of the Borrower in the
ordinary course of its business and for other general corporate purposes. No
portion of any administrative expense claim or other claim relating to the
Chapter 11 Case shall be paid with the proceeds of such Loans provided by the
Lenders to the Borrower, other than those administrative expense claims and
other claims relating to the Chapter 11 Case directly attributable to the
operation of the business of the Borrower and, subject to the Professional
Expense Cap (and the other provisions of this Agreement), Professional Expenses.
Nothing contained herein shall limit the right of the Agent under Section 11.16
hereto to object to any use or proposed use of proceeds of Loans; provided,
however, that the Agent shall not object to any use of proceeds of Loans if such
use is in all respects consistent with the terms of this Agreement.
2.10. Eurodollar Rate Not Determinable; Inability to
Determine Interest Rate; Illegality or Impropriety.
29
(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, 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. 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 that the circumstances giving rise to such notice no longer
exist, be deemed to be a request for a Reference 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 such
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
Reference Loan.
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 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
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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 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 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
Related 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, (iii) that such amount(s) have been
determined in good faith, and (iv) that the Letter of Credit Issuer or such
Lender is using reasonable efforts to collect comparable amounts from similarly
situated account parties or borrowers having similar relationships with the
Letter of Credit Issuer or such Lender under documentation which gives the
Letter of Credit Issuer or such Lender substantially the same rights with
respect to such increased costs or reductions or payments made with respect to
capital adequacy requirements or guidelines, as relevant, as set forth in this
Section 2.11, 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;
31
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
(including, but not limited to, reasonable fees and expenses of counsel) 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 Reference 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, (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 costs 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 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.
Notwithstanding the foregoing, the Agent will use reasonable efforts to minimize
or reduce any such loss or expense resulting from the mandatory prepayments
required by clause (iv) of Section 2.04(b) of this Agreement by calculating such
loss or expense based upon the net decrease in Eurodollar Loans on a day after
giving effect to all prepayments and all Loans made on such day. 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. Right of Set-Off; Sharing of Set-Offs.
(a) Right of Set-Off. Subject to Section 10.02 hereof, upon
the occurrence and during the continuance of an Event of Default, each Lender is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law and without further order of or application to the Bankruptcy
32
Court, to set off and apply any and all deposits (general or special, time or
demand, provisional or final and including, without limitation, any deposits or
funds in the Cash Concentration Account and the Letter of Credit Cash Collateral
Account) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of the Borrower against any and all
of the Obligations of the Borrower now or hereinafter existing under this
Agreement or the Related Documents, irrespective of whether or not such Lender
shall have made any demand under this Agreement or any Related Document and
although such Obligations may be unmatured. Such Lender agrees promptly to
notify the Borrower after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Lenders under this Section 2.13
are in addition to other rights and remedies which the Lenders may have upon the
occurrence of any Event of Default.
(b) Sharing of Set-offs. 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 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 to convert any Reference 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 Reference Loan, subject to the following:
33
(A) in the case of a conversion of a Reference
Loan or portion thereof into a Eurodollar Loan, no Event of Default
or Potential Default shall have occurred and be continuing at the
time of such continuation or conversion;
(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
$1,000,000 and in multiples of $500,000 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; accrued interest on the 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 the Agent on demand for any loss
incurred or to be incurred by it (including, but not limited to,
reasonable fees and expenses of counsel) 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 Reference 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 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 or measured by 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
34
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
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 the Agent 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 Entry Date (or, in the case
of a Lender which becomes a party hereto pursuant to Section 11.13 hereof after
the Entry 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,
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
35
(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 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. Payment of Pre-Petition Obligations.
(a) Interim Paydown. All proceeds from accounts receivable
and the sale of Inventory, as well as other amounts deposited or required to be
deposited into the Depository Accounts, whether relating to assets in existence
on the Filing Date or thereafter, shall be applied to the Pre-Petition
Obligations, including interest thereon at the non-default rate. Any such
amounts remaining after the Prepetition Obligations have been paid in full shall
be credited to the Loans and then to the other Obligations. Application will be
made upon the Agent's receipt of "collected funds" at the Agent Account on the
Business Day of receipt if received no later than 1:00 p.m. and on the next
succeeding Business Day if received after 1:00 p.m. No checks, drafts, or other
instrument received by the Agent shall constitute final payment to the Agent
unless and until such instruments have actually been collected.
(b) Final Paydown. Upon the entry of Final Bankruptcy Court
Order, the Borrower shall pay any remaining Pre-Petition Obligations, including
unpaid interest thereon, in full out of the proceeds of the Loans made by the
Lenders to the Borrower.
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 the Agent to join in the applications for such Letters of Credit,
and/or guarantee payment or performance of such Letters of Credit and any drafts
36
or acceptances thereunder through the issuance of a Letter of Credit Guaranty,
thereby lending the Agent's credit to the Borrower, and the Agent has agreed to
do so. These arrangements shall be handled by the Agent subject to the terms and
conditions set forth below. The Agent 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, the Agent shall not be required to be the
issuer of any Letter of Credit. The Letter of Credit Issuer shall be a bank
mutually acceptable to the Agent and the Borrower. The Borrower will be the
account party for any application for a Letter of Credit, which shall be
substantially in the form of Exhibit G hereto or such other form as may from
time to time be approved by the Letter of Credit Issuer and the Agent, and shall
be duly completed in a manner acceptable to the Agent, together with such other
certificates, documents and other papers and information as the Letter of Credit
Issuer or the Agent may request (the "Letter of Credit Application").
(i) The aggregate Letter of Credit Exposure shall not
exceed $15,000,000. In addition, the amount, purpose and extent of the Letters
of Credit and changes or modifications thereof by the Borrower and/or the Letter
of Credit Issuer of the terms and conditions thereof shall in all respects be
subject to the prior approval of the Agent in the exercise of its reasonable
discretion, provided, however, that (A) the expiry date of all Letters of Credit
shall be no later than 15 days prior to the Termination Date unless on or prior
to 15 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, which cash collateral shall be deposited and held in the
Letter of Credit Cash Collateral Account until all Obligations have been paid in
full in cash, provided, however, that the Borrower shall not be required to cash
collateralize Letters of Credit issued between the Entry Date and the date upon
which the Final Bankruptcy Court Order is entered, unless the Final Bankruptcy
Court shall not have been entered on the Final Hearing Date, in which case the
Borrower shall cash collateralize all Letters of Credit issued since the Entry
Date and outstanding on the Final Hearing Date, (B) the Letters of Credit and
all documentation in connection therewith shall be in form and substance
reasonably satisfactory to the Agent and the Letter of Credit Issuer, and (C)
aggregate Letter of Credit Exposure in excess of $10,000,000 resulting from the
issuance of Letters of Credit for the benefit of domestic trade creditors in
connection with the purchase of Inventory by the Borrower shall not be
permitted.
(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, reserve requirement and capital adequacy charges) incurred by
the Agent, CIT or the Lenders under the Letter of Credit Guaranty at the earlier
of (A) payment by CIT or the Lenders under the Letters of Credit Guaranty, or
(B) 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 subsection 2.03(e) and (f). Any charges, fees, commissions, costs and
expenses charged to CIT for the Borrower's account by the Letter of Credit
37
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 or Default or Potential Default shall have occurred and be
continuing or whether any of the conditions precedent in Section 7.02 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 (including, but not limited to,
reasonable fees and expenses of counsel) 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
acceptance 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 omissions, 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 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; and 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 or any Lender, if taken in good faith, and any action taken by the Letter of
Credit Issuer, under or in connection with the Letters of Credit, the
38
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 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 and endorsement in
writing, 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 of an Event of Default which is not cured within any applicable grace
period, if any, or waived by the Agent, 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.
(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
accordance 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 Lenders 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
39
by the Borrower to the Letter of Credit Issuer in any application for Letters of
Credit, any standing agreement relating to Letters of Credit or otherwise, all
of which shall be deemed to have been granted to the Agent and apply in all
respects to the Agent 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, New York City
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 issuance day for such Letter of Credit that
one or more of the conditions precedent in Section 7.02 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 7.02 have been satisfied.
(c) Existing Letters of Credit. Schedule 3.01(c) hereto
contains a description of all letters of credit issued pursuant to the
Pre-Petition Loan Agreement and outstanding on the Entry Date. Each such letter
of credit, including any extension or renewal thereof (each, as amended from
time to time in accordance with the terms thereof and hereof, an "Existing
Letter of Credit") shall constitute a "Letter of Credit" for all purposes of
this Agreement, issued on the Entry Date.
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).
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(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 Related 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
performance or observance of any of the terms of any of the Related Documents;
(v) any failure by the Agent to provide any notices
required pursuant to this Agreement relating to the 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. The Agent and the 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 Loan or Letter
of Credit 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), 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.
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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 any
Lender (knowingly or otherwise) makes an advance hereunder in excess of the
Borrowing Base.
4.04. Borrowing Base Certificate. (a) By 12:00 noon, New
York City time (i) seven (7) Business Days after the Friday of each week and
(ii) thirty (30) days after the end of each fiscal month (and on any other date
on which the Agent reasonably requests), the Borrower shall furnish to the Agent
a certificate ("Borrowing Base Certificate") substantially in the form attached
hereto as Exhibit H, 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 (in the case of the weekly Borrowing Base Certificates), or as of
Borrower's close of business on the last day of each fiscal month (in the case
of subsequent monthly Borrowing Base Certificates), in each case together with
such other information with respect to the Inventory of the Borrower as the
Agent may reasonably request. The weekly Borrowing Base Certificate may be
prepared based upon a good faith estimate by the Borrower of its Inventory.
(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.
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ARTICLE V
SECURITY; ADMINISTRATIVE PRIORITY
---------------------------------
5.01. Grant of Lien and Security Interest. (a) As
collateral security for all of the Obligations, the Borrower hereby (i)
reaffirms the validity, perfection and first priority of the Liens previously
granted to the Agent in the Pre-Petition Collateral under the Pre-Petition Loan
Documents, and (ii) pledges and assigns to the Agent, and grants to the Agent
for the benefit of the Lenders a continuing security interest in, all assets and
properties of the Borrower, wherever located and whether now of hereafter
existing and whether now owned or hereafter acquired, of every kind and
description, tangible or intangible (the "Collateral"), including, without
limitation, all of the Borrower's right, title and interest in and to the
following:
(i) all equipment of any kind (including, without
limitation, all furniture, fixtures and machinery, wherever located and whether
now of hereafter existing and whether now owned or hereafter acquired, together
with all substitutes, replacements, accessions and additions thereto, and all
tools, parts, accessories and attachments used in connection therewith
(hereinafter collectively referred to as the "Equipment");
(ii) all of Borrower's now owned and hereafter acquired
real property, wherever located, of every kind and description, including, but
not limited to, all fee interests and leasehold interests, together with all
buildings, structures and other improvements located thereon and all licenses,
easements and appurtenances relating thereto (collectively, "Real Estate");
(iii) all inventory of any kind, wherever located and
whether now of hereafter existing and whether now owned or hereafter acquired
(including, without limitation, all types of goods, property and other assets,
raw, in process and finished, and all other inventory, merchandise, goods and
other tangible personal property that are held for sale or lease by the
Borrower), all materials used or consumed in the business of the Borrower, goods
returned to or repossessed by the Borrower, and goods in which the Borrower has
an interest in mass or a joint or other interest or right of any kind (including
goods being processed), all accessions thereto and products thereof and all
packing and shipping materials (hereinafter collectively referred to as the
"Inventory");
(iv) (A) all accounts, contract rights, chattel paper,
instruments, documents, general intangibles and other obligations of any kind,
whether now or hereafter existing and whether now owned or hereafter acquired,
arising out of or in connection with the sale or lease of goods or the rendering
of services or otherwise; and (B) all rights now or hereafter existing in and to
all credit insurance, guarantees, letters of credit, security agreements, leases
and other contracts now or hereafter existing and securing or otherwise relating
to any such account, contract rights, chattel paper, instruments, general
intangibles or obligations, to the extent not expressly prohibited thereby (any
and all such accounts, contract rights, chattel paper, instruments, general
intangibles or obligations being hereinafter referred to collectively as the
"Receivables", and any and all such credit insurance, guarantees, letters of
credit, security agreements, leases and other contracts being hereinafter
referred to collectively as the "Related Contracts");
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(v) (A) all trademarks, service marks, tradenames, business
names, trade styles, designs, logos and other source or business identifiers and
all general intangibles of like nature, now or hereafter owned, adopted,
acquired or used by the Borrower (including, without limitation, all trademarks,
service marks, trade names, business names, trade styles, designs, logos and
other source or business identifiers described in Schedule 5.01(a)(v) hereto),
all applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any state thereof or any other country or any political subdivision
thereof), and all reissues, extensions or renewals thereof, together with all
goodwill of the business symbolized by such marks and all customer lists,
formulae and other records of the Borrower relating to the distribution of
products and services in connection with which any of such marks are used, and
all income, royalties, damages and payments now or hereafter due and/or payable
under and with respect thereto, including, without limitation, payments under
all licenses entered into in connection therewith and damages and payments for
past and future infringements or dilutions thereof and the right to xxx for
past, present and future infringements and dilutions thereof (hereinafter
referred to collectively as the "Trademarks"), and (B) all licenses, contracts
or other agreements, whether written or oral, naming the Borrower as licensor or
licensee and providing for the grant of any right to use any Trademark,
including, without limitation, all Trademark Licenses described in Schedule
5.01(a)(v) hereto, together with any goodwill connected with and symbolized by
any such trademark licenses or agreements and the right to prepare for sale and
sell any and all Inventory now or hereafter owned by the Borrower and now or
hereafter covered by such licenses (hereinafter referred to collectively as the
"Trademark Licenses");
(vi) (A) all letters patent, design patents and utility
patents, and all copyrights, inventions, trade secrets, proprietary information
and technology, know-how, formulae and other general intangibles of like nature,
now existing or hereafter acquired (including, without limitation, all letters
patent, design patents and utility patents described in Schedule 5.01(a)(vi)
hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisions, continuations, continuations in part and extensions or
renewals thereof (hereinafter referred to collectively as the "Patents"), and
(B) all licenses, contracts or other agreements, whether written or oral, naming
the Borrower as licensee or licensor and providing for the grant of any right to
manufacture, use or sell any invention covered by any patent (hereinafter
referred to collectively as the "Patent Licenses" and together with the
Trademark Licenses, the "Licenses") (including, without limitation, all Patent
Licenses set forth in Schedule 5.01(a)(vi) hereto);
(vii) (A) all moneys, securities and other property, and
the proceeds thereof, now or hereafter held or received by, or in transit to,
the Lenders and the Agent from or for the Borrower, whether for safekeeping,
pledge, custody, transmission, collection or otherwise, and all of the
Borrower's claims against the Lenders and the Agent at any time existing; (B)
all rights relating to the sale or other transfer of property to, or the
construction, renovation or other improvement of property by or for, the
44
Borrower; (C) all rights, interests, choses in action, causes of actions, claims
and all other intangible property of every kind and nature, in each instance
whether now owned or hereafter acquired by the Borrower, including, without
limitation, all corporate and other business records, all loans, royalties, and
all other forms of obligations receivable whatsoever (other than Receivables);
(D) all computer programs, software, printouts and other computer materials,
customer lists, credit files, correspondence and advertising materials; (E) all
customer and supplier contracts, sale orders, rights under license and franchise
agreements, and other contracts and contracts rights; (F) all interests in
partnerships and joint ventures, including all moneys due from time to time in
respect thereof; (G) all federal, state, and local tax refunds and federal,
state and local tax refund claims; (H) all right, title and interest under
leases, subleases, licenses and concessions and other agreements relating to
personal property, including all moneys due from time to time in respect
thereof; (I) all payments due or made to the Borrower in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of any property
by any Person, Governmental Authority or regulatory body; (J) the Cash
Concentration Account, the Letter of Credit Cash Collateral Account, all
Depository Accounts and all other deposit accounts (general or special) with any
bank or other financial institution, including, without limitation, all
depository or other accounts maintained by the Borrower at the Agent or any
Lender and all funds on deposit therein and the balance from time to time in all
accounts described in Schedule 5.01(a)(vii) hereto; (K) all credits with and
other claims against third parties (including carriers and shippers) (other than
Receivables); (L) all rights to indemnification; (M) all reversionary interests
in pension and profit sharing plans and reversionary, beneficial and residual
interests in trusts; (N) all letters of credit, guaranties, liens, security
interests and other security held by or granted to the Borrower; (O) all
instruments, files, records, ledger sheets and documents covering or relating to
any of the Collateral; and (P) all other intangible property, whether or not
similar to the foregoing, in each instance, however and wherever arising;
(viii) the books and records of the Borrower relating to
any of the foregoing Collateral, including, without limitation, all customer
contracts, sale orders, minute books, ledgers, records, computer programs,
software, printouts and other computer materials, customer lists, credit files,
correspondence and advertising materials, in each case indicating, summarizing
or evidencing any of the Collateral, and
(ix) all proceeds of any and all of the foregoing
Collateral (including, without limitation, (i) damages and payments for past or
future infringements of the Trademarks or the Patents and (ii) the right to xxx
for past, present and future infringements of the Trademarks or the Patents)
and, to the extent not otherwise included, all payments under insurance (whether
or not the Agent is the loss payee thereof) and any indemnity, warranty or
guaranty payable by reason of loss or damage to or otherwise with respect to any
of the foregoing Collateral;
in each case howsoever the Borrower's interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise); provided,
however, that the Collateral excludes any and all monies and other property of
any kind recovered or transfer avoided by or on behalf of the Borrower or its
estate under chapter 5 of the Bankruptcy Code, including, without limitation,
sections 542, 544, 547, 548, 549, 550, 551 and 553 thereof.
45
(b) In addition, as collateral security for the prompt and
complete payment when due of the Obligations to induce the Lenders as aforesaid,
the Borrower hereby further grants to the Agent for the benefit of the Lenders a
Lien on all property of the Borrower held by the Agent or any of the Lenders,
including, without limitation, all property of every description, now or
hereafter in the possession or custody of or in transit to the Agent or any of
the Lenders for any purpose, including safekeeping, collection or pledge, for
the account of the Borrower or as to which the Borrower may have any right or
power.
(c) As further adequate protection for the use by the
Borrower of Pre-Petition Collateral and for any diminution in the value of the
interest of the Lenders in the Pre-Petition Collateral, the Lenders and the
Agent are hereby granted, under sections 361 and 364 of the Bankruptcy Code, a
valid, binding, enforceable and perfected security interest in and lien on the
Collateral subject and subordinate only to (i) the lien and security interest
granted to the Lenders and the Agent under this Agreement and the other Loan
Documents securing the Obligations, and (ii) Carve-Out Expenses and superior
existing Liens. The lien and security interest granted hereunder to the Lenders
and the Agent under the Pre-Petition Loan Agreement shall not be subject and
subordinate to any security interest or lien that is avoided and preserved for
the benefit of the estates of the Borrower under section 551 of the Bankruptcy
Code or, except set forth in clauses (i) and (ii) above, be made on a parity
with, or subordinated to, any other Lien under section 364(d) of the Bankruptcy
Code or otherwise.
5.02. Perfection of Security Interests. (a) The liens and
security interests granted herein shall be deemed valid, enforceable and
perfected by entry of the Interim Bankruptcy Court Order and the Final
Bankruptcy Court Order, as the case may be. No financing statement, notice of
lien or similar instrument in any jurisdiction or filing office need be filed or
any other action taken in order to validate or perfect the liens and security
interests granted by or pursuant to this Agreement, the Interim Bankruptcy Court
Order or the Final Bankruptcy Court Order.
(b) The liens and security interests, lien property,
administrative priorities and other rights and remedies granted to the Lenders
and the Agent pursuant to this Agreement, the Interim Bankruptcy Court Order
and/or the Final Bankruptcy Court Order (specifically including but not limited
to the existence, perfection and priority of the Liens and security interests
provided herein and the administrative priority provided herein) shall not be
modified, altered or impaired in any manner by any other financing or extension
of credit or incurrence of debt by the Borrower (pursuant to section 364 of the
Bankruptcy Code or otherwise), or by any dismissal or conversion of the Chapter
11 Cases, or by any other act or omission whatever. Without limitation,
notwithstanding any such order, financing, extension, incurrence, dismissal,
conversion, act or omission:
(i) except for the Carve-Out Expenses having priority over
the Obligations, no costs or expenses of administration which have
been or may be incurred in the Chapter 11 Cases or any conversion of
the same or in any other proceedings related thereto, and no priority
claims, are or will be prior to or on a parity with any claim of the
Lenders or the Agent against the Borrower in respect of any
Obligation;
46
(ii) the liens and security interests set forth in Section
5.01 shall constitute valid and perfected first priority liens and
security interests, subject only to the Carve-Out Expenses and shall
be prior to all other liens and security interests, now existing or
hereafter arising, in favor of any other creditor or any other Person
whatever; and
(iii) the liens and security interests granted hereunder
shall continue valid and perfected without the necessity that
financing statements be filed or that any other action be taken under
applicable nonbankruptcy law.
(c) Notwithstanding subsections (a) and (b) of this Section
5.02, or any failure on the part of the Borrower and the Lenders and the Agent
to perfect, maintain, protect or enforce the liens and security interests in the
Collateral granted hereunder, the Interim Bankruptcy Court Order and the Final
Bankruptcy Court Order (when entered) shall automatically, and without further
action by any Person, perfect such liens and security interests against the
Collateral.
5.03. Performance by the Lenders of Borrower's Obligations.
If the Borrower fails to perform or comply with any of their agreements
contained herein and the Agent, as provided for by the terms of this Agreement,
shall perform or comply, or otherwise cause performance or compliance, with such
agreement, the reasonable expenses of the Agent incurred in connection with such
performance or compliance, together with interest thereon at the rate then in
effect in respect of the Loans, shall be payable by the Borrower to the Agent on
demand and shall constitute Obligations secured by the Collateral. Performance
of Borrowers' obligations as permitted under Section 5.04 shall in no way
constitute a violation of the automatic stay provided by section 362 of the
Bankruptcy Code and the Borrower hereby waives applicability thereof. Moreover,
neither the Agent and the Lenders shall in any way be responsible for the
payment of any costs incurred in connection with preserving or disposing of
Collateral pursuant to section 506(c) of the Bankruptcy Code and the Collateral
may not be charged for the incurrence of any such cost.
5.04. Limitation on the Lenders' Duty in Respect of
Collateral. Neither the Agent nor any of the Lenders shall have any duty as to
any Collateral in its possession or control or in the possession or control of
any of its agents or nominees of or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining thereto, except
that the Agent and the Lenders shall use reasonable care with respect to the
Collateral in their possession or under their control. Upon request of the
Borrower, the Lenders shall account for any moneys received by them in respect
of any foreclosure on or disposition of the Collateral.
5.05. Remedies, Rights Upon Default. (a) If any Event of
Default shall occur and be continuing, the Agent may exercise in addition to all
other rights and remedies granted to it in this Agreement and in any other Loan
Document, all rights and remedies of a secured party under the U.C.C. Without
limiting the generality of the foregoing, the Borrower expressly agrees that in
any such event the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon such Borrower or any other
Person (all and each of which demands, advertisements and/or notices are hereby
expressly waived to the maximum extent permitted by the U.C.C. and other
applicable law), may forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, lease, assign,
give an option or options to purchase, or sell or otherwise dispose of and
deliver the Collateral (or contract to do so), or any part thereof, in one or
47
more parcels at public or private sale or sales, at any exchange or broker's
board or at any of the Agent's offices or elsewhere at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. The Agent shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of said Collateral so sold, free of any right
or equity of redemption, which equity of redemption the Borrower hereby
releases. The Borrower further agrees, at the Agent's request, to assemble the
Collateral and make it available at places which the Agent shall reasonably
select, whether at the Borrower's premises or elsewhere. The Borrower shall
apply the proceeds of any such collection, recovery, receipt, appropriation,
realization or sale (net of all expenses incurred by the Agent and the Lenders
in connection therewith, including, without limitation, attorney's fees), first
to the Obligations in any order deemed appropriate by the Agent and then to the
Pre-Petition Obligations, Borrower's remaining liability for any deficiency
remaining unpaid after such application, and only after so paying over such net
proceeds and after the payment by the Agent of any other amount required by any
provision of law, including section 9-504(1)(c) of the U.C.C., need the Agent
account for the surplus, if any, to the Borrower. To the maximum extent
permitted by applicable law, the Borrower waives all claims, damages, and
demands against the Agent and the Lenders arising out of the repossession,
retention or sale of the Collateral except such as arise out of the gross
negligence or willful misconduct of the Agent or the Lenders. The Borrower
agrees that the Agent and the Lenders need not give more than ten (10) days'
notice (which notification shall be deemed given when mailed or delivered on an
overnight basis, postage prepaid, addressed to such Borrower at its address
referred to in the signature pages of this Agreement) of the time and place of
any public sale or of the time after which a private sale may take place and
that such notice is reasonable notification of such matters. The Borrower shall
remain liable for any deficiency if the proceeds of any sale or disposition of
the Collateral are insufficient to pay all Obligations and Pre-Petition
Obligations. The Borrower is also liable for the fees of any attorneys employed
by the Agent and the Lenders to collect such deficiency.
(b) Borrower agrees to pay all reasonable costs of the
Agent, including, without limitation, attorneys' fees, incurred in connection
with the enforcement of any of their rights and remedies hereunder.
(c) The Borrower hereby waives presentment, demand, protest
or any notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral. In no event shall prior
recourse to any Collateral be a prerequisite to the Agent's right to demand
payment of any of the Obligations.
5.06. Automatic Stay. During the continuance of an Event of
Default, upon three Business Days notice to the Borrower, any Creditors'
Committee and the United States Trustee, the automatic stay provided under
section 362 of the Bankruptcy Code shall be deemed automatically vacated to
permit the Agent and the Lenders to take immediately any action permitted under
this Agreement, the other Loan Documents, the Bankruptcy Code, the U.C.C. or
other applicable law with respect to the Collateral or otherwise.
48
5.07. The Agent's Appointment as Attorney-in-Fact. (a) The
Borrower hereby irrevocably constitutes and appoints the Agent and any officer
or agent thereof, with full power of substitution, as their true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Borrower and in the name of the Borrower or in its own name, from
time to time in the Agent's discretion, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to execute
and deliver any and all documents and instruments which may be necessary and
desirable to accomplish the purposes of this Agreement and the transactions
contemplated hereby, and, without limiting the generality of the foregoing,
hereby give the Agent the power and right, on behalf of the Borrower, without
notice to or assent by the Borrower to do the following:
(i) to ask, demand, collect, receive and give acquittances
and receipts for any and all moneys due and to become due under any
Collateral and, in the name of the Borrower or its own name or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other Instruments for the payment of
moneys due under any Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Agent for the purpose of collecting any and
all such moneys due under any Collateral whenever payable and to file
any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Agent for the
purpose of collecting any and all such moneys due under any
Collateral whenever payable;
(ii) to pay or discharge taxes, liens, security interests
or other encumbrances levied or placed on or threatened against the
Collateral, to effect any repairs or any insurance called for by the
terms of this Agreement and to pay all or any part of the premiums
therefor and the costs thereof; and
(iii) (A) to direct any party liable for any payment under
any of the Collateral to make payment of any and all moneys due, and
to become due thereunder, directly to the Agent or as the Agent shall
direct; (B) to receive payment of and receipt for any and all moneys,
claims and other amounts due, and to become due at any time, in
respect or arising out of any Collateral; (C) to sign and indorse any
invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts and other
documents constituting or relating to any of the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at law or
equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in
respect of any Collateral; (E) to defend any suit, action or
proceeding brought against the Borrower with respect to any
Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give such
discharges or releases as the Agent may deem appropriate; (G) to
license or, to the extent permitted by an applicable license,
sublicense, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any Trademark, throughout the world
for such term or terms, on such conditions, and in such manner, as
the Agent shall in its sole discretion determine; and (H) generally
to sell, transfer, pledge, make any agreement with respect to or
49
otherwise deal with any of the Collateral as fully and completely as
though Borrower were the absolute owner thereof for all purposes, and
to do, at the Agent's option and the Borrower's expense, at any time,
or from time to time, all acts and things which the Agent reasonably
deems necessary to protect, preserve or realize upon the Collateral
and the Agent's liens and security interest therein in order to
effect the intent of this Agreement, all as fully and effectively as
Borrower might do.
(b) The Agent agrees that, except as otherwise provided in
this Agreement, it will forbear from exercising the power of attorney or any
rights granted to the Agent pursuant to this Section 5.08, except upon the
occurrence and during the continuation of an Event of Default. The Borrower
hereby ratifies, to the extent permitted by law, all that said attorneys shall
lawfully do or cause to be done by virtue hereof. Exercise by the Agent or any
Lenders of the powers granted hereunder is not a violation of the automatic stay
provided in section 362 of the Bankruptcy Code and the Borrower waives
applicability thereof. The power of attorney granted pursuant to this Section
5.08 is a power coupled with an interest and shall be irrevocable until the
Obligations are indefeasibly paid in full.
(c) The powers conferred on the Agent hereunder are solely
to protect the Agent's and the Lenders' interests in the Collateral and shall
not impose any duty upon it or them to exercise any such powers. The Agent shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither it nor any of its respective officers,
directors, employees or agents shall be responsible to the Borrower for any act
or failure to act, except for their own gross negligence or willful misconduct.
(d) The Borrower also authorizes the Agent, at any time and
from time to time upon the occurrence and during the continuation of any Event
of Default or as otherwise expressly permitted by this Agreement, (i) to
communicate in its own name with any party to any Contract with regard to the
assignment of the right, title and interest of the Borrower in and under the
Contracts hereunder and other matters relating thereto and (ii) to execute any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower hereby represents and warrants to the Lenders
and the Agent 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.
50
6.02. Authorization, Etc. The execution, delivery and
performance by the Borrower of this Agreement and each Related Document, (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 this Agreement) 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 this Agreement and each of the other
Related Documents 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 this Agreement.
6.04. Enforceability of Loan Documents. This Agreement and
each of the other Related Documents to the 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 each
Subsidiary, enforceable against such Subsidiary in accordance with its terms.
6.05 Xxxxxxxxxxxx.Xx of the date hereof, Westview
Advertising is the only Subsidiary of the Borrower. The Borrower owns all of the
outstanding capital stock of Westview Advertising. All shares of such stock of
Westview Advertising are owned by the Borrower free and clear of all Liens,
except for the Liens in favor of the Lenders and the Agent that secure payment
of the Obligations. There are no options, warrants or other rights to acquire
shares of capital stock of any Subsidiary of the Borrower. The aggregate fair
market value of all assets owned by all Subsidiaries of the Borrower existing on
the Entry Date is not in excess of $500,000.
6.06. Absence of Conflicts. Neither the execution and
delivery of this Agreement or the other Related Documents to which the Borrower
is a party nor consummation of the transactions herein or therein contemplated
nor performance of or compliance with the terms and conditions hereof or thereof
will (a) violate any Law, (b) conflict with or result in a breach of or default
under its charter or by-laws, or any material agreement or instrument to which
the Borrower is a party or by which it or any of its properties (now owned or
hereafter acquired) may be subject or bound (other than conflicts, breaches and
defaults the enforcement of which will be stayed by virtue of the filing of the
Chapter 11 Case) or (c) result in the creation or imposition of any Lien upon
any property (now owned or hereafter acquired) of the Borrower, except the Lien
in favor of the Lenders and the Agent with respect to the Collateral.
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6.07. Financial Statements. (a) Historical Statements. The
Borrower has heretofore furnished to the Lenders (i) an unaudited balance sheet
of the Borrower as of August 26, 2000 and the related unaudited statements of
operations and cash flows for the seven months then ended and (ii) a balance
sheet of the Borrower as of January 29, 2000 and the related statements of
operations and cash flows for the fiscal year then ended, as examined and
reported on by Ernst & Young LLP, independent certified public accountants. Such
financial statements (including the notes thereto in the case of the statements
as of January 29, 2000) present fairly, in all material respects, the financial
condition of the Borrower as of the end of such fiscal year and as of the end of
such period 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, subject (in the case of interim financial
statements) to year-end adjustments. 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 anticipate losses from unfavorable commitments.
(b) Projections. The Borrower has heretofore furnished to
the Lenders projections for the period from August 27, 2000 through February 2,
2002 and such projections have been prepared in accordance with the standard set
forth in the second sentence of Section 6.22 hereof.
6.08. No Event of Default. No event has occurred and is
continuing and no condition exists which constitutes an Event of Default or
Potential Default. The Borrower is not in violation of any term of its charter
or by-laws.
6.09. Litigation. Except as set forth on Schedule 6.09
hereto, there is no pending or, to the knowledge of the Borrower, threatened
action, suit or proceeding affecting the Borrower before any court or other
Governmental Authority or any arbitrator in existence on the Entry Date. There
is no pending or threatened action, suit or proceeding affecting the Borrower
before any court or other Governmental Authority or any arbitrator which may
have a Material Adverse Effect, other than the Chapter 11 Case.
6.10. ERISA. (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 Benefit Plan,
including Schedule B (Actuarial 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, and a copy of each such annual report filed by the Borrower
after the Filing Date will be delivered to the Agent promptly thereafter, (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, security interest or other charge or encumbrance
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
52
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 or the retention plan adopted by the Borrower on September 19, 2000,
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 Entry
Date are set forth on Schedule 6.10.
6.11. 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 January 31, 1997 (except
if Borrower utilizes net operating losses for tax years prior to such date,
those tax years may be reopened by the Internal Revenue Service) all such
liabilities (including all deficiencies assessed following audit) have been
satisfied.
6.12. Regulation U. 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 Regulation U 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 purposes of purchasing or carrying any
margin stock.
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 nor any of its Subsidiaries is (i) a "holding company" or a
"subsidiary company" of a "holding company" or any "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. Except for (a) Permitted Liens and
(b) any failure arising from any act or omission of the Agent after the Entry
Date with respect to the perfection of the Liens granted under this Agreement
53
and the Related Documents, the Liens granted under this Agreement and the
Related 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, free and clear of any and all claims or Liens in
favor of others and no Person has any right of first refusal, option or other
preferential right to purchase any Collateral and 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;
and 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 to all of their owned properties and assets, free and clear of all Liens
except Permitted Liens, the Liens arising under the Related Documents and Liens
with respect to Capitalized Leases.
6.17. Financial Accounting Practices, Etc.
(a) The Borrower makes and keeps books, records and
accounts which, in reasonable detail, accurately and fairly reflect their
respective transactions and dispositions of their respective assets and each
maintains 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 maintains 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 as provided herein and the valuation thereof) is accurate.
6.18. Power To Carry On Business. The Borrower has all the
requisite power and authority to own and operate its properties and to carry on
its business as now conducted and as presently planned to be conducted (subject
to Bankruptcy Court approval with respect to transactions outside the ordinary
course of business).
6.19. No Material Adverse Change. Between January 29, 2000
and the date hereof there has not occurred any event which may be reasonably
expected to have a Material Adverse Effect, other than events (a) disclosed in
writing by the Borrower to the Agent prior to the Filing Date or (b) that
customarily occur as a result of events leading up to and following the
commencement of a case under chapter 11 of the Bankruptcy Code.
6.20. Existing Liens; Capitalized Leases; Unpaid Rent.
There are no Liens on any assets of the Borrower other than (a) the Lien created
as of the Entry Date in favor of the Agent hereunder and under the other Related
Documents, (b) Liens created by the Borrower which secure indebtedness (other
54
than in respect of Capitalized Leases) which do not exceed $1,000,000, (c)
obligations related to Capitalized Leases which do not exceed $250,000 in the
aggregate, and (d) Permitted Liens.
6.21. Compliance with Laws. The Borrower is not in
violation of or otherwise liable under 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), except
for violations which in the aggregate do not have a Material Adverse Effect and
violations or any enforcement actions which will be stayed by virtue of the
filing of the Chapter 11 Case.
6.22. Accurate and Complete Disclosure. No representation
or warranty made by the Borrower under this Agreement or any other Related
Document and no written statement made by the Borrower in any financial
statement (furnished pursuant to this Agreement or otherwise), certificate,
report, exhibit or document furnished by the Borrower to the Agent pursuant to
or in connection with this Agreement or any other Related Document is or was or
will be, when delivered, when taken together with all other information supplied
by the Borrower to the Agent, false or misleading in any material respect
(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). To the extent the Borrower furnishes any
projections of the financial position and results of operations of the Borrower
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. The
Borrower has disclosed to the Agent in writing every fact which to the best of
its knowledge is reasonably likely to result in a Material Adverse Effect. 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.
6.23. 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 6.23 hereto sets forth a list of all insurance maintained by the
Borrower and its Subsidiaries on the Entry Date.
6.24. Operating Lease Obligations. On the Entry Date, the
Borrower and its Subsidiaries do not have any obligations as lessee for the
payment of rent for any real or personal property other than the Operating Lease
Obligations set forth in Schedule 6.24 hereto.
6.25. Environmental Matters.
55
(A) Except as disclosed on Schedule 6.25:
(i) The Borrower and its Subsidiaries at all times have
been operated, and is, in full compliance with all applicable Environmental
Laws, including all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
all applicable Environmental Laws, except to the extent such failure to comply
would not result in a Material Adverse Effect.
(ii) The Borrower and its Subsidiaries have obtained, and
is in compliance with, all permits, licenses, authorizations, registrations and
other governmental consents required by applicable Environmental Laws
("Environmental Permits"), except to the extent the failure to so obtain or
comply with any such Environmental Permits would not result in a Material
Adverse Effect. All Environmental Permits are in full force and effect, and the
Borrower and its Subsidiaries have made all appropriate filings for issuance or
renewal of such Environmental Permits, except such as would not result in a
Material Adverse Effect.
(iii) All of the property owned, leased, operated or
controlled by the Borrower or any of its Subsidiaries is free of any Hazardous
Materials (except those authorized pursuant to and in accordance with
Environmental Permits held by the Borrower or its Subsidiaries) and free of all
contamination arising from, relating to, or resulting from any such Hazardous
Materials, except such as would not result in a Material Adverse Effect.
(iv) There are no pending or, to the knowledge of the
Borrower, threatened Environmental Actions.
(v) There are no past or present conditions, events,
circumstances, facts, activities, practices, incidents, actions, omissions or
plans: (1) that may interfere with or prevent continued compliance by the
Borrower or its Subsidiaries with Environmental Laws and the requirements of
material Environmental Permits, or (2) that may require the Borrower or any
Subsidiary to incur any Environmental Liabilities and Costs, or (3) that may
form the basis of any Environmental Action against or involving the Borrower or
its Subsidiaries, except such as would not result in a Material Adverse Effect.
(vi) There are no underground or aboveground storage tanks,
or related piping, incinerators or surface impoundments at, on, or about, under
or within any property owned, operated, leased or controlled by Borrower or its
Subsidiaries, and any former underground or aboveground storage tanks, or
related piping, incinerators or surface impoundments at, on, or about, under or
within any such property have been removed or closed in accordance with
applicable Environmental Law.
(vii) The Borrower and its Subsidiaries have not received
any notice or other communication that any of them is or may be a potentially
responsible person or otherwise liable in connection with any waste disposal
site allegedly containing any Hazardous Materials, or other location used for
the disposal of any Hazardous Materials, or notice of any failure of the
Borrower or its Subsidiaries to comply with any Environmental Law or the
requirements of any Environmental Permit.
56
(viii) The Borrower and its Subsidiaries have not used any
waste disposal site, or otherwise disposed of, transported, or arranged for the
transportation of, any Hazardous Materials to any place or location, or in
violation of any Environmental Laws, except such as would not result in a
Material Adverse Effect.
(ix) No Environmental Lien exists, and no condition exists
which could result in the filing of a Environmental Lien, against any assets,
facility, inventory or property owned, leased, operated or controlled by the
Borrower or its Subsidiaries.
(x) There has been no Release or threatened material
Release at any time of any Hazardous Materials at, on, or about, under or within
any real property currently or formerly owned, leased, operated or controlled by
the Borrower or its Subsidiaries or any predecessor of the Borrower or its
Subsidiaries (other than pursuant to and in accordance with permits held by the
Borrower or its Subsidiaries or any such predecessor), except such as shall not
result in a Material Adverse Effect. To the knowledge of the Borrower and its
Subsidiaries, there has been no such Releases of Hazardous Materials at, on, or
about, under, within, or from any property adjacent to any Mortgaged Property
that, through soil, air, surface water or groundwater migration or
contamination, may reasonably have been expected to have migrated to or under
any Mortgaged Property.
(xi) Neither the Borrower nor any Subsidiary has entered
into or agreed to any currently pending or effective judgment, decree or order
by any judicial or administrative tribunal relating to compliance with any
Environmental Law or to Remedial Action, nor has Borrower or any Subsidiary been
requested or required by any Governmental Authority to perform any Remedial
Action.
(B) To the knowledge of the Borrower and its Subsidiaries,
all environmental investigations, studies, audits or assessments in the
possession or control of the Borrower or any Subsidiary concerning any violation
or potential violation of, or liability or potential liability under, any
Environmental Law relating to any current or prior business, facilities or
properties owned, operated, leased or controlled by the Borrower or any
Subsidiary (or any of their respective predecessors in interest) have been made
available to the Lenders and the Agent.
6.26. 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.
6.27. Administrative Priority; Lien Priority.
(a) After the Entry Date, the Obligations of the Borrower
will constitute allowed administrative expenses in the Chapter 11 Case having
priority over all administrative expenses and unsecured claims against the
Borrower now existing or hereafter arising, of any kind or nature whatsoever,
including without limitation all administrative expenses of the kind specified
57
in Sections 503(b) and 507(b) of the Bankruptcy Code, subject, as to priority,
only to Carve-Out Expenses having priority over the Obligations to the extent
set forth in the Agreed Administrative Expense Priorities.
(b) The Lien on the Collateral shall be a valid and
perfected first priority Lien to the extent provided in the Interim Bankruptcy
Court Order and the Final Bankruptcy Court Order.
6.28. Bankruptcy Court Order. The Interim Bankruptcy Court
Order or the Final Bankruptcy Court Order, as the case may be, is in full force
and effect, and has not been reversed, stayed, modified or amended absent the
joinder and consent of the Agent and the Borrower.
6.29. Real Property.
(a) Schedule 6.29 hereto sets forth a complete and accurate
description and list as of the Entry Date of the location, by state and street
address, of all real property owned and leased by the Borrower.
(b) As of the Entry Date, the Borrower has valid leasehold
interests in the Leases described in Schedule 6.29 hereto. None of the Leases is
subject to any Lien except Liens granted to the Agent pursuant to the
Pre-Petition Loan Agreement, this Agreement and each of the Related 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 and its Subsidiaries right, title and interest in and to all Mortgaged
Property. Schedule 6.29 sets forth with respect to each Lease, the commencement
date, termination date, renewal options (if any) and annual base rents. To the
best of the Borrower's knowledge each such Lease is valid and enforceable in
accordance with its terms in all material respects and is in full force and
effect. 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 this Agreement and each of the Related
Documents, except as set forth on Schedule 6.29. 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 (other than defaults, or notices thereof subject to cure, that
customarily occur for a retail store operator such as the Borrower in connection
with the commencement of a case under chapter 11 of the Bankruptcy Code) 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 Entry 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 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
58
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 repaired or
restored is not reasonably likely to result in a Material Adverse Effect. Except
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.
6.30. Location of Bank Accounts. Schedule 6.30 hereto sets
forth a complete and accurate list as of the date hereof of all deposits and
other accounts, including all Depository Accounts, 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).
6.31. Use of Proceeds. The Borrower will use the proceeds
of the Loans and the Letters of Credit, respectively, in accordance with Section
2.09 hereof.
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 1.01(A) hereto and (ii) any other locations
approved in writing by the Agent pursuant to the definition of "Eligible
Inventory." Schedule 1.01(A) hereto contains a true, correct and complete list,
as of the Entry 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
59
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. Nature of Business. Neither the Borrower nor any of
its Subsidiaries is engaged in any business other than the operation of stores
selling family apparel, shoes, related accessories and other retail items and
the support of the Borrower's and such Subsidiaries' business and operations as
presently conducted.
ARTICLE VII
CONDITIONS OF CREDIT EXTENSIONS
-------------------------------
7.01. Conditions Precedent to Initial Credit Extension. The
obligation of the Lenders to make the initial Credit Extension with respect to
the Interim Bankruptcy Court Order and with respect to the Final Bankruptcy
Court Order (whether such Credit Extension shall consist of the making of a Loan
or assistance to the Borrower in establishing or opening Letters of Credit) is
subject to the satisfaction on or before the date thereof of each of the
following conditions:
(a) The Interim Bankruptcy Court Order or the Final
Bankruptcy Court Order, as the case may be, shall have been entered by the
Bankruptcy Court, and the Agent shall have received a certified copy of the
same, and such order shall be in full force and effect and shall not have been
reversed, stayed, modified or amended.
(b) The Borrower shall have executed and delivered to the
Agent the Notes, substantially in the form of Exhibit A hereto, which shall be
dated the Entry Date.
(c) The Borrower shall have paid to the Agent all fees when
due and other amounts due and payable to the Agent when due, including but not
limited to amounts due under Section 2.08 or 11.06 hereof and all amounts due
under the Fee Letter (all of which fees and amounts may, when due and at the
Agent's sole discretion, be deemed to automatically increase the amount of Loans
then outstanding); provided, that, all such fees that are due and payable on or
prior to the initial Credit Extension may be paid contemporaneously therewith.
The Borrower shall have paid to counsel to the Agent all reasonable fees and
other client charges due to such counsel on the date of the initial Credit
Extension.
(d) The Agent shall have received certificates satisfactory
in form and substance to it from the Borrower, signed by the Designated
Borrowing Officer, certifying as to (i) true copies of Borrower's charter and
by-laws, (ii) true copies of all corporate action taken by the Borrower relative
to the Related Documents and the transactions contemplated thereby (which shall
designate one or more Designated Financial Officers and Designated Borrowing
Officers), (iii) the true signatures and incumbency of the Designated Borrowing
Officers and (iv) such other matters as the Agent may reasonably request.
60
(e) The Agent shall have received a certified copy of the
initial Borrowing Base Certificate described in Section 4.04(a) hereof, in form
and substance and as of a date reasonably satisfactory to the Agent.
(f) The Lien in favor of the Agent and the Lenders with
respect to the Collateral shall be a valid and perfected first priority Lien
prior to all other Liens in the Collateral except as set forth herein.
(g) The Borrower shall have caused all property insurance
policies to show the Agent as loss payee as its interest may appear and, with
respect to Inventory, all such policies shall name the Agent as first payee.
(h) With respect to each Benefit Plan, the Agent shall have
received copies of the most recent Annual Report (Form 5500), including Schedule
B thereto, and the most recent actuarial report. In addition, the Agent shall
have received evidence in the form of an officer's certificate, in form and
substance reasonably satisfactory to the Agent, of the Borrower's material
compliance with all Environmental Laws, ERISA, labor and WARN matters.
(i) The Agent shall have received certified copies of
requests for copies or information on Form UCC-11 or reports from a reporting
company satisfactory to the Agent, listing all effective UCC financing
statements, tax liens and judgment liens in each of the jurisdictions listed on
Schedule 1.01(A) hereto, which name as debtor the Borrower, together with copies
of such financing statements, none of which (other than those consented to by
the Agent), shall cover any of the Inventory of the Borrower.
(j) All legal proceedings in connection with the
transactions contemplated by this Agreement and the other Related Documents
shall be satisfactory to the Agent and the Agent shall have received all such
counterpart originals or certified or other copies of such documents and
proceedings in connection with such transactions, in form and substance
reasonably satisfactory to the Agent, as the Agent may from time to time
request.
7.02. Conditions Precedent to Each Credit Extension. In
addition to the requirements of Section 7.01, the obligation of each Lender to
make any Credit Extension hereunder (whether such Credit Extension shall consist
of the making of a Loan or assistance to the Borrower in establishing or opening
Letters of Credit) is subject to the fulfillment, by the Borrower, in a manner
satisfactory to the Agent of each of the following further conditions:
(a) 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 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 of the Borrower
contained in Article VI of this Agreement and in each other Loan Document and
certificate or other writing delivered to the Lenders pursuant hereto on or
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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.
(b) Legality. The making of such Loan or the issuance of
such Letter of Credit shall not contravene any law, rule or regulation
applicable to the Agent, the Lenders or the Letter of Credit Issuer.
(c) 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 Reference 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.
(d) 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.
(e) 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 document, in
form and substance satisfactory to the Agent, as the Agent or such special
counsel may reasonably request.
(f) Commitment. The aggregate unpaid principal amount of
the Loans and the Letter of Credit Exposure shall not exceed, and giving effect
to the requested Credit Extension will not exceed, the Current Commitment.
(g) Additional Availability. On the earlier of (i) the date
on which the Lenders make the initial Loan under this Agreement or (ii) the date
on which the Borrower obtains the issuance of the initial Letter of Credit under
this Agreement (excluding any Existing Letters of Credit), after giving effect
to all Loans made on such date, the Letters of Credit issued on such date and
all Existing Letters of Credit, the Availability shall not be less than
$1,000,000 and the Borrower shall deliver to the Agent a certificate of the
Designated Financial Officer of the Borrower certifying that the Availability is
not less than $1,000,000 and containing the calculation thereof.
(h) Entry of Order. On the date of any Credit Extension,
the Interim Bankruptcy Court Order or the Final Bankruptcy Court Order, as the
case may be, shall have been entered by the Bankruptcy Court, and the Agent
62
shall have received a certified copy of the same and such order shall be in full
force and effect and shall not have been reversed, stayed, modified or amended.
(i) Final Order. With respect to any Credit Extension on or
after the thirtieth day following the Entry Date, the Final Bankruptcy Court
Order shall be in full force and effect and shall not have been reversed,
stayed, modified or amended.
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 7.02, except for conditions that are
subject to additional requests of the Agent (or its special counsel) or that are
subject to the Agent's satisfaction with the form and substance thereof, 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 7.02 have been satisfied as of the date of
such Credit Extension.
ARTICLE VIII
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:
8.01. Reporting Requirements. Furnish to the Lenders:
(a) Annual Reports. 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
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 Ernst & Young, 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 shall be without exceptions or qualifications 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 its operations
and the changes in its financial position 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
such certificate or report shall be delivered to the Agent and each Lender and
signed by such independent public accountants. Each set of statements and
63
balance sheets delivered pursuant to this Section 8.01(a) shall be accompanied
by a certificate dated the date 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 and (B) a certificate certified by the
Designated Financial Officer of the Borrower stating that the Borrower has
complied with the Capital Expenditures, Maintenance of Inventory and Cumulative
FIFO EBITDA covenants set forth in Sections 9.11, 9.16 and 9.17, respectively,
in form and substance satisfactory to the Agent.
(b) Quarterly Reports. 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 for the corresponding fiscal quarter for the preceding
fiscal year, and 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 its operations and the changes in its financial position 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. Each set
of statements and balance sheets delivered pursuant to this Section 8.01(b)
shall be accompanied by a certificate of a Designated Financial Officer dated
the date 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 and that the Borrower has complied with the Capital Expenditures,
Maintenance of Inventory and Cumulative FIFO EBITDA covenants set forth in
Sections 9.11, 9.16 and 9.17, respectively, in form and substance satisfactory
to the Agent.
(c) Monthly Reports. As soon as practicable and in any
event within thirty days after the end of each month (including the fiscal month
in which this Agreement is executed), unaudited consolidated statements of
operations and cash flows for the Borrower and its Consolidated Subsidiaries for
such fiscal month and for the period from the beginning of such fiscal year to
the end of such fiscal month, and an unaudited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such fiscal month,
all in reasonable detail, setting forth in comparative form the corresponding
figures for the same periods during the preceding fiscal year (except for the
balance sheet, which shall set forth in comparative form the corresponding
balance sheet as of the prior fiscal year end), and accompanied by a certificate
of a Designated Financial Officer of the Borrower stating that (1) such
statements present fairly, in all material respects, the financial position of
the Borrower and its Consolidated Subsidiaries as of the end of such fiscal
month and the results of its operations and cash flows for such fiscal month, in
conformity with GAAP applied in a manner consistent except as otherwise
disclosed therein with that of the most recent adjusted financial statements
64
furnished to the Lenders, subject to year-end adjustments, (2) 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 and (3) the Borrower has complied with the Capital Expenditures,
Maintenance of Inventory and Cumulative FIFO EBITDA covenants set forth in
Sections 9.11, 9.16 and 9.17, respectively.
(d) Other Monthly Reports. As soon as practicable and in
any event within thirty 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 and a Borrowing Base Certificate 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 Borrowing Base Certificate delivered by the Borrower to
the Lenders pursuant to paragraph (e) of this Section 8.01.
(e) Weekly Reports. As soon as practicable and in any event
within seven Business Days after the end of each week (including the week in
which this Agreement is executed), weekly sales reports, weekly inventory report
and a Borrowing Base Certificate, each in form and substance reasonably
satisfactory to the Agent and certified by a Designated Financial Officer of the
Borrower.
(f) Notice of Event of Default or Material Adverse Change.
As soon as possible, and in any event within five Business Days after becoming
aware of 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.
(g) Certain Reports. Upon the request of the Agent, copies
of all consultants' reports, investment bankers' reports, accountants'
management letters, business plans and similar documents.
(h) Other Reports and Information. 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 any
independent accountants in connection with any annual, interim or special audit
of the Borrower.
(i) Pleadings, etc. Copies of all pleadings, motions,
applications, financial information and other papers and documents filed by the
Borrower in the Chapter 11 Case.
(j) Reports to Committees. Promptly after the sending
thereof, copies of all written reports given by the Borrower to any official or
unofficial creditors' committee in the Chapter 11 Case.
65
(k) Financial Plan. As soon as possible and in any event no
later than (1) December 15, 2000, a revised financial plan of the Borrower
containing financial projections for the fiscal year of the Borrower ending
February 2, 2002 prepared by management of the Borrower, in form and substance
satisfactory to the Agent, and (2) December 15, 2001, a financial plan of the
Borrower containing financial projections for the fiscal year of the Borrower
ending February 1, 2003 prepared by management of the Borrower in form and
substance satisfactory to the Agent.
(l) Visitation and Verification. Permit the Agent or such
professionals or other Persons as the Agent may designate (i) to examine and
inspect the books and records of the Borrower and take copies and extracts
therefrom at reasonable times and during normal business hours upon the
reasonable request of the Agent, (ii) to verify materials, leases, notes,
receivables, deposit accounts and other assets of the Borrower from time to
time, and (iii) to conduct a physical Inventory count and/or valuation at the
distribution center and retail stores of the Borrower, provided that the
Borrower shall cause to be conducted at least one physical Inventory count in
the twelve-month periods commencing on each of (A) the Entry Date and (B) the
first anniversary of the Entry Date, and shall promptly after it becomes
available provide to the Lenders a copy of the written results of such physical
Inventory count. In addition to the physical Inventory count referred to in the
preceding sentence, the Borrower shall not be obligated to pay for more than one
such additional count and/or valuation in such twelve-month periods, provided,
however, that (x) any such additional count and/or valuation shall be conducted
upon the reasonable request of the Agent (y) shall be based upon a
representative random sample of the physical Inventory and (z) the limitation
contained in this sentence shall not apply after the occurrence of an Event of
Default.
(m) ERISA Statements. (1) As soon as possible and in any
event (A) no later than the latest date specified in Section 4043 of ERISA and
the regulations thereunder for the Borrower or any of its ERISA Affiliates to
notify the PBGC that any Termination Event described in clause (i) of the
definition of Termination Event with respect to any Benefit Plan has occurred or
is about to occur, 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 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 proposes to take with
respect thereto, (2) promptly and in any event within five 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 Benefit Plan or to have a trustee
appointed to administer any Benefit 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 Benefit 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 a Plan,
66
a statement of the Designated Financial Officer of the Borrower describing such
employee benefit plan and a copy of such employee benefit plan. (n) Promptly
after, and in any event within 10 days after, an officer of the Borrower learns
of any of the following, notice thereof:
(i) 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;
(ii) notice of violation of any Environmental Law and
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;
(iii) notice that Borrower or any Subsidiary is or may be a
potentially responsible person or otherwise liable in connection with any waste
disposal site allegedly containing any Hazardous Materials, or other location
used for the disposal of any Hazardous Materials; or
(iv) notice from any Governmental Authority or any third
party that the Borrower or any Subsidiary may be required to undertake Remedial
Action.
(o) Promptly after the commencement thereof but in any
event not later than five Business 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.
(p) 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
other than routine inquiries by such Governmental Authority.
(q) 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
reasonably request.
(r) Further Information. Such other information and in such
form as the Agent may reasonably request.
8.02. Preservation of Existence and Franchises. Subject to
Section 9.07(b) hereof, maintain and preserve, and cause each of its
Subsidiaries to maintain and preserve (which may be by virtue of the stay
imposed in the Chapter 11 Case) its corporate existence, as the case may be,
rights and franchise in full force and effect in its jurisdiction of
incorporation. The Borrower shall qualify and remain qualified (which may be by
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virtue of the stay imposed in the Chapter 11 Case) as a foreign corporation in
each jurisdiction in which failure to qualify would have a Material Adverse
Effect.
8.03. 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 generally accepted accounting
principles consistently applied.
8.04. [INTENTIONALLY OMITTED]
8.05. 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, rent 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. All policies covering
the Collateral not subject to any Mortgage are to be made payable to the Agent,
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 under such policies. All original policies or true copies thereof are to be
delivered to the Agent, premium prepaid, 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, 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 8.05 are subject to any provisions in the Mortgages which may
impose additional or greater obligations on the Borrower.
8.06. 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 8.06 are subject to any provisions in the Mortgages
which may impose additional or greater obligations on the Borrower.
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8.07. Environmental Indemnity. (a) Comply, and cause each
of its Subsidiaries to comply, with 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, leased, operated or controlled 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 in violation of Environmental Law or in a manner that could result in
Environmental Liabilities and Costs; and take all necessary steps to initiate
and expeditiously complete all Remedial Action to eliminate any such
Environmental Liabilities and Costs. In the event the Borrower fails to comply
with the covenants in the preceding sentence, the Agent may, in addition to any
other applicable remedies set forth herein, at Borrower's sole cost and expense,
cause any Remedial Action to be taken, and the Borrower shall provide to the
Agent access to the Mortgaged Property for such purpose. Any costs or expenses
incurred by the Agent for such purpose shall be immediately due and payable by
the Borrower and shall bear interest at the rate determined pursuant to Section
2.08(d) herein.
(b) The Agent shall have the right at any time that any
Obligations are outstanding, at the sole cost and expense of the Borrower, to
conduct an environmental audit of the Mortgaged Property by such persons or
firms appointed by the Agent, and the Borrower shall cooperate in all respects
in the conduct of such environmental audit, including, without limitation, by
providing access to the Mortgaged Property and to all records relating thereto.
To the extent that any such environmental audit identifies conditions which
violate, or could be expected to give rise to liabilities or obligations under,
Environmental Laws, the Borrower agrees to expeditiously conduct all Remedial
Action necessary to eliminate such conditions.
(c) 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 Environmental Liabilities and Costs, including,
without limitation, those arising out of (i) any Release or threatened Release
on any property presently or formerly owned, leased, operated or controlled 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 Borrower or any of its Subsidiaries (or their predecessors in interest or
title); (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 disposed of by the Borrower (or any
predecessor in interest or title); and/or (v) the breach of any representation
or warranty made by the Borrower in Section 6.24 hereof or the breach of any
covenant made by the Borrower in this Section 8.07, provided that the Borrower
shall not have any liability under this Section 8.07 with respect to any
Environmental Liabilities and Costs finally determined by a court of competent
jurisdiction to have been directly caused by the gross negligence or willful
misconduct of the Agent, the Letter of Credit Issuer or their employees, agents,
officers or directors. This Environmental Indemnity shall survive the repayment
of the Obligations and discharge or release of any security interest granted
under the Loan Documents.
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8.08. 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 Subsidiary 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 as provided herein and the valuation thereof) is accurate in all
material respects.
8.09. Compliance with Laws. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders (including, without limitation, 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. The provisions of this Section 8.09 are
subject to any provisions in the Mortgages which may impose additional or
greater obligations on the Borrower and its Subsidiaries.
8.10. Further Assurances. Promptly do, execute,
acknowledge, deliver, record, file, register and perform any and all such
further acts, deeds, conveyances, estoppel certificates, assurances and other
instruments as the Agent may reasonably request from time to time in order (a)
to carry out more effectively the purposes of this Agreement or any other
Related Document, (b) to subject to valid and perfected first priority lien on
all Collateral (subject, as to priority, to Carve-Out Expenses having a priority
over the Obligations to the extent set forth in the definition of Agreed
Administrative Expense Priorities), (c) to perfect and maintain the validity,
effectiveness and priority of any of the Related Documents and the Lien intended
to be created thereby, and (d) to better assure, convey, grant, assign,
transfer, preserve, protect and confirm unto the Agent the rights granted or now
or hereafter intended to be granted to the Agent under any Related Document. The
assurances contemplated by this Section 8.10 shall be given under applicable
nonbankruptcy Law as well as the Bankruptcy Code, it being the intention of the
parties that the Agent may request assurances under applicable nonbankruptcy
Law, and such request shall be complied with (if otherwise made in good faith by
the Agent) whether or not the Interim Bankruptcy Court Order or the Final
Bankruptcy Court Order, as the case may be, is in force and whether or not
70
dismissal of the Chapter 11 Case or any other action by the Bankruptcy Court is
imminent, likely or threatened.
8.11. Cash Management System. (a) The Borrower agrees and
covenants to (i) cause all cash and all proceeds from accounts receivable and
the sale of Inventory 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 the Cash
Concentration Account or a Depository Account on a daily basis, (iii) cause all
funds in the Depository Accounts to be transferred into the Cash Concentration
Account at least three (3) times per week, (iv) take all such actions as the
Agent deems necessary or advisable to send all cash, all proceeds from the sale
of Inventory, all remittances or other proceeds of Collateral to the Cash
Concentration Account, (v) as soon as possible and in no event later than thirty
(30) days following the Entry Date, the Borrower shall enter into a Depository
Account Agreement substantially in the form of Exhibit B hereto with respect to
each Depository Bank listed on Schedule 6.30, and (vi) take such actions as the
Agent deems necessary or advisable to grant to the Agent dominion and control
over the funds in the Cash Concentration Account. With respect to the Cash
Concentration Account, as soon a possible and in no event later than thirty (30)
days following the Entry Date, the Borrower shall deliver to the Agent an
agreement, duly executed by the Borrower and the Cash Concentration Account Bank
substantially in the form of Exhibit E hereto (the "Restricted Account
Agreement"), authorizing and directing the Cash Concentration Account Bank to
remit all amounts deposited in the Cash Concentration Account to the Agent or as
the Agent may direct, subject to this Section 8.11. After the occurrence and
during the continuance of an Event of Default, the Agent may instruct the Cash
Concentration Account Bank to send by wire transfer all amounts deposited in the
Cash Concentration Account to the Agent Account or as the Agent shall direct. In
the absence of an Event of Default, the Agent shall direct the Cash
Concentration Account Bank to make all cash in the Cash Concentration Account
available to the Borrower for general corporate purposes in accordance with
Section 2.09. The Borrower shall promptly, and in any event not later than five
(5) days after the opening of any such new account, notify the Agent in writing
of the creation of any new Depository Account and shall at the time of such
notice cause each Depository Bank maintaining a Depository Account to promptly,
and in any event within thirty (30) days after the date of such notice, enter
into a Depository Account Agreement. If the Borrower is unable to obtain a
Depository Account Agreement from any financial institution that receives
remittances or other proceeds of sales of Inventory within such thirty (30) day
period, the Borrower shall promptly thereafter terminate such accounts and
establish new accounts at a financial institution that will enter into a
Depository Account Agreement.
(b) As soon as practicable and in any event within thirty
(30) days of the Entry Date, the Borrower 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 I hereto, duly executed by the Borrower and each of Discover Card
Services Inc. and National Bancard Corporation. The Borrower shall promptly, and
in any event not later than five (5) days after the establishment of any new
credit card 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
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depository account agreement, substantially in the form of Exhibit I hereto,
duly executed by the Borrower and such new credit card servicer.
(c) Upon receipt by the Borrower of collections of cash and
any proceeds of the sale 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.
(d) Notwithstanding anything contained in this Section
8.11, and in lieu of establishing a new or separate cash management system, the
cash management system existing pursuant to the Pre-Petition Loan Documents
shall continue to be maintained for the benefit of the Agent and the Lenders to
the extent consistent with the terms and provisions of this Section 8.11.
8.12. Taxes. The Borrower shall pay and discharge, to the
extent consistent with the rights and obligations of the Borrower as a
debtor-in-possession under the Bankruptcy Code, all post-petition taxes,
assessments and governmental charges upon it, its income and its properties,
which arise from or relate to operations of the Borrower or other events
occurring after the Filing Date, prior to the date on which penalties are
attached thereto, unless and to the extent only that (a) such taxes, assessments
and governmental charges shall be contested in good faith and by appropriate
proceedings by the Borrower and (b) adequate reserves are maintained by the
Borrower with respect thereto.
8.13. Borrowing Base. Maintain all Loans and Letters of
Credit in compliance with the then-current Borrowing Base.
8.14. Change in Collateral; Collateral Records. Give the
Agent 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 and
otherwise fully perfected its Liens thereon. The Borrower shall also advise the
Agent promptly, in sufficient detail, of any material adverse change relating to
the type, 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.
8.15. Leases. Upon the request of the Agent, 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) upon the request of the Agent, provide the Agent with a
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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; (iv) 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 (v) notify the
Agent at least 14 days prior to the date the Borrower or such Subsidiary becomes
liable under any new Lease.
8.16. New Real Estate. If at any time the Borrower or any
of its Subsidiaries acquires any fee interest in real property not covered by a
Mortgage, the Borrower or such Subsidiary shall promptly execute, deliver and
record or cause such Subsidiary to execute, deliver and record, a first priority
mortgage (subject only to such Liens as may already constitute a Lien against
such real estate prior to the time the Borrower or such Subsidiary acquires such
real estate and not in contemplation of such acquisition) in favor the Agent
covering such real property interest, in form and substance satisfactory to the
Agent, and provide the Agent with (i) a title insurance policy covering such
real property interest in an amount equal to the purchase price thereof, (ii) a
current ALTA survey thereof, (iii) a surveyor's certificate, (iv) the documents
referred to in Section 7.01(d) hereof with respect to such real property
interest and (v) acknowledgment copies of appropriate financing statements on
Form UCC-1, duly executed by the Borrower and 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 and evidence that all
necessary filing fees and taxes or other expenses related to such filings have
been paid in full each in form and substance satisfactory to the Agent.
8.17. 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, execute and
deliver to the Agent a pledge agreement, appropriately completed, providing that
all of the outstanding shares of capital stock of such Subsidiary shall be
pledged to the Agent as collateral security for the Obligations, and deliver to
the Agent the certificate(s) representing such capital stock, together with
instruments of assignment and transfer in such form as the Agent may request,
(iii) 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 in respect of the Obligations and to deliver proof of corporate action,
incumbency of officers, opinions of counsel and other documents as the Agent may
reasonably request, and (iv) 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 Related 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
73
any shares of stock of any class whatsoever to any Person (other than to the
Borrower). In the event that any such additional shares of stock shall be issued
by any Subsidiary, the Borrower agrees forthwith to deliver or cause to be
delivered to the Agent pursuant to a pledge agreement the certificates
evidencing such shares of stock, accompanied by instruments of assignment and
transfer in such form as the Agent may request and shall take such other action
as the Agent shall request to perfect the security interest created therein
pursuant to a pledge agreement.
8.18. Sales Tax Escrow Account. The Borrower shall maintain
a separate bank account in its name, but styled "for the benefit of sales taxing
authorities," and shall maintain an amount of cash in this account equal to an
estimate, updated weekly in a manner acceptable to the Agent, of the Borrower's
accrued sales tax obligations.
ARTICLE IX
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:
9.01. Interim Bankruptcy Court Order; Final Bankruptcy
Court Order; Administrative Priority; Lien Priority; Payment of Claims.
(a) Seek, consent to or suffer to exist, or permit any of
its Subsidiaries to seek, consent to or suffer to exist, any modification, stay,
vacation or amendment of the Interim Bankruptcy Court Order or the Final
Bankruptcy Court Order except for modifications and amendments agreed to by the
Agent.
(b) Suffer to exist, or permit any of its Subsidiaries to
suffer to exist, a priority for any administrative expense or unsecured claim
(including, without limitation, any reclamation claim) against the Borrower (now
existing or hereafter arising of any kind or nature whatsoever, including
without limitation any administrative expenses of the kind specified in Sections
503(b) and 507(b) of the Bankruptcy Code) equal or superior to the priority of
the Agent in respect of the Obligations, except for the Carve-Out Expenses
having priority over the Obligations to the extent set forth in the definition
of Agreed Administrative Expense Priorities.
(c) Prior to the date on which the Obligations have been
paid in full in cash and the Revolving Credit Commitment has been terminated,
the Borrower shall not pay any administrative expense claims except (i) Priority
Professional Expenses and amounts payable pursuant to 28 U.S.C. ss. 1930(a)(6)
and (ii) other administrative expense claims incurred in the ordinary course of
the business of the Borrower, in each case to the extent and having the order of
priority set forth in the Agreed Administrative Expense Priorities.
9.02. Liens. 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
74
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 Filing Date, as set forth in
Schedule 9.02 hereto, but not the extension of coverage thereof to the other
property or the extension of maturity, refinancing or other modification of the
terms thereof or of the Indebtedness secured thereby;
(c) Liens for taxes, assessments or governmental charges or
levies to the extent that the payment thereof shall not be required by Section
8.09 hereof and/or any of the Mortgages;
(d) Liens created by operation of law other than
Environmental Liens, such as materialmen's liens, mechanics' liens and other
similar liens, including landlord's liens, arising in the 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) 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 property to be used by the Borrower in the
ordinary course of its business, securing payment of all or part of the purchase
price thereof, and Liens with respect to equipment leases which equipment is
used by the Borrower in the ordinary course of its business, provided that the
aggregate amount of Indebtedness at any one time outstanding incurred after the
Filing Date and secured by such Liens shall not exceed $3,000,000, and further
provided that such Liens are confined solely to the property so purchased,
leased, improvements thereto and proceeds thereof;
(h) Liens securing Capitalized Leases permitted by Sections
9.10 and 9.11; and
(i) to the extent the same constitutes Liens, the interest
of the consigner in Inventory held by the Borrower on consignment.
9.03. Indebtedness. Create, incur or suffer to exist, or
permit any of its Subsidiaries to create, incur or suffer to exist, any
Indebtedness, other than:
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(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 9.03 hereto, but not the extension of maturity, refinancing or other
modification of the terms thereof;
(c) Indebtedness of the Borrower which is fully
subordinated to the payment of the Obligations on terms fully approved in
writing by the Majority Lenders in their sole and absolute discretion, provided
that such Indebtedness is not secured;
(d) Indebtedness for Capitalized Leases permitted by
Sections 9.10 and 9.11 of this Agreement;
(e) Indebtedness secured by Liens or security interests
permitted by 9.02(g);
(f) accounts payable and accrued expenses arising out of
transactions (other than borrowings) in the ordinary course of business; and
(g) Indebtedness contemplated by the Interim Bankruptcy
Court Order or the Final Bankruptcy Court Order.
9.04. Guarantees, Etc. Become liable under any Guarantee in
connection with any Indebtedness of any other Person, other than:
(a) guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business; and
(b) guaranties existing on the Filing Date, as set forth in
Schedule 9.04 hereto, but not any renewal or other modification thereof.
9.05. Loans, Advances and Investments, Etc. Make, or permit
any of its Subsidiaries to make, any loan or advance to any Person or purchase
or otherwise acquire, or permit any of its Subsidiaries to purchase or otherwise
acquire, any capital stock, properties, assets or obligations of, or any
interest in, any Person, other than advances to employees not exceeding $100,000
at any time outstanding. By way of illustration, and without limitation of the
foregoing, it is understood that the Borrower will be deemed to have made an
advance to a Person: (x) to the extent that the Borrower performs any service
for such Person (including but not limited to management services), or transfers
any property to such Person, and is not reimbursed for such service or property
and (y) to the extent that the Borrower pays any obligation on behalf of such
Person. The amount of such advance shall be deemed to be the fair value of the
services so performed or property so transferred (in the case of clause (x)) or
the amount so paid by the Borrower (in the case of clause (y)).
The following are excepted from the operation of this
Section 9.05.
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(a) Permitted Investments; and
(b) investments, loans or advances by the Borrower to its
Subsidiaries, provided that (1) any such Subsidiary has executed and delivered
to the Agent a Subsidiary Guaranty and all of the other conditions of Section
8.17 have otherwise been satisfied with respect to such Subsidiary, (2) the
aggregate amount of such investments, loans, or advances to all Subsidiaries
(other than Westview Advertising) shall not exceed $100,000 and (3) the
aggregate amount of such investments, loans, or advances to Westview Advertising
shall not exceed $4,000,000 during any 12-month period.
9.06. 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..
9.07. 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) no other provision of
this Agreement would be violated thereby, and (ii) 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, worn-out property or excess inventory in
the ordinary course of business, (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, for cash, in
connection with the closing of the retail stores set forth on Schedule 9.07(b),
(v) the Borrower, with the prior written consent of the Agent, may sell
Inventory and other assets for fair market value, for cash, in connection with
store closings in the ordinary course of business and as commercially reasonable
as part of the Chapter 11 Case, and (vi) the Borrower may sell or otherwise
dispose of assets, other than Inventory, for fair market value, for cash,
provided that the Net Proceeds of such dispositions do not exceed $250,000 in
the aggregate.
9.08. 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
77
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, provided that the amount of such normal and customary operating
expenses shall not exceed $100,000.
9.09. Continuation of or Change in Business. Make, or
permit any of its Subsidiaries to make, any change in the nature of its business
as carried on at the date hereof.
9.10 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 the
payment of rent for any real or personal property under leases or agreements to
lease other than aggregate obligations under Capitalized Leases and Operating
Lease Obligations which would not cause the aggregate amount of all obligations
under Capitalized Leases and Operating Lease Obligations entered into after the
date hereof owing by the Borrower and its Subsidiaries in any 12-month period to
exceed $4,000,000.
9.11. 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 (i) $7,200,000
for the fiscal year of the Borrower ending February 3, 2001, (ii) $3,000,000 for
the fiscal year of the Borrower ending February 2, 2002, or (iii) $2,000,000 for
the period beginning on February 3, 2002 and ending on November 2, 2002.
9.12. 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.
9.13. 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.
9.14. Environmental. Dispose, and shall not permit any
Subsidiary to dispose, of any Hazardous Material by placing it in or on the
ground or waters of any property owned, leases, operated or controlled by the
Borrower or such Subsidiary.
9.15. 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.
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(c) amend or permit any ERISA Affiliate to amend any
Benefit Plan in a manner that would require security under Section 307 of ERISA;
or
(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.
(e) adopt any Plan or any amendment to a Plan the effect of
which is to materially increase the "current liability" under the Plan as
defined in Section 302(d)(7) of ERISA.
9.16. Maintenance of Inventory. The Borrower shall not
permit the aggregate amount of its Inventory (valued at Book Value) at the end
of each fiscal quarter ending on the dates set forth below to be more than the
amounts specified opposite each such fiscal quarter set forth below:
Fiscal Quarter Maximum Amount
-------------- --------------
October 28, 2000 $65,000,000
February 3, 2001 65,000,000
May 5, 2001 65,000,000
August 4, 2001 65,000,000
November 3, 2001 65,000,000
February 2, 2002 65,000,000
May 4, 2002 65,000,000
August 3, 2002 65,000,000
November 2, 2002 65,000,000
9.17. Cumulative FIFO EBITDA. (i) Permit Cumulative FIFO
EBITDA for any fiscal quarter (calculated on a rolling twelve (12) month basis)
of the Borrower ending on the dates set forth below to be less than the amount
specified opposite each such fiscal quarter.
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Fiscal Quarter Amount
-------------- ------
October 28, 2000 $(10,900,000)
February 3, 2001 (13,900,000)
May 5, 2001 (13,200,000)
August 4, 2001 (10,000,000)
November 3, 2001 ( 4,000,000)
February 2, 2002 1,250,000
May 4, 2002 2,000,000
August 3, 2002 2,250,000
November 2, 2002 2,500,000
The Lenders and the Borrower acknowledge that when and if
any or all of the retail stores set forth on Schedule 9.07(b) are closed, the
Borrower and the Lenders will discuss whether any adjustments to the amounts set
forth above are necessitated as a result of such closures. (1)
9.18. Payments. The Borrower shall not make any payment of
principal or interest or otherwise on account of any Indebtedness (including,
without limitation, any payment in respect of any reclamation claim) or trade
payable incurred prior to the Filing Date, provided that such payments may be
made: (i) to the holders of, or in respect of, wage, salary, commission,
employee benefit obligations and workers' compensation claims (including expense
reimbursements) which arose prior to the Filing Date; (ii) to landlords in
connection with the assumption of unexpired leases under Section 365 of the
Bankruptcy Code in an aggregate amount not to exceed $2,000,000; (iii) to other
lessors and non-debtor parties to executory contracts in connection with the
assumption of such leases and contracts under Section 365 of the Bankruptcy
Code; (iv) to holders of secured Indebtedness of the Borrower (other than
secured Indebtedness owing to the Agent or the Lenders) in such amounts as are
determined by the Bankruptcy Court, not to exceed the amounts set forth in
-----------------------
(1) Pursuant to the Final Order of the United States Bankruptcy Court for the
District of Delaware dated December 6, 2000, Section 9.17 was amended in its
entirety to read as follows:
"9.17. Cumulative FIFO EBITDA. (i) Permit Cumulative FIFO
EBITDA for any fiscal quarter (calculated on a rolling twelve (12) month basis)
of the Borrower ending on the dates set forth below to be less than the amount
specified opposite each such fiscal quarter.
Fiscal Quarter Amount
-------------- ------
February 3, 2001 $(16,000,000)
May 5, 2001 (17,500,000)
August 4, 2001 (14,000,000)
November 3, 2001 ( 9,000,000)
February 2, 2002 ( 2,000,000)
May 4, 2002 2,000,000
August 3, 2002 2,250,000
November 2, 2002 2,500,000
The Lenders and the Borrower acknowledge that when and if
any or all of the retail stores set forth on Schedule 9.07(b) are closed, the
Borrower and the Lenders will discuss whether any adjustments to the amounts set
forth above are necessitated as a result of such closures."
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Schedule 9.18 hereto; and (v) to other Persons in an aggregate amount not to
exceed $500,000, in each case after prior written notice of such payment has
been given by the Borrower to the Agent and subject to approval of the
Bankruptcy Court. Nothing contained in this Section 9.18 shall prevent the
Borrower from effecting the payment of or otherwise issuing goods or refunds in
connection with payroll taxes, trust fund taxes, sales taxes, gift certificates,
layaways, exchanges of goods and cash refunds to customers.
ARTICLE X
DEFAULTS
--------
10.01. 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 or 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 Related 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 Related Document and such failure
shall continue unremedied for more than five Business Days; or
(b) Any representation or warranty made by the Borrower
under this Agreement or any other Related 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 Related Document, shall prove to have been false or misleading in any
material respect as of the time when made (including by omission of 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 Sections 8.02, 8.05, 8.07, 8.11, 8.13,
8.14, 8.17 or 8.18 or Article IX hereof; or
(d) The Borrower shall default in the performance or
observance of (i) the covenants contained in Section 8.01 and such default shall
have continued unremedied for a period of five days, or (ii) any other covenant,
agreement or duty under this Agreement or any other Related Document (to the
extent not otherwise set forth in this Section 10.01) and such default shall
have continued unremedied for a period of 20 days; or
(e) An order with respect to the Chapter 11 Case shall be
entered by the Bankruptcy Court, or the Borrower shall file an application for
an order with respect to the Chapter 11 Case, (i) appointing a trustee under
Section 1104, or (ii) appointing an examiner with enlarged powers (beyond those
set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) relating to the
operation of the business under Section 1106(b) of the Bankruptcy Code; or
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(f) An order with respect to the Chapter 11 Case shall be
entered by the Bankruptcy Court converting such chapter 11 case to a chapter 7
case; or
(g) An order shall be entered by the Bankruptcy Court
confirming a plan of reorganization in the Chapter 11 Case which does not
contain a provision for termination of the Revolving Credit Commitment and
payment in full in cash of all Obligations of the Borrower hereunder and under
the other Related Documents on or before the effective date of such plan or
plans upon entry thereof; or
(h) An order shall be entered by the Bankruptcy Court
dismissing the Chapter 11 Case which does not contain a provision for
termination of the Revolving Credit Commitment and payment in full in cash of
all Obligations of the Borrower hereunder and under the other Related Documents
upon entry thereof; or
(i) An order with respect to the Chapter 11 Case shall be
entered by the Bankruptcy Court without the express prior written consent of the
Agent, (i) to revoke, reverse, stay, modify, supplement or amend the Interim
Bankruptcy Court Order or the Final Bankruptcy Court Order or (ii) to permit any
administrative expense or any claim (now existing or hereafter arising, of any
kind or nature whatsoever) to have administrative priority as to the Borrower
equal or superior to the priority of the Agent in respect of the Obligations,
except for allowed administrative expenses having priority over the Obligations
to the extent set forth in the Agreed Administrative Expense Priorities, or
(iii) to grant or permit the grant of a Lien on the Collateral or the Inventory;
or
(j) An application for any of the orders described in
clauses (e), (f), (g), (h) or (i) above shall be made by a Person other than the
Borrower and such application is not contested by the Borrower in good faith and
the relief requested is granted in an order that is not stayed pending appeal;
or
(k) An order shall be entered by the Bankruptcy Court that
is not stayed pending appeal granting relief from the automatic stay to any
creditor of the Borrower with respect to any claim in an amount equal to or
exceeding $250,000 in the aggregate; provided, however, that it shall not be an
Event of Default if relief from the automatic stay is granted (i) solely for the
purpose of allowing such creditor to determine the liquidated amount of its
claim against the Borrower, (ii) to permit a secured creditor of the Borrower to
foreclose upon its collateral, or (iii) to permit the commencement of and/or
prosecution of a proceeding to collect against an insurance company; or
(l) There shall have been asserted against the Borrower or
any Subsidiary claims, whether accrued, absolute or contingent, based on or
arising from any Environmental Matter, including, without limitation, the
generation, storage, transport, handling or disposal of Hazardous Materials by
the Borrower or any Subsidiary, or any predecessor in interest to the Borrower
or any Subsidiary, which claims are reasonably likely to be determined adversely
to the Borrower or any Subsidiary (or any such predecessor in interest), in an
amount in excess of $250,000; or
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(m) 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 $250,000, 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;
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; or
(n) 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 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 shall deny in writing
that the Borrower has any liability or obligation purported to be created under
any Loan Document; or
(o) 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 $250,000;
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 $250,000; or
(p) Any Termination Event with respect to any Benefit Plan
shall 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 $250,000 (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); or
(q) Xxxxxxx X. Xxxxxx shall cease to be actively involved
in the management of the Borrower (other than as a result of the death,
incapacity or disability of Xx. Xxxxxx) and such Person shall not have been
replaced within 90 days of Xx. Xxxxxx ceasing to be actively involved in the
management of the Borrower with a person reasonably acceptable to the Agent on
terms reasonably acceptable to the Agent.
10.02. Consequences of an Event of Default. If an Event of
Default shall occur and be continuing or shall exist, the Agent may, by notice
to the Borrower,
83
(i) declare the Revolving Credit Commitment terminated,
whereupon the Commitment will terminate immediately and any fees hereunder shall
be immediately due and payable without further order of or application to the
Bankruptcy Court, presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived, and an action therefor shall
immediately accrue; or
(ii) 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 and all other
amounts owing by the Borrower hereunder or under the Notes to be immediately due
and payable without further order of or application to the Bankruptcy Court,
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived, and an action therefor shall immediately accrue; or
(iii) give notice to the Borrower of the occurrence and
continuance of an Event of Default; or
(iv) 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; or
(v) apply all funds deposited in the Cash Concentration
Accounts and in the Letter of Credit Cash Collateral Account to the payment, in
whole or in part, of the Obligations; or
(vi) set-off amounts in the Cash Concentration Account, the
Letter of Credit Cash Collateral Account and apply such amounts to the
Obligations of the Borrower hereunder and in the Related Documents.
10.03. Deposit for Letters of Credit. Upon the occurrence
of an Event of Default, the Letter of Credit Issuer may make payment of all or
any part of the Stated Amount of any Letter of Credit to the beneficiary
thereof, or to an account at the Agent designated by the Agent for the purpose
of future payments to be made to such beneficiary, in which event such payment
shall be treated in all respects as a drawing under the Letter of Credit in full
compliance therewith (notwithstanding that the beneficiary shall have failed to
present all or any of the documents or satisfied all or any of the requirements
for a drawing thereunder) and shall result in an Unreimbursed Draw. In addition,
upon demand by the Letter of Credit Issuer after the occurrence of any Event of
Default, the Borrower shall deposit with the Agent for the benefit of 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 the Letter of
Credit Issuer in a non-interest bearing cash collateral account as security for,
and to provide for the payment of, the Letter of Credit Exposure.
10.04. Certain Remedies. If an Event of Default occurs, the
Agent and the Bank may each exercise all rights and remedies which the Agent and
the Bank may each have hereunder or under any other Related Document or at law
84
(including but not limited to the Bankruptcy Code and the Uniform Commercial
Code) or in equity or otherwise. All such remedies shall be cumulative and not
exclusive.
ARTICLE XI
MISCELLANEOUS
-------------
11.01. 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.
11.02. 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, each Lender's
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 commitment fee, facility fee, Unused Line Fee, administration
fee and Letter of Credit fees shall at all times be ascertained from the records
of the Agent, which shall be conclusive absent manifest error.
11.03. Amendments and Waivers. (a) No amendment or
modification of any provision of this Agreement or of any of the Notes or of any
other Related 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 the Majority Lenders, which the Majority Lenders shall have the
right to grant or withhold at their sole discretion; except that any amendment,
modification, or waiver of (i) any provision of Article II or III which
amendment, modification or waiver increases the Revolving Credit Commitment of
any Lender, changes the principal amount or the final maturity of the Loans or
reduces the interest rate applicable to the Loans or the amount of the fees
payable pursuant hereto, (ii) the definitions of "Termination Date", "Majority
Lenders" and "Pro Rata Shares", (iii) any provision of this Agreement or any
Related Document that would permit Liens on the Collateral or release of the
Collateral (except as set forth in Section 12.08 hereof or except as otherwise
permitted therein) or (iv) the provisions contained in this Section 11.03, shall
be effective only if evidenced by a writing signed by or on behalf of all
Lenders. 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 11.03 shall be binding on each Lender, each future
Lender, and, if signed by the Borrower, on the Borrower.
85
(b) Notwithstanding anything to the contrary contained in
subsection 11.03(a), in the event that the Borrower requests that this Agreement
or any other Related 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 (w) the termination of the Revolving Credit Commitment
of each of the Minority Lenders, (x) 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,
(y) 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 (z) the payment
of all 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.
11.04. 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 Related
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 other right, power or privilege. The rights and remedies of the
Lenders or the Agent under this Agreement, the Notes and the other Related
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.
11.05. 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
86
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 Related Document.
11.06 Expenses; Taxes; Attorneys' Fees; Indemnification.
Without in any way limiting any provision of this Agreement or any provision of
any Related Document, 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,
investigation, monitoring and appraisals of assets, syndication, miscellaneous
disbursements, examination, travel, lodging and meals, incurred by the Agent
(and, in the case of clauses (e) 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 Related
Documents, (b) any requested amendments, waivers or consents to this Agreement
or the other Related 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 Related 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
Related 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 arising from or related to this
Agreement or any other Related 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 Related 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
Related 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
Related Document, (i) any attempt to collect from the Borrower, (j) the receipt
of any advice with respect to any of the foregoing, (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, (1) 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, (m) any costs or liabilities incurred in connection with
any Environmental Lien and (n) any costs or liabilities related to or arising in
connection with the Chapter 11 Case. Without limitation of the foregoing or any
other provision of any Related Document: (x) the Borrower agrees to pay all
stamp, document, transfer, recording or filing taxes or fees (including, without
limitation, mortgage 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 Related 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)
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if the Borrower fails to perform any covenant or agreement contained herein or
in any other Related 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 expenses 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 brought
or threatened relating to, or otherwise arising out of or relating to, the
execution of this Agreement or any other Related 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 or any of its Affiliates 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 determined
by a final judgment of a court of competent jurisdiction to have resulted from
the gross negligence or willful misconduct of the Indemnified Party.
11.07. Application. Except to the extent, if any, expressly
set forth in this Agreement or in the Related Documents, the Agent and the
Lenders shall have the right to apply 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.
11.08. 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.
11.09. Governing Law. This Agreement and the Notes shall be
deemed to be contracts under the laws of the State of New York, 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 except as the
law is governed by the Bankruptcy Code.
11.10. 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.
11.11. 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 Related 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
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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 11.06 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.
11.12. 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.
11.13. Assignment; Participations . (a) Each Lender shall
have the right at any time to assign to one or more Persons (then entitled to
receive payments of principal, interest and fees for the account of its lending
office under this Agreement free from withholding of Federal income tax) 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 Related Documents; provided, however, that (i) 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, and (ii) after giving effect to such assignment, CIT's Revolving
Credit Commitment shall be at least equal to the lesser of (1) $17,500,001 and
(2) an amount equal to a majority of the aggregate amount of the Revolving
Credit Commitments. The Borrower shall pay any and all costs and fees that are
paid to induce any assignee (other than CIT) under an Assignment and Acceptance
to execute such Assignment and Acceptance. Such payment may be charged, at the
Agent's sole option, to any account of the Borrowers maintained by the Agent.
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 Related 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 assignor 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 assignor 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 assignor 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 Related Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Related
Document furnished pursuant hereto; (ii) the assignor 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
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the Borrower of any of its obligations under this Agreement or any other Related
Document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Related 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 Agent 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 Related 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 Related 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 Related 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, 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 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 Lender, the Agent and the Borrower,
together with the Note subject to such Assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
Exhibit A 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
assigned 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 Note 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 D 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 Related Documents (including, without
limitation, all or a portion of its Revolving Credit Commitment and the Loans
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owing to it and its participation in Letters of Credit), provided that (1) such
Lender's obligations under this Agreement (including, without limitation, its
Revolving Credit Commitment hereunder) and the other Related Documents shall
remain unchanged; (2) 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 Related Documents; and (3) 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 of the
Loans, or (B) action directly effecting an increase of any of the Revolving
Credit Commitments or principal amounts of Loans or a decrease in the rate of
interest payable on the Loans.
(f) Notwithstanding the foregoing provisions of this
Section 11.13, 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
Related Document to any Affiliate of such Lender.
11.14. Successors and Assigns. This Agreement and the other
Related Documents shall be binding upon and inure to the benefit of the parties
hereto and their 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.
11.15. 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 Related 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 11.15, 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 11.15 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 any 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 11.15 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
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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 Related Document or (z)
of any information which has been made public by a Person other than any Lender
or the Agent. The Lenders and the Agent shall have the right to disclose any
confidential information described in this Section 11.15 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.
11.16. The Agent and the Lenders as Party in Interest. The
Borrower hereby stipulates and agrees that the Agent and the Lenders are and
shall remain parties in interest in the Chapter 11 Case and shall have the right
to participate, object and be heard in any motion or proceeding in connection
therewith. Nothing in this Agreement or any other Related Document shall be
deemed to be a waiver of any of the Agent's and the Lender's rights or remedies
under applicable law or documentation. Without limitation of the foregoing, the
Agent and the Lenders shall have the right to make any motion or raise any
objection it deems to be in its interest (specifically including but not limited
to objections to use of proceeds of the Loans, use of Letters of Credit, to
payment of professional fees and expenses or the amount thereof, to sales or
other transactions outside the ordinary course of business or to assumption or
rejection of any executory contract or lease), provided that the Agent and the
Lenders will not exercise such right if the action or inaction by the Borrower
which is the subject of such motion or objection is expressly permitted by any
covenant or provision of this Agreement.
11.17. Waiver of Jury Trial. BY ITS EXECUTION AND DELIVERY
OF THIS AGREEMENT, THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
AGAINST THE AGENT, ANY LENDER, ASSIGNEE, INDEMNIFIED PARTY OR LETTER OF CREDIT
ISSUER, BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
AGREEMENT, THE NOTES OR ANY OTHER RELATED DOCUMENT, ANY OF THE 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.
11.18. 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 the 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
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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 11.17 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.
11.19. Headings. Section headings herein are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
ARTICLE XII
THE AGENT
---------
12.01. Appointment. Each Lender designates and appoints CIT
as its Agent under this Agreement and the Related Documents, and each Lender
hereby irrevocably authorizes the Agent to take such action on its behalf under
the provisions of this Agreement and the Related Documents and to exercise such
powers as are set forth herein or therein, together with such other powers as
are reasonably incidental thereto. The Agent agrees to act as such on the
express conditions contained in this Article XII. The provisions of this Article
XII are solely for the benefit of the Agent and the Lenders and the Borrower
shall not have any rights as a third party beneficiary of any of the provisions
hereof (other than as expressly set forth in Section 12.07). In performing its
functions and duties under this Agreement and under the Related Documents, the
Agent shall act solely as agent of the Lenders and does not assume and shall not
be deemed to have assumed any obligations toward or relationship of agency or
trust with or for the Borrower. The Agent may perform any of its duties
hereunder, or under the Related Documents, by or through its agents or
employees.
12.02. Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
Related Documents. The duties of the Agent shall be mechanical and
administrative in nature. The Agent shall not have by reason of this Agreement
or any Related Document a fiduciary relationship in respect of any Lender.
Nothing in this Agreement or any of the Related 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 Related 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 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 Related
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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.
12.03. Rights, Exculpation, Etc. Neither the Agent nor any
of its officers, directors, employees or agents shall be liable to any Lender
for any action taken or omitted by them hereunder or under any of the Related
Documents, or in connection herewith or therewith, except that the Agent shall
be obligated on the terms set forth herein for performance of its express
obligations hereunder and except that no Person shall be relieved of any
liability imposed by law for intentional tort. 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 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 shall not be responsible to any Lender for any recitals,
statements, representations or warranties herein or in the Related Documents or
for any execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the Related Documents
or the transactions contemplated thereby, or for the financial condition of the
Borrower. The Agent shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
this Agreement or any of the Related Documents or the financial condition of the
Borrower, or the existence or possible existence of any Potential Default or
Event of Default. 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 Related 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 Related 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 Related Documents in accordance with the instructions of the
Majority Lenders.
12.04. 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 Related Documents and its
duties hereunder or thereunder, upon advice of counsel selected by it.
12.05. 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 Related Documents or any action taken or omitted
by the Agent under this Agreement or any of the Related Documents, in proportion
to each Lender's Pro Rata Share, including, without limitation, advances and
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disbursements made pursuant to Section 12.08; 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 resulting from the Agent's recklessness or willful misconduct. The
obligations of the Lenders under this Section 12.05 shall survive the payment in
full of the Loans and Reimbursement Obligations and the termination of this
Agreement.
12.06. 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 Chemical Bank, as the Letter of Credit
Issuer, is an Affiliate of the Agent, and may take actions which are not in the
interests 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.
12.07. Successor Agent. (a) The Agent may resign from the
performance of all its functions and duties hereunder and under the other
Related 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.
(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.
12.08. 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
12.06. The Agent Advances shall be repayable on demand and be secured by the
Collateral. The Agent Advances shall not constitute Loans but shall otherwise
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constitute Obligations hereunder. The Agent shall notify 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 12.05, each Lender agrees that it shall make
available to the Agent, upon the Agents' 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 9.07(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. 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 12.08(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 12.08(b)), each Lender agrees to confirm in
writing, upon request by the Agent, the authority to release Collateral
conferred upon the Agent under Section 12.08(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 at least five (5) Business Days' 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 or 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
96
12.08 or in any of the Related 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.
97
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.
WEINER'S STORES, INC.,
debtor and
debtor-in-possession
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
Address for Notices:
-------------------
Weiner's Stores, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx,
Chairman and Chief Executive Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: J. Xxxxxx Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
THE CIT GROUP/BUSINESS CREDIT, INC.,
in its capacity as Agent and a Lender
By: /s/ Xxxxx Xxxxx
-----------------------------------------
Name: Xxxxx Xxxxx
Title: Account Executive/AVP
98
Address for Notices:
-------------------
The CIT Group/Business
Credit, Inc.
Two Lincoln Centre
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Regional Credit Manager
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. South, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
99
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated _______, ____
Reference is made to the Debtor-In-Possession Revolving
Credit Agreement, dated as of October __, 2000 (as amended, modified or
supplemented from time to time, the "Credit Agreement"), among WEINER'S STORES,
INC., a Delaware corporation (the "Borrower"), the financial institutions from
time to time party thereto (collectively, the "Lenders" and individually, a
"Lender"), and THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender and as agent for
the Lenders (in such capacity, the "Agent"). Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Credit Agreement.
_____________, (the "Assignor") and
___________________________ (the "Assignee") agree as follows:
1. As of the Effective Date (as defined below), the
Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, the percentage interest specified on
Schedule 1 in and to all the Assignor's rights and obligations under the Credit
Agreement immediately prior to the Effective Date (including, without
limitation, such percentage interest in the Revolving Credit Commitment of the
Assignor immediately prior to the Effective Date and/or such percentage interest
in the Loans owing to the Assignor outstanding immediately prior to the
Effective Date, together with such percentage interest in all unpaid interest
and commitment fees accrued to the Effective Date and such percentage interest
in the aggregate Notes held by the Assignor).
2. The Assignor (i) represents that as of immediately prior
to the Effective Date, its Revolving Credit Commitment (without giving effect to
the assignment by the Assignor to the Assignee pursuant hereto) is $__________,
and (ii) makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or the execution, legality, validity,
enforceability, perfection, genuineness, sufficiency or value of the Credit
Agreement, the other Loan Documents or any Collateral with respect thereto or
any other instrument or document furnished pursuant thereto, other than that it
is the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observation by the
Borrower of any of its obligations under the Credit Agreement, any of the other
Loan Documents or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Notes referred to in paragraph 1 above and requests that
the Agent exchange such Notes for a new Note payable to Assignee in principal
1
amounts equal to the Revolving Credit Commitment assumed by the Assignee
pursuant hereto and a new Note payable to Assignor in a principal amount equal
to the Revolving Credit Commitment retained by the Assignor under the Credit
Agreement, respectively, as specified on Schedule 1 hereto.
3. The Assignee (i) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance and the other
documents executed and delivered in connection herewith; (ii) confirms that it
has received a copy of the Credit Agreement and the other Loan Documents,
together with copies of such financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (iii) agrees that it
will, independently and without reliance upon the Agent/Assignor or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (iv) appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under the
Credit 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; (v) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; [and] (vi) agrees that it will keep confidential
all information with respect to the Borrowers furnished to it by the Borrowers
or the Assignor to the extent required under Section 11.15 of the Credit
Agreement [and (vii) attaches the forms prescribed by the Internal Revenue
Service of the United States certifying as to the Assignee's status for purposes
of determining exemption from United States withholding taxes with respect to
all payments to be made to the Assignee under the Credit Agreement and the Notes
or such other documents as are necessary to indicate that all such payments are
subject to such rates at a rate reduced by an applicable tax treaty]1.
4. The effective date for this Assignment and Acceptance
shall be __________, 20__ (the "Effective Date"). Following the execution of
this Assignment and Acceptance, it will be delivered to the Agent for acceptance
and recording by the Agent.
5. Upon such acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments in respect of the interest
assigned hereby (including payments of principal, interest, fees and other
amounts) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments for periods prior to the Effective Date by the Agent or
with respect to the making of this assignment directly between themselves.
-------------------
1 If the Assignee is organized under the laws of a jurisdiction outside
the United States.
2
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO SUCH STATE'S RULES CONCERNING CONFLICTS OF LAWS.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective officers thereunto
duly authorized, as of the date first above written, such execution being made
on Schedule 1 hereto.
3
Schedule 1
to
Assignment and Acceptance
Dated ________, 20__
Section 1.
---------
Percentage Interest held by Assignee upon assignment: ________%
Section 2.
---------
Assignee's Commitment upon assignment: $_______
Aggregate Outstanding Principal
Amount of Advances owing to the Assignee prior to assignment: $_______
Note payable to the order of the Assignee
Dated: ________, 20__
Principal amount: _________
Note payable to the order of the Assignor
Dated: ________, 20__
Principal amount: _________
[ASSIGNOR]
By:
----------------------------------
Name:
Title:
[ASSIGNEE]
By:
----------------------------------
Name:
Title:
4
Accepted and consented
to this ____ day
of ________, 20__
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Agent
By: ______________________________
Name:
Title:
5
EXHIBIT B
DEPOSITORY ACCOUNT AGREEMENT
----------------------------
[Bank]
[Bank Address]
Gentlemen:
We refer to account number ________, maintained with you by
Weiner's Stores, Inc. (the "Company") into which certain monies, instruments and
other property are deposited from time to time (the "Depository Account").
Pursuant to the Debtor-In-Possession Revolving Credit Agreement dated as of
October __, 2000 among the Company, the financial institutions from time to time
party thereto (collectively, the "Lenders") and The CIT Group/Business Credit,
Inc., as a Lender and as agent for the Lenders (in such capacity, the "Agent"),
the Company has granted to the Lenders certain rights with respect to the
Depository Account, all monies, instruments and other property deposited therein
and all certificates and instruments, if any, representing or evidencing the
Depository Account. It is a condition to the continued maintenance of the
Depository Account with you that you agree to this Letter Agreement.
By signing this Letter Agreement, you agree that from the
date hereof the Depository Account shall be under the exclusive dominion and
control of the Agent and all monies, instruments or other property of the
Company received in connection therewith, whether or not deposited in the
Depository Account, shall be held solely for the benefit of the Agent. The
Depository Account shall be subject to written instructions only from the Agent
who shall have the sole right of withdrawal from the Depository Account. Unless
and until you have received written instructions to the contrary from the Agent
(including written instructions set forth in this Letter Agreement), no officer
or agent of the Company shall have the authority to withdraw or provide payment
instructions as to any amounts in the Depository Account or otherwise exercise
any authority of any kind with respect to the Depository Account and the funds
deposited therein. You agree to:
(a) follow your usual operating procedures for the handling
of any remittance received in the Depository Account that contains restrictive
endorsements or irregularities such as a variance between the written and
numerical amounts, undated or postdated items, missing signature, incorrect
payee, etc.;
1
(b) endorse and process all eligible checks and other
remittance items not covered by subparagraph (a) above, deposit such checks and
other remittance items in the Depository Account and transfer intact all amounts
deposited in respect thereof to the Cash Concentration Account (defined below);
(c) not commingle any cash or other payments deposited in
the Depository Account with other funds; and
(d) maintain a record of all checks and other remittance
items received in the Depository Account and, in addition to providing the
Company or the Agent, upon request therefor, with photostats, vouchers,
enclosures, etc. of checks and other remittance items received, as well as a
monthly statement, furnish to the Agent your regular bank statement with respect
to the Depository Account, with the words "The CIT Group/Business Credit, Inc.,
Re: Weiner's Stores, Inc." included thereon so that there is no confusion as to
ownership of the Depository Account and so that the Agent is able to properly
identify the Depository Account.
From the date hereof, you are hereby directed and agree to
transfer, on each day which you are open, in same day funds all collected funds
(provided the minimum amount is $10,000) on deposit in the Depository Account,
less charges for returned items received on the date of such transfer, to an
account maintained with Chase Bank of Texas, N.A. at:
Chase Bank of Texas, N.A.
Houston, Texas
For the account of: The CIT Business Group/Business Credit, Inc.
Account #: ______________________
Re: Weiner's Stores, Inc.
(the "Cash Concentration Account") or such other account
designated in writing by the Agent. In order to enable the Agent to properly
reconcile the Company's records, you agree that each such transfer of funds by
you to the Cash Concentration Account shall neither comprise only part of a
remittance nor reflect the rounding off of any funds so transferred.
You waive and agree not to assert, claim or endeavor to
exercise, and by executing this Letter Agreement bar and estop yourself from
asserting, claiming or exercising, and you acknowledge that you have not
heretofore received a notice from any other party asserting, claiming or
exercising, any right to setoff, banker's lien or other purported form of claim
with respect to the Depository Account and funds from time to time therein,
except with respect to your right to charge the Depository Account for any
reasonable fees and expenses, or chargebacks for uncollected items, all in
accordance with your customary practices and procedures. Except for such rights,
you shall have no rights in the Depository Account or the funds therein. To the
extent you may ever have any such other rights, you hereby expressly subordinate
all such rights to all rights of the Agent.
2
It is expressly agreed that any and all fees and charges
associated with the Depository Account shall be payable exclusively by the
Company. Such fees and charges shall be included in the monthly statement
furnished to the Company and the Agent. Such statement shall be accompanied by
supporting documentation as to the fees and charges payable for such month.
You may terminate this Letter Agreement only upon prior
written notice to that effect to the Company and the Agent, by canceling the
Depository Account maintained with you and, pending the effective date of such
termination, transferring all funds, as they become collected funds, if any, in
such Depository Account to the Cash Concentration Account at the address set
forth above. After the effective date of any such termination, you shall
nonetheless remain obligated promptly to transfer to the Cash Concentration
Account anything from time to time received in the Depository Account from
obligors of the Company.
3
This Letter Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without giving effect to
such state's rules governing conflicts of laws.
Very truly yours,
WEINER's stores, inc.
By: ______________________________
Name:
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.
By: ______________________________
Name:
Title:
Acknowledged and agreed to
as of the date first above written.
[Bank]
By: ____________________________________
Name:
Title:
4
EXHIBIT C
[INTENTIONALLY OMITTED]
EXHIBIT D - FORM OF NOTE
[$35,000,000.00]
New York, New York
October ___, 2000
FOR VALUE RECEIVED, WEINER'S STORES, INC., a Delaware
corporation, as debtor and as debtor in possession under Chapter 11 of title 11
of the United States Code (the "Bankruptcy Code") (the "Borrower"), hereby
promises to pay to the order of THE CIT GROUP/BUSINESS CREDIT, INC. ("CIT") on
or before the Termination Date (as defined in the Agreement referred to below),
and at such earlier dates as may be required by the Agreement, the lesser of (i)
the principal sum of THIRTY-FIVE MILLION DOLLARS ($35,000,000.00) or (ii) the
aggregate unpaid principal amount of all Loans made by CIT to the Borrower
pursuant to the Agreement. The Borrower further promises to pay to the order of
CIT interest on the unpaid principal amount hereof from time to time outstanding
at the rate or rates per annum determined pursuant to the Agreement. The
Borrower further promises to pay to the order of CIT interest on the unpaid
principal amount hereof from time to time outstanding at the rate or rates per
annum determined pursuant to the Agreement, payable on the dates set forth in
the Agreement. Payments of principal and interest on this Note shall be made in
the manner set forth in the Agreement.
This Note is the "Note" referred to in, and is entitled to
the benefits of, the Debtor-in-Possession Revolving Credit Agreement dated as of
October ___, 1995 by and among the Borrower, CIT and the financial institutions
party thereto (the "Lendors") (as the same may be amended, modified or
supplemented from time to time, the "Agreement") which, among other things,
provides for the acceleration of the maturity hereof upon the occurrence of
certain events and for prepayments in certain circumstances and upon certain
terms and conditions specified therein. Terms defined in the Agreement have the
same meanings herein.
This Note is secured by and is entitled to the benefits of
the lien and security interest granted by the Agreement, and the other Related
Documents referred to in the Agreement. The obligations of the Borrower
hereunder constitute allowed administrative expense claims in the Chapter 11
Case entitled to priority over all administrative expenses and unsecured claims
against the Borrower, now existing or hereafter arising, of any kind or nature
whatsoever, including without limitation all administrative expenses of the kind
specified in Sections 503(b) and 507(b) of the Bankruptcy Code, subject to
certain exceptions set forth in the Agreement.
Except as otherwise provided in the Agreement, the Borrower
hereby expressly waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note and the Agreement, and an action for amounts
due hereafter or thereunder shall immediately accrue.
This Note and interests herein may only be transferred to
the extent and in the manner set forth in the Agreement.
1
This Note shall be governed by, construed and enforced in
accordance with the law of the State of New York.
WEINER'S STORES, INC.
as debtor and as debtor-in-possession
By:_____________________________________
Title:__________________________________
2
EXHIBIT E
_______ __, 20__
RESTRICTED ACCOUNT AGREEMENT
Chase Bank of Texas, N.A.
[Address]
[Address]
Attn: [Name]
Gentlemen:
We refer to account number __________ (the "Cash
Concentration Account") maintained with you by Weiner's Stores, Inc. (the
"Company") into which certain monies, instruments and other property are
deposited from time to time. The Company has granted to the Lenders (as defined
below) and The CIT Group/Business Credit, Inc., as agent for the Lenders (the
"Agent"), pursuant to the Debtor-In-Possession Revolving Credit Agreement, dated
as of October __, 2000 and as amended from time to time thereafter, among the
Company, the financial institutions parties thereto (the "Lenders") and the
Agent, certain rights with respect to the Cash Concentration Account, all
monies, instruments and other property deposited therein and all certificates
and instruments, if any, representing or evidencing the Cash Concentration
Account. It is a condition to the continued maintenance of the Cash
Concentration Account with you that you agree to this Letter Agreement.
By signing this Letter Agreement, you agree that from the
date hereof the Cash Concentration Account shall be under the exclusive dominion
and control of the Agent, and all monies, instruments and other property of the
Company received for deposit in the Cash Concentration Account shall be held
solely for the benefit of the Agent. The Cash Concentration Account shall be
subject to written instructions only from the Agent (including written
instructions set forth in this Letter Agreement). Instructions from the Agent
(or the Company, to the extent that the Agent directs you to follow the
instructions of the Company) with respect to the disposition of any and all
money deposited in the Cash Concentration Account shall be understood to refer
to, and be effective as to, only the disposition of collected funds and all
funds as they become collected funds from time to time; you are not in any event
obligated to transfer uncollected funds out of the Cash Concentration Account.
You agree to:
(a) endorse and process, in accordance with your customary
collection procedures, all checks and other remittance items you receive for
deposit into the Cash Concentration Account from third-party remitters and
deposit such checks and other remittance items in the Cash Concentration
Account;
1
(b) not commingle any cash or other payments deposited in
the Cash Concentration Account with other funds; and
(c) maintain a record of all checks deposited into the Cash
Concentration Account by third-party remitters and other remittance items and
deposits similarly deposited in the Cash Concentration Account and, in addition
to providing the Company or the Agent, upon request therefor, with photostats,
vouchers, enclosures, etc. (as appropriate) of such checks and other remittance
items and deposits received, as well as a monthly statement, furnish to the
Agent, free of any service charge payable by the Agent, your regular bank
statement with respect to the Cash Concentration Account, with the words "The
CIT Group/Business Credit, Inc., Re: Weiner's Stores, Inc." included thereon so
that there is no confusion as to ownership of the Cash Concentration Account and
so that CIT is able to properly identify the Cash Concentration Account.
From the date hereof, you hereby agree to follow the
instructions of the Company with respect to the disposition of any and all money
deposited in the Cash Concentration Account as directed by the Company unless
and until you have received written instructions to the contrary from the Agent
(which written instructions shall be sent by the Agent via facsimile to
__________), in which case you agree to follow such instructions from the Agent;
provided that such written instructions from the Agent shall not be effective
until the first business day after your confirmed receipt of such written
instructions from the Agent.
You waive and agree not to assert, claim or endeavor to
exercise, and by executing this Letter Agreement bar and estop yourself from
asserting, claiming or exercising, and you acknowledge that you have not
heretofore received a notice from any other party asserting, claiming or
exercising, any right of setoff, banker's lien or other purported form of claim
with respect to the Cash Concentration Account and funds from time to time
therein, except with respect to your right to charge the Cash Concentration
Account for any reasonable fees and expenses, or chargebacks for uncollected
items or other deposits, all in accordance with your customary practices and
procedures. Except for such rights, you shall have no rights in the Cash
Concentration Account or the funds therein. To the extent you may ever have any
such other rights, you hereby expressly subordinate all such rights to all
rights of the Agent.
You may terminate this Letter Agreement only upon thirty
days' prior written notice to that effect to the Company and the Agent, by
cancelling the Cash Concentration Account maintained with you and, pending the
effective date of such termination, transferring all funds as they become
collected funds, if any, in such Cash Concentration Account to the Agent. After
the effective date of any such termination, you shall nonetheless remain
obligated promptly to transfer to the Agent at such address anything from time
to time received in the Cash Concentration Account including, but not limited
to, any funds received for deposit in the Cash Concentration Account as they
become collected funds.
Notwithstanding anything contained in this Letter Agreement
to the contrary, you shall be entitled to maintain a minimum balance of no more
than $10,000 in the Cash Concentration Account until the effective date of any
termination of this Letter Agreement.
2
This Letter Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
Very truly yours,
WEINER'S STORES, INC.
By:
Name:
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
Name:
Title:
3
Acknowledged and agreed to
as of the date first above written.
Chase Bank of Texas, N.A.
By:
Name:
Title:
4
EXHIBIT F
FORM OF SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE, dated as of October __, 2000, by each
of the corporations that are signatories hereto (the "Guarantors") in favor of
THE CIT GROUP/BUSINESS CREDIT, INC., as agent (in such capacity, the "Agent")
for the financial institutions (the "Lenders") from time to time party to the
Credit Agreement described below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, WEINER'S STORES, INC., a Delaware corporation (the
"Company"), is party to the Debtor-In-Possession Revolving Credit Agreement,
dated as of October __, 2000, among the Company, the Lenders, and the Agent (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement");
WHEREAS, pursuant to the terms of the Credit Agreement and
the other Loan Documents (as defined in the Credit Agreement), the Lenders have
severally agreed to make certain Loans (as defined in the Credit Agreement) to
or for the benefit of the Company upon the terms and subject to the conditions
set forth therein;
WHEREAS, the Company owns, directly or indirectly, all of
the issued and outstanding stock of, or other equity interests in, each of the
Guarantors;
WHEREAS, each Guarantor will derive substantial direct and
indirect benefit from the holding and making of the Loans;
WHEREAS, the obligation of the Lenders to make the Loans is
conditioned upon, among other things, the execution and delivery by each of the
Guarantors of a Guarantee to the Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to
induce the Lenders to enter into the Credit Agreement and to make the Loans,
each Guarantor hereby agrees with and for the benefit of the Agent and the
Lenders as follows:
1. Defined Terms. As used in this Guarantee, terms defined
in the Credit Agreement (unless otherwise defined herein) are used herein as
therein defined and the following terms shall have the following meanings:
"Contractual Obligation" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which
it or any of the property owned by it is bound.
"Requirement of Law" shall mean, as to any Person, the
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation (including, without limitation, Environmental Laws) or
1
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
2. Guarantee. (a) Each of the Guarantors hereby, jointly
and severally, unconditionally and irrevocably, guarantees to the Agent and the
Lenders and their respective successors, endorsees, transferees and assigns, the
prompt and complete payment by the Company when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, and each Guarantor
further agrees to pay any and all expenses (including, without limitation, all
reasonable fees and disbursements of counsel) which may be paid or incurred by
the Agent or any Lender in enforcing, or obtaining advice of counsel in respect
of, any rights with respect to, or collecting, any or all of the Obligations
and/or enforcing any rights with respect to, or collecting against, such
Guarantor under this Guarantee. This Guarantee constitutes a guarantee of
payment when due and not of collection, and each of the Guarantors specifically
agrees that it shall not be necessary or required that the Agent or any Lender
exercise any right, assert any claim or demand or enforce any remedy whatsoever
against the Company (or any other Person) before or as a condition to the
obligations of such Guarantor hereunder.
(b) No payment or payments made by the Company, any of the
Guarantors, any other guarantor or any other Person or received or collected by
the Agent or any Lender from the Company, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment or payments other than payments made by
such Guarantor in respect of the Obligations or payments received or collected
from such Guarantor in respect of the Obligations, remain liable for the
Obligations until the Obligations are paid in full and all Revolving Credit
Commitments and Letters of Credit shall have expired or terminated.
(c) Each Guarantor agrees that whenever, at any time, or
from time to time, it shall make any payment to the Agent or any Lender on
account of its liability hereunder, it will notify the Agent in writing that
such payment is made under this Guarantee for such purpose.
3. Right of Contribution. Each Guarantor hereby agrees that
to the extent that a Guarantor shall have paid more than its proportionate share
of any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder who has not
paid its proportionate share of such payment. Each Guarantor's right of
contribution shall be subject to the terms and conditions of Paragraph 5 hereof.
The provisions of this Paragraph 3 shall in no respect limit the obligations and
liabilities of any Guarantor to the Agent and the Lenders, and each Guarantor
shall remain liable to the Agent and the Lenders for the full amount being
guaranteed hereunder by the Guarantors.
4. Right of Set-off. Without limiting in any way Paragraph
10(a) hereof, upon the occurrence and during the continuance of any Event of
Default specified in the Credit Agreement, each Guarantor hereby irrevocably
authorizes each Lender at any time and from time to time without notice to such
2
Guarantor or any other Guarantor, any such notice being expressly waived by each
Guarantor, to set-off and appropriate and apply any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case, whether direct
or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender to or for the credit or the account of such Guarantor, or
any part thereof, in such amounts as such Lender may elect, against and on
account of the obligations and liabilities of such Guarantor to such Lender
hereunder and claims of every nature and description of such Lender against such
Guarantor, in any currency, whether arising hereunder, under the Credit
Agreement, the Notes, the other Loan Documents, the Letters of Credit or
otherwise, as such Lender may elect, whether or not the Agent or any Lender has
made any demand for payment and although such obligations, liabilities and
claims may be contingent or unmatured. Each Lender agrees to notify such
Guarantor promptly of any such set-off and the application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender under this Paragraph 4
are in addition to other rights and remedies (including, without limitation,
other rights of set-off) which such Lender may have.
5. Subrogation, etc. Notwithstanding any payment or
payments made by any of the Guarantors hereunder or any set-off or application
of funds of any of the Guarantors by any Lender, no Guarantor shall exercise any
of the rights of the Agent or any Lender which the Guarantor may acquire by way
of subrogation, by any payment made hereunder, by reason of such set-off or
application of funds or otherwise, against the Company or any other Guarantor or
any collateral security or guarantee or right of offset held by any Lender for
the payment of the Obligations, nor shall any Guarantor seek or be entitled to
seek any contribution or reimbursement from the Company or any other Guarantor
in respect of payments made by such Guarantor hereunder, until all amounts owing
to the Agent and the Lenders by the Company on account of the Obligations are
paid in full and all Revolving Credit Commitments and Letters of Credit have
expired or terminated. If any amount shall be paid to any Guarantor on account
of such subrogation rights at any time when all of the Obligations shall not
have been paid in full, any Letter of Credit shall be outstanding or the
Revolving Credit Commitments shall not have been terminated, such amount shall
be held by such Guarantor in trust for the Agent and the Lenders, segregated
from other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Agent in the exact form received by such
Guarantor (duly endorsed by such Guarantor to the Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
required by the applicable Loan Documents.
6. Amendments, etc. with respect to the Obligations; Waiver
of Rights. Each Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against any Guarantor and without notice to or
further assent by any Guarantor, any demand for payment of any of the
Obligations made by the Agent or any Lender may be rescinded by such party and
any of the Obligations continued, and the Obligations, or the liability of any
other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in party, be renewed, extended, amended, modified,
3
accelerated, compromised, waived, surrendered or released by the Agent or any
Lender and the Credit Agreement, the Notes, the other Loan Documents, any Letter
of Credit and any other collateral security document or other guarantee or
document in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Agent and/or any Lender may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Agent or any Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. Neither the
Agent nor any Lender shall have any obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Obligations or for
this Guarantee or any property subject thereto. When making any demand hereunder
against any of the Guarantors, the Agent or any Lender may, but shall be under
no obligation to, make a similar demand on the Company or any other Guarantor or
guarantor, and any failure by the Agent or any Lender to make any such demand or
to collect any payments from the Company or any such other Guarantor or
guarantor or any release of the Company or such other Guarantor or guarantor
shall not relieve any of the Guarantors in respect of which a demand or
collection is not made or any of the Guarantors not so released of their several
obligations or liabilities hereunder, and shall not impair or affect the rights
and remedies, express or implied, or as a matter of law, of the Agent or any
Lender against any of the Guarantors. For the purposes hereof "demand" shall
include the commencement and continuance of any legal proceedings.
7. Guarantee Absolute and Unconditional. Each Guarantor
hereby waives any and all notice of the creation, renewal, extension or accrual
of any of the Obligations and notice of or proof of reliance by the Agent or any
Lender upon this Guarantee or acceptance of this Guarantee; the Obligations, and
any of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee; and all dealings between the Company or any of the Guarantors and the
Agent or any Lender shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. Each Guarantor hereby waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Company or any of the Guarantors with respect to the
Obligations. Each Guarantor understands and agrees that this Guarantee shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity, regularity or enforceability of the Credit
Agreement, the Notes, the Letters of Credit, any of the other Loan Documents,
any of the Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Agent or any Lender, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by the Company against the Agent or any Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Company
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Company for the Obligations, or of such
Guarantor under this Guarantee, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against any Guarantor, the Agent and
any Lender may, but shall be under no obligation to, pursue such rights and
remedies as it may have against the Company or any other Person or against any
collateral security or guarantee for the Obligations or any right of offset with
4
respect thereto, and any failure by the Agent or any Lender to pursue such other
rights or remedies or to collect any payments from the Company or any such other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Company or any such
other Person or any such collateral security, guarantee or right of offset,
shall not relieve such Guarantor of any liability hereunder, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the Agent or any Lender against such Guarantor. This
Guarantee shall remain in full force and effect and be binding in accordance
with and to the extent of its terms upon each Guarantor and the successors and
assigns thereof, and shall inure to the benefit of the Agent and the Lenders,
and their respective successors, endorsees, transferees and assigns, until all
the Obligations and the obligations of each Guarantor under this Guarantee shall
have been satisfied by payment in full, no Letter of Credit shall remain
outstanding and the Revolving Credit Commitments shall be terminated,
notwithstanding that from time to time during the term of the Credit Agreement
the Company may be free from any Obligations.
8. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Agent or any Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Company or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Company or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
9. Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Agent without set-off or counterclaim in U.S.
Dollars at the office of the Agent located at 1211 Avenue of the Americas, Xxx
Xxxx, Xxx Xxxx 00000, X.X.X.
10. Cash Management System. (a) Each Guarantor hereby
agrees and covenants to (i) cause all cash and all proceeds from accounts
receivable and the sale of Inventory to be deposited into the Depository
Accounts, (ii) cause all remittances on credit card sales to be transferred into
the Cash Concentration Account or a Depository Account on a daily basis, (iii)
cause all funds in the Depository Accounts to be transferred into the Cash
Concentration Account at least three (3) times per week, (iv) take all such
actions as the Agent deems necessary or advisable to send all cash, all proceeds
from the sale of Inventory, all remittances or other proceeds of Collateral to
the Cash Concentration Account, (v) as soon as possible and in no event later
than thirty (30) days following the Entry Date, each Guarantor shall enter into
a Depository Account Agreement substantially in the form of Exhibit B with
respect to each Depository Bank listed on Schedule 6.30 to the Credit Agreement,
(viii) take such actions as the Agent deems necessary or advisable to grant to
the Agent dominion and control over the funds in the Cash Concentration Account.
Each Guarantor shall promptly, and in any event not later than five (5) days
after the opening of any such new account, notify the Agent in writing of the
creation of any new Depository Account and shall at the time of such notice
cause each Depository Bank maintaining a Depository Account to promptly, and in
any event within thirty (30) days after the date of such notice enter into a
Depository Account Agreement. If the Guarantors are unable to obtain a
Depository Account Agreement from any financial institution that receives
remittances or other proceeds of sales of Inventory within such thirty (30) day
period, the Guarantors shall promptly thereafter terminate such accounts and
establish new accounts at a financial institution that will enter into a
Depository Account Agreement.
5
(b) As soon as practicable and in any event within thirty
(30) days of the Entry Date, each Guarantor shall use its best efforts (but not
requiring any payment to be made by the Grantor) to deliver to the Agent a
credit card bank depository account agreement, substantially in the form of
Exhibit I hereto, executed by each Guarantor and each credit card bank. Each
Guarantor shall within five (5) days after to the establishment of any new
credit card relationship, notify the Agent in writing of the creation of such
new relationship and shall deliver to the Agent a credit card bank depository
account agreement, substantially in the form of Exhibit I to the Credit
Agreement, duly executed by such Guarantor and such new credit card servicer.
(c) Upon receipt by the Guarantors of collections of cash
and any proceeds of the sale of Inventory, the Guarantors shall immediately
deposit all such payments into the Cash Concentration Account or any Depository
Account. The Guarantors 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.
11. Representations and Warranties. Each Guarantor hereby
represents and warrants that:
(a) such Guarantor is a corporation or partnership, as the
case may be, duly organized, validly existing and in good standing
under the laws of the jurisdiction set forth opposite its name on
Schedule 1 attached hereto and has the corporate or partnership power
and authority and the legal right to own and operate its property, to
lease the property it operates and to conduct the business in which
it is currently engaged;
(b) such Guarantor has the corporate or partnership power
and authority and the legal right to execute and deliver, and to
perform its obligations under, this Guarantee, and has taken all
necessary corporate or partnership action to authorize its execution,
delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and
binding obligation of such Guarantor enforceable in accordance with
its terms;
(d) the execution, delivery and performance of this
Guarantee will not violate any Requirement of Law or any Contractual
Obligation applicable to or binding upon such Guarantor and will not
result in or require the creation or imposition of any Lien on any of
the properties or assets of such Guarantor pursuant to the
Requirement of Law applicable to it or any Contractual Obligation
(other than any Liens created pursuant to the Loan Documents);
(e) no consent or authorization of, filing with, or other
act by or in respect of, any arbitrator or Governmental Authority and
no consent of any other Person (including, without limitation, any
stockholder or creditor of such Guarantor) is required in connection
with the execution, delivery, performance, validity or enforceability
of this Guarantee; and
6
(f) no litigation or investigation known to such Guarantor
or proceeding of or by any Governmental Authority or other Person is
pending against such Guarantor (i) with respect to this Guarantee or
(ii) which would have a Material Adverse Effect.
Each Guarantor agrees that the foregoing representations
and warranties shall be deemed to have been made by such Guarantor on the date
of each Loan under the Credit Agreement on and as of such date as though made
hereunder on and as of such date.
12. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. Paragraph Headings. The paragraph headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
14. No Waiver; Cumulative Remedies. Neither the Agent nor
any Lender shall by any act (except by a written instrument pursuant to
paragraph 15 hereof), delay, indulgence, omission or otherwise be deemed to have
waived any right or remedy hereunder or to have acquiesced in any Potential
Default or Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of the
Agent or any Lender, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Agent or any Lender of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Agent or such Lender would otherwise have
on any future occasion. The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
15. Integration; Waivers and Amendments; Successors and
Assigns; Governing Law. This Guarantee represents the agreement of each
Guarantor with respect to the subject matter hereof and there are no promises or
representations by the Agent or any Lender relative to the subject matter hereof
not reflected herein. None of the terms or provisions of this Guarantee may be
waived, amended or supplemented or otherwise modified except by a written
instrument executed by each Guarantor and the Agent, provided that any provision
of this Guarantee may be waived by the Agent and the Lenders in a letter or
agreement executed by the Agent or by telex or facsimile transmission from the
Agent. This Guarantee shall be binding upon the successors and assigns of each
Guarantor and shall inure to the benefit of the Agent and the Lenders and their
respective successors and assigns. THIS GUARANTEE SHALL BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
7
16. Notices. All notices, requests and demands to or upon
the Guarantors or the Agent or any Lender to be effective shall be in writing or
by telecopy or telex and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand, or, in the case
of mail, one day after deposit in the postal system, first class postage
pre-paid, or, in the case of telecopy notice, confirmation of receipt received,
or, in the case of telex notice, when sent, answerback received, addressed to a
party at the address provided for such party on the signature page of the Credit
Agreement or Schedule I hereto, as the case may be.
17. Counterparts. This Guarantee may be executed by one or
more of the parties hereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
18. SUBMISSION TO JURISDICTION; WAIVERS. (A) EACH GUARANTOR
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(I) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO ANY LOAN DOCUMENT, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE
COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(II) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(III) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF, BY REGISTERED
OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, TO SUCH GUARANTOR AT ITS ADDRESS SET FORTH ON
SCHEDULE I HERETO OR AT SUCH OTHER ADDRESS OF WHICH THE AGENT SHALL
HAVE BEEN NOTIFIED PURSUANT TO PARAGRAPH 16 HEREOF;
(IV) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT TO XXX IN ANY OTHER JURISDICTION.
(B) EACH OF THE AGENT, EACH LENDER AND EACH GUARANTOR
HEREBY UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
8
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.
20. Authority of Agent. Each Guarantor acknowledges that
the rights and responsibilities of the Agent under this Guarantee with respect
to any action taken by the Agent or the exercise or non-exercise by the Agent of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Guarantee shall, as between the Agent
and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and such Guarantor, the Agent shall be conclusively
presumed to be acting as agent for the Lenders with full and valid authority so
to act or refrain from acting, and neither such Guarantor, the Company nor any
other Guarantor shall be under any obligation, or entitlement, to make any
inquiry respecting such authority.
9
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee to be duly executed and delivered by its duly authorized officer as of
the day and year first above written.
WESTVIEW ADVERTISING, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
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10
SCHEDULE 1
----------
Guarantors Jurisdiction
---------- ------------
[TO COME] [TO COME]
11
EXHIBIT G(1)
THE CHASE MANHATTAN BANK CHASE Commercial Letter of Credit
Application and
Security Agreement
WHEN TRANSMITTING THIS APPLICATION BY FACSIMILE ALL PAGES MUST BE TRANSMITTED
The undersigned represents and warrants that the terms and conditions contained
in this Application are the same as those in the diskette provided to us by the
Bank.
If Delivered by Hand - Deliver to: If Mailed - Address as Follows:
The Chase Manhattan Bank The Chase Manhattan Bank No. Date
Global Trade Operations Global Trade Operations Expiry Date and Place of Expiry:
00 Xxxxx Xxxxxx, 00xx Xxxxx P. O. Box 44 Expiry date: Place of Expiry:
Xxx Xxxx, XX 00000-0000 Xxx Xxxx, XX 0000-0000 Beneficiary:
Gentlemen: Please issue an IRREVOCABLE DOCUMENTARY letter of credit and transit
it by: Amount in figures and words
|_| Teletransmission |_| Mail |_|Brief Teletransmission, full
|_| Courier details by mail
Applicant
Unless the undersigned or The Chase Manhattan Bank nominates a bank which is
authorized to pay, or to accept, or to negotiate, the letter of credit will be
freely negotiable. The Chase Manhattan Bank may nominate such a b bank in its
sole discretion.
Advising Bank (if blank The Chase Manhattan Bank or affiliate or
corresponds in the domicile of the beneficiary)
If the letter of credit is freely negotiable, it will be considered to be freely
negotiable by any bank anywhere unless the place of expiry is indicated.
(The Chase Manhattan Bank in its sole discretion, may specify that the letter
Partial Shipment Transhipment Credit available:
(if blank allowed( (if blank allowed) |_| by payment at sight ______.
|_| Allowed |_| Allowed |_| by deferred payment at _____.
|_| Not Allowed |_| Not Allowed |_| by acceptance of drafts at _____.
Shipment: |_| by negotiation
From: against the documents detailed herein and Beneficiary's draft(s)
drawn on The Chase Manhattan Bank or The Chase Manhattan Bank's
For Transportation to: affiliate or correspondent (at The Chase Manhattan Bank's option)
for 100% or ___% of invoice.
Not Later Than: |_| Insurance will be covered by us:
The following documents are required: complete
set unless otherwise stated. |_| Full set of insurance |_| Policy |_| Certificate: covering the
following risks:
|_| All Risks |_| War |_| SR&CC |_| Other Risks (specify)
|_| Commercial Invoice and _________________ copies. _________
|_| Custom Invoice and ________________ copies. |_| Insurance coverage for ___% (Unless otherwise specified the minimum
|_| Visaed Customs invoice and ____________ copies. amount of insurance must be for 100% of the C.I.F. or C.I.P. value
plus 10%. If the C.I.F. value cannot be determined from the documents
on their face, insurance must be for 100% of the drawing amount or 110%
OF the gross invoice amount, whichever is greater.
TRANSPORT DOCUMENTS:
|_| Full Set of Marine/Ocean Xxxx of Lading covering
a port to port shipment consigned to the order of
The Chase Manhattan Bank marked notify applicant
indicating the name of the carrier, and indicating
the goods have been loaded on board or shipped on
a named vessel. |_| Packing List and _____ copies.
|_| Full Set of Multimodal Transport document
consigned to the order of The Chase Manhattan |_| Certificate of Origin and _____ copies.
Bank marked notify applicant indicating the name |_| Inspection Certificate issued by ________________ and
of the carrier or Multimodal transport operator, purportedly signed by ________________________________
and indicating that the goods have been
dispatched, taken in charge or loaded on board. |_| Letter of Credit is transferable. (The Chase Manhattan Bank is
authorized to include its standard transfer conditions and is
authorized to nominate a Transferring Bank if the Letter of Credit
is available for negotiation by any Bank)
|_| Air Waybill consigned to The Chase Manhattan
Bank marked notify applicant indicating the
name of the carrier.
|_| If Consignee other than The Chase Manhattan
ank ______________
|_| If notify party other than
Applicant ____________________________ |_| Other Documents _____
The Transport Document must be marked |_| See attached for further documents or instructions.
|_| Freight Collect
|_| Freight Prepaid
Covering: Merchandise described in the invoice as (Mention Commodity only in
generic terms omitting details as to grade, quality, etc. Please do not attach
copy of Purchase Order. Reference may be made to it for information only.)
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Terms: |_| FAS __________ |_|FOB __________ |_| C&F __________ |_| CIF ________
|_| Other __________
Documents must be presented for payment, acceptance, negotiation within ___ days
(unless otherwise specified 21 days will be stipulated) after the date of
issuance of the transport documents but within validity of letter of credit
All bank charges other than those of The Chase Manhattan Bank N.Y. are for the
beneficiary's account.
Documents are to be forwarded in one dispatch.
Special Conditions:
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IN CONSIDERATION OF THE ISSUANCE BY YOU, THE CHASE MANHATTAN BANK, AT THE
REQUEST OF THE UNDERSIGNED OF YOUR COMMERCIAL LETTER OF CREDIT (HEREINAFTER
CALLED THE "CREDIT") SUBSTANTIALLY IN ACCORDANCE WITH THE FOREGOING APPLICATION,
THE UNDERSIGNED HEREBY AGREES TO ALL THE TERMS AND CONDITIONS SET FORTH ON THE
FACE AND REVERSE HEREOF, ALL OF WHICH HAVE BEEN READ AND UNDERSTOOD BY THE
UNDERSIGNED. IN ADDITION, THE CUSTOMER OF AN APPLICANT BANK OR COMMERCIAL
FINANCE/FACTORING COMPANY BY ITS SIGNATURE BELOW IRREVOCABLY AUTHORIZES YOU TO
DELIVER ALL DOCUMENTS PRESENTED OR OTHERWISE RECEIVED BY YOU UNDER THE TERMS OF
THE CREDIT AND/OR THE UNDERLYING MERCHANDISE TO THE APPLICANT BANK COMMERCIAL
FINANCE/FACTORING COMPANY.
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|_| We have previously executed The Chase Manhattan Bank's Continuing Letter of
Credit Agreement and this Application is subject to the terms and conditions
thereof (if this box is checked, only the cover
sheet of this Application needs to be transmitted
to The Chase Manhattan Bank
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APPLICANT/APPLICANT BANK OR COMMERCIAL FINANCE/FACTORING
APPLICANT
Name
---------------------------------------------------------
Address
------------------------------------------------------
By
-----------------------------------------------------------
Title
--------------------------------------------------------
(Signature must be on file with The Chase Manhattan Bank)
COMPANY (where applicable)
Name
---------------------------------------------------------
Address
------------------------------------------------------
By
-----------------------------------------------------------
Title
--------------------------------------------------------
(Signature must be on file with The Chase Manhattan Bank)
Our account No. with The Chase Manhattan Bank _________________________
2
1. The Applicant authorizes the Bank to set forth in the Credit the
terms in this Application in such language as the Bank may deem appropriate with
such variations from such terms as the Bank may in its discretion determine are
necessary and are not materially inconsistent with this Application.
2. As to any drawing under the Credit payable in United States
currency, Applicant shall reimburse the Bank at its office noted on the
Application (or at such other office as the Bank may advise) in U.S. currency in
immediately available funds, the amount paid on such drawing, with interest from
the date of payment (at the maximum rate permitted by law) ("Interest"), or, if
so demanded by the Bank to pay to it at said office, in advance, the amount
required to pay such drawing. As to a drawing payable in another currency,
reimbursement shall be the equivalent of the amount paid in U.S. currency at the
Bank's then selling rate for cable transfers to the place of payment together
with Interest. If the Bank has no rate for cable transfers to the place of
payment in the currency in which any such drawing is made, Applicant shall pay
the Bank, in U.S. currency in immediately available funds, an amount which in
the Bank's sole judgment shall be sufficient to meet Applicant's liabilities in
respect of the Credit, which amount may be applied by the Bank at any time as a
payment on account of such liabilities, or, at the Bank's option, held as
security therefor; it being understood, however, that Applicant shall remain
liable for any deficiency which may result if such amount in U.S. legal tender
shall prove to be insufficient to effect full payment or reimbursement to the
Bank at the time when a rate of exchange for such cable transfers shall again be
quoted by the Bank.
3. Applicant shall pay the Bank, on demand, its commission, charges and
expenses (including reasonable inside and outside counsel fees, expenses and
charges) incurred in connection with the Credit. and correspondent's charges, if
any.
4. All payments made by the Applicant hereunder shall be made free and
clear of and without deduction for any present or future foreign taxes, levies,
imposts, claims, setoffs. charges, withholdings and liabilities with respect
thereto of any nature or description. The Applicant hereby authorizes the Bank
to charge the Applicant's account(s) maintained with the Bank without notice to
the Applicant for any and all amounts due to the Bank hereunder.
5. Applicant hereby grants the Bank a security interest in and
recognizes and admits the Bank's unqualified right to the possession and
disposition of all property shipped under or in connection with the Credit and
in and to all shipping documents, warehouse receipts, policies or certificates
of insurance and other documents or instruments accompanying or relative to
drawings under the Credit and in and to the proceeds of each and all of the
foregoing, all to be held by the Bank as collateral security for the prompt and
unconditional payment of all obligations and liabilities of the Applicant to the
Bank ("Obligations").
6. I n order to secure further the payment of the Obligations. the Bank
is hereby given a continuing lien for the amount of all Obligations upon any and
all property of the Applicant in the Bank's (or any of its affiliates',
including without limitation, Chase Securities Inc. ("Affiliates")) actual or
constructive possession or in transit to them or their correspondents or agents
from or for the Applicant and the proceeds thereof, whether for safekeeping,
custody. pledge. transmission, collection, or otherwise or coming into the
Bank's or an Affiliate's possession in any way, or placed in any safe deposit
box leased by the Bank to the Applicant. The Bank is also hereby given a
continuing lien and right of set-off for the amount of the Obligations upon or
with respect to any and all deposits (general or special) and credits of the
Applicant with the Bank, credits payable by the Bank to the Applicant. and any
and all claims of the Applicant against the Bank at any time existing, and the
Bank is hereby authorized at any time or times, without prior notice, to apply
such deposits or credits, or any part thereof to the Obligations and in such
amount as the Bank may select. even though contingent and/or unmatured, and
whether the collateral security therefore is deemed adequate or not (All of the
foregoing, together with the property enumerated in paragraph 5 hereof, as well
as any property in which the Bank may now or hereafter be granted a security
interest or which may be deposited with the Bank or it's agents by the Applicant
to secure Obligations are herein collectively called "Collateral"). if the
Applicant, as registered holder of Collateral, shall become entitled to receive
or does receive any stock certificate, option, or right, whether as an addition
to, in substitution of or in exchange for Collateral, or otherwise. the
Applicant agrees to accept same as the Bank's agent and to hold same in trust
for the Bank, and to deliver the same to the Bank forthwith in the exact form
received, with the Applicant's endorsement when necessary to be held by the Bank
as Collateral.
7. Applicant will indemnify the Bank from and against all claims,
suits, losses, liabilities, assessments or judgments and other expenses which
the Bank may at any time sustain or incur by reason of, or in consequence of, or
arising out of. issuance of the Credit. It is the intention of the parties that
this Agreement shall be construed and applied to protect and indemnity the Bank
and its officers, agents and employees against all risks involved in the
issuance of the Credit, which are hereby assumed by the Applicant, including,
without limitation, all risks of the acts or omissions. whether rightful or
wrongful, of any present or future de jure or de facto governmental authority or
regulatory authority (all such acts and omissions, herein called "Government
Acts"). The Bank shall not be liable for failure to pay a drawing under the
Credit resulting from any Government Acts or any other cause beyond the Bank's
control or the control of the Bank's agents or subagents. The Bank shall be
subrogated to all of the Applicant's rights against the beneficiary of the
Credit upon its accepting drafts drawn under, honoring or paying (as applicable)
the Credit. and in furtherance of the foregoing, the Applicant agrees to
execute. deliver and acknowledge such documents and take such other and further
action as the Bank may deem necessary or desirable to effectuate the assignment
of the Applicant's rights against the beneficiary of the Credit to the Bank.
3
8. Applicant agrees (a) that the Bank or its correspondents may accept
or pay, as complying with the terms of the Credit, any drafts, claims or other
documents otherwise in order which may be signed or issued by one who purports
to be the administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver, legal
representative or any other entity succeeding or purporting to succeed de facto
or de jure to the powers, rights or privileges of any party who is authorized to
draw under the Credit (b) that the Bank has no obligation to dishonor any
drafts, claims or other documents otherwise in order in the absence of an
injunction issued by a court of competent jurisdiction and (c) that in the event
of any extension of the maturity or time for negotiation or presentation of
drafts, claims, acceptances or documents, increase in the amount of the Credit,
or other modification of the terms or provisions of the Credit at the request or
with the consent of any Applicant, with or without notification to the other
Applicants, if any, this Agreement shall be binding upon all Applicants with
regard to (i) the Credit so extended, increased, or otherwise modified, (ii)
drafts. claims, documents and property covered thereby, and (iii) any action
taken by the Bank or any of its correspondents in accordance with such
extension. increase, or other modification.
9. Bank shall not be responsible for any payment against presentation
of drafts, claims, or documents which do not strictly comply with the terms of
the Credit provided the Bank determines in good faith that such drafts, claims
or documents substantially comply with the terms of the Credit. The Bank shall
have sole discretion to decide whether to pay against drafts, claims or
documents which in the Bank's judgment substantially comply with the terms of
the Credit.
10. In case of any purported variation between the Applicant's
instructions and the requirements of the Credit or between documents accepted by
the Bank or its correspondents and the requirements of the Credit for which the
Bank is otherwise responsible. Applicant shall be conclusively deemed to have
waived any right to object to such variation unless the Applicant immediately
upon receipt of a copy of the Credit or such documents or acquisition of
knowledge of such variation by any Applicant files objection with the Bank in
writing specifying each variation to which objection is made and the basis of
each objection. No legal proceeding or action shall be brought by Applicant
against the Bank arising from any purported variation or payment made by the
Bank or charge made by the Bank to any account of the Applicant unless (i)
Applicant shall have first given the written notice as required in this
paragraph and (ii) such legal proceeding or action shall be commenced in a Court
of competent jurisdiction in the State of New York within one year from the date
when such copy of the Credit or document or acquisition of such knowledge was
delivered, mailed or acquired to or by the Applicant.
11. The Applicant agrees to procure promptly any necessary import,
export, or other license for the importing, exporting, shipping, or warehousing
of any property shipped under, pursuant to, or in connection with the Credit or
covered by any document held by the Bank relative to any draft or claim accepted
by the Bank, and to comply with all foreign and domestic laws and governmental
regulations in regard to the shipment and/or importation and/or exportation
and/or warehousing and/or the financing thereof, and to furnish such
certificates in that respect as the Bank may at any time require.
12. The Applicant consents that, without the necessity for any
reservation of rights against the Applicant and without notice or further assent
by the Applicant, the liability of any party for or upon Obligations may from
time to time, in whole or in part, be renewed, extended, modified, released,
discharged, accelerated, compromised, settled for cash, credit, or otherwise
upon any terms and conditions the Bank may deem advisable and that the Bank may
discharge or release any other party from any liabilities, all without in any
way affecting or releasing the liability of the Applicant under this Agreement.
13. If any Applicant shall fail to perform any agreement herein
contained or contained in any security document or other agreement entered into
by the Applicant with, or delivered by the Applicant to, the Bank or another, or
if any Applicant defaults in the punctual payment of any sum payable upon the
Obligations or upon the happening with respect to any Applicant, an indorser or
any guarantor of Obligations, or any of them of any of the following: the
commencement of any proceeding, suit or action (at law or in equity) for
reorganization, dissolution, or liquidation-suspension or liquidation of
its/their usual business, insolvency, the filing of a voluntary or involuntary
petition under any of the provisions of any bankruptcy or similar law,
dissolution, application for, or appointment of. a conservator, rehabilitator,
or receiver of any of them or their property in any jurisdiction-, termination
of existence; death; issuance of an injunction or an order of attachment; entry
of a judgment; failure to pay any tax when due; the making of any tax
assessments by the United States or any state; the calling of a meeting of
creditors; appointment of a committee of creditors or liquidating agent;
offering a composition or extension to creditors: assignment for benefit of
creditors, making or sending notice of an intended bulk transfer, commencement
of any proceeding for enforcement of a money judgment under Article 52 of the
New York Civil Practice Law and Rules or amendments thereto: failure after
demand to furnish any financial information or to permit the inspection of books
or records of account: the making of any misrepresentation to the Bank for the
purpose of obtaining the Credit or an extension of credit- or if at any time in
the Bank's opinion the financial responsibility of any of them shall become
impaired, then in any of those events all of the Obligations, although
contingent and not mature, shall, without notice or demand, forthwith become and
be immediately due and payable, notwithstanding any time or credit otherwise
allowed under any of the Obligations or under any instrument evidencing the
same.
4
Upon the happening of any of the events hereinabove set forth, and at
any time thereafter, the Bank shall have. in addition to all other rights and
remedies, the remedies of a secured party under the New York Uniform Commercial
Code The Applicant shall, upon the Bank's request, assemble the Collateral and
make it available to the Bank at a place to be designated by the Bank which is
reasonably convenient to the Bank and the Applicant The Bank will give the
Applicant notice of the time and place of any public sale of the Collateral or
of the time after which any private sale or any other intended disposition
thereof is to be made, by sending notice, as provided below, at least five days
before the time of sale or disposition, which provisions for notice the Bank and
the Applicant agree are reasonable. No notice need be given by the Bank with
respect to Collateral which is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market.
The Bank may apply the net proceeds of any sale. lease, or other
disposition of Collateral after deducting all costs and expenses of every kind
incurred herein or incidental to the retaking, holding, preparing for sale,
selling, leasing or the like of said Collateral, or in any way relating to the
rights of the Applicant thereunder, including reasonable inside or outside
counsel fees and expenses. to the payment, in whole or in part, in such order as
the Bank may elect, of one or more of the Obligations. whether due or not due,
absolute or contingent, making proper rebate for interest or discount on items
not then due, and only after so applying such net proceeds and after the payment
by the Bank of any other amounts required by any existing or future provision of
law (including Section 9-504(1)(c) of the Uniform Commercial Code of any
Jurisdiction in which any of the Collateral may at the time be located) need the
Bank account for the surplus, if any. The Applicant shall remain liable to the
Bank for the payment of any deficiency. The Bank may pay any surplus to any
Applicant and such payment shall be a complete discharge as to all other
Applicants.
The Applicant will, at any time on the Bank's request, sign financing
statements, trust receipts. security agreements or other agreements with respect
to any Collateral notwithstanding the foregoing, the Applicant hereby authorizes
the Bank, as the agent of the Applicant, to sign and file any such statements,
receipts and agreements. The Applicant agrees to pay all filing fees and to
reimburse the Bank for all costs and expenses of any kind incurred in any way in
Connection with the Collateral.
14. Any notice to the Bank shall be in writing and deemed effective
only if sent to and received at the branch, division or department conducting
the transaction or transactions hereunder. Notwithstanding the foregoing, the
Bank may act in reliance on any oral, written or teletransmitted request or
notice believed by it in good faith to have been authorized by any Applicant,
whether or not in fact sent, authorized, given or signed by an Applicant or
authorized person. If this Application or any amendments or notices with respect
thereto or with respect to the Credit is received by the Bank by means of a
facsimile transmission, the Applicant hereby authorizes the Bank to accept and
to act in reliance upon such Application, amendment or notice and the Applicant
shall be bound by the terms of such Application, amendment or notice as if it
were the original executed version thereof. The transmission of this
Application, any amendments thereto and any notice with respect to the Credit by
facsimile transmission will be entirely at the risk of the Applicant and the
Bank shall not be liable for any mistake or omission in such transmission nor
for the fact that such transmission was unauthorized or fraudulent. Any notice
or demand on any Applicant shall be binding on all of the Applicants and shall
be deemed effective if not first otherwise made or given when sent to any
Applicant by mail, teletransmission, telephone, or otherwise to the last address
or telephone number of such Applicant appearing on the Bank's records with the
same effect as if the same were actually delivered to and received by each
Applicant in person. Each of the Applicants hereby irrevocably designates each
of the other Applicants as agent to receive notice and demand hereunder on its
behalf. Bank shall not by any act, delay, omission, or otherwise be deemed to
have waived any of its rights or remedies hereunder and no waiver whatever shall
be valid unless in writing, and signed on behalf of the Bank, and then only to
the extent therein set forth. A waiver by the Bank of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which it would otherwise have on any future occasion. No term or
provision of this Agreement may be changed orally and no executory agreement
unless in writing and signed on behalf of the Bank, and no course of dealing
between the Applicant and the Bank shall be effective to change or modify or to
discharge in whole or in part this Agreement. All of the Bank's rights and
remedies hereunder shall be cumulative and may be exercised singly or
concurrently.
15. In the event that the Bank, at the request of any Applicant,
extends, renews or refinances any of the obligations arising under paragraph 1
or paragraph 2 hereof, by means of (a) bankers acceptances created by the
acceptance of drafts drawn by any Applicant on the Bank, (b) drafts drawn by the
beneficiary of the Credit and accepted by the Bank or its correspondent, (c)
notes made by any Applicant or (d) in the event that the Bank further extends,
renews. or refinances, from time to time, any such banker's acceptance, draft or
note. then, and in consideration thereof, the Applicant agrees to pay to the
Bank the amount of each banker's acceptance or draft in the manner provided in
paragraph 1 or paragraph 2 hereof as the case may be, for the payment of time
drafts drawn under the Credit. or, if a note is involved, then in the manner
provided in the note. The Applicant further agrees that with respect to any such
extension renewal or refinancing, all of the terms, conditions, agreements, and
obligations contained in this Agreement shall apply thereto and that the Bank
shall have all the rights and remedies set forth in this Agreement as well as
those set forth in any other document signed by or on behalf of any Applicant.
Should the Applicant obtain a steamship guarantee or airway release in
connection with the Credit, the Applicant authorizes the Bank to honor drafts or
claims presented under the Credit, whether or not such drafts or claims and/or
accompanying documents comply with the terms of the Credit and regardless of the
amount of such draft or claim, and the Applicant agrees to reimburse the Bank
for all such drafts or claims honored by it.
5
16. If any Applicant or guarantor of Obligations acts in anyway,
including but not limited to seeking an injunction or restraining order;
temporary or permanent, or order of attachment as to any drafts, claims,
acceptances, or payments under the Credit, which has or may have the effect of
preventing or delaying payment, acceptance or remittance by the Bank of or on
any draft, claim or acceptance or discharging any Applicant or guarantor of
Obligations, Applicant agrees: (i) that the Applicant will only commence such an
action in a court of competent jurisdiction located in the County of New York,
State of New York; (ii) to bear and pay all of the Bank's expenses of any kind,
including without limitation, reasonable inside or outside counsel fees,
incurred by it in respect of such an action, (iii) to be bound by the Bank's
decision, which it shall have exclusive discretion to make, to settle, pay or
compromise any drawing on or claim made against it. of any nature or description
relating to the Credit, including without limitation, for costs, interest,
demurrage, fines, penalties, legal fees or any expenses or charges, whether or
not actually incurred, and irrespective of amount, and to reimburse or pay the
Bank promptly on demand for all payments it elects to make with Interest; and
(iv) to provide and to continue to provide to the Bank surety, indemnity or
collateral upon its demand in any amount which, in its sole judgment, it
determines is reasonable and necessary to protect its interests. Each Applicant
agrees that the failure of any Applicant to comply with any provision set forth
in this paragraph within ten calendar days after any demand shall require the
dismissal with prejudice of any action brought by an Applicant against the Bank.
Each Applicant shall remain liable to indemnity and hold the Bank harmless as
set forth above.
17. Bank and Applicant in any litigation (whether or not arising out of
relating to this agreement or to any Obligations) in which the Bank and any
Applicant shall be adverse parties, irrevocably waive trial by jury and the
Applicant in addition waives the right to interpose any defense based upon any
Statute of Limitations or any claim of laches, waiver. estoppel. or set-off, or
to assert any counterclaim however denominated or recover any, special,
exemplary, punitive or consequential damages of any nature in any such
Litigation. Applicant will bear and pay all expenses of every kind for the
enforcement, protection or defense of any of the Bank's rights herein mentioned.
18. Each Applicant submits in any legal proceeding relating to this
Agreement or the Credit to the non-exclusive in personam jurisdiction of any
court of competent jurisdiction sitting in the State of New York and agrees to
suit being brought in any such court; waives any objection that it may now or
hereafter have to the venue of such proceeding in any such court or that such
proceeding was brought in an inconvenient Court; agrees that service of process
in any such legal proceeding may be made, and shall be conclusively deemed
sufficient and adequate, by mailing of copies thereof (by registered or
certified mail, if practicable) postage prepaid. or by teletransmission, to
Applicant at its address set forth above or such other address of which the Bank
shall have been notified in writing, in which event, service shall be deemed
complete upon the filing with the court of a Copy of the process mailed or sent
and an affidavit attesting to the mailing or sending, and agrees that nothing
herein shall affect the Bank's right to effect service of process in any other
manner permitted by law.
19. The term "Applicant" as used throughout this Agreement shall
include each entity executing the foregoing application and (a) any entity or
entities to which all or a substantial portion of the business or assets of said
Applicant shall have been transferred, (b) in case of a partnership, any new
partnership which shall have been created by reason of the admission of any new
partner or partners therein or the dissolution of the existing partnership by
death, resignation. or other withdrawal of any partner, and (c) in the case of a
corporation, any other corporation into or in which the Applicant shall have
been merged, consolidated, reorganized, or absorbed. If this application is
signed by more than one Applicant, it shall be the joint and several agreement
of all such Applicants.
20. The Applicant hereby certifies that the merchandise to be shipped
under the Credit is not prohibited under the Foreign Assets Control Regulations
of the United States Treasury Department and that any importation covered by the
Credit complies in every respect with all existing United States Government
regulations.
21. THE CREDIT SHALL BE SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR
DOCUMENTARY CREDITS (1993 REVISION, INTERNATIONAL CHAMBER OF COMMERCE
PUBLICATION NO. 500) AND ANY AMENDMENTS THERETO AND REVISIONS THEREOF.
22. (a) If any change in any law or regulation or in the interpretation
or application thereof by any court or administrative or governmental authority
charged with the administration thereof shall either (i) impose, modify, or make
applicable any reserve, special deposit, assessment insurance premium, or
similar requirement in connection with the Credit or (i) impose on the Bank any
other condition regarding the Application or the Credit, and the result of any
event referred to in subsection (i) or (ii) above shall be to increase the cost
to the Bank of issuing or maintaining the Credit (which increase in cost shall
be the result of the Bank's reasonable allocation of the aggregate of such cost
increases resulting from such events) then, upon demand by the Bank, the
Applicant shall immediately pay to the Bank, from time to time as specified by
the Bank additional amounts which shall be sufficient to compensate the Bank for
such increased cost, together with interest on each such amount from the date
demanded until payment in full thereof at the rate and on the terms set forth in
section 2 above. A certificate as to such increased cost incurred by the Bank as
a result of any event mentioned in subsection (i) or (ii) above submitted by the
Bank to the Applicant, shall be conclusive, absent manifest error, as to the
amount thereof. (b) In the event the Bank shall have determined that the
adoption of any law, rule or regulation regarding capital adequacy, or any
change therein or in the interpretation or application thereof or compliance by
the Bank or any corporation controlling the Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
central bank or governmental authority, does or shall have the effect of
reducing the rate of return on the Bank's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which the Bank or
6
such corporation could have achieved but for such adoption, change or compliance
(taking into consideration the Bank's or such corporation's policies with
respect to capital adequacy) by an amount deemed by the Bank to be material,
then from time to time, after submission by the Bank to Applicant of a written
request therefor (which shall be conclusive and binding upon the Applicant
absent manifest error). Applicant shall pay to the Bank such additional amount
or amounts as will Compensate the Bank of such corporation for such reduction.
23. This Agreement shall be deemed to be executed in the State of New
York and the State and Federal courts in the State of New York shall have
exclusive jurisdiction over any suit commenced by Applicant or the Bank against
the other.
24. This Agreement shall continue in full force and effect until the
expiration of the Credit, but notwithstanding any such expiration, this
Agreement shall continue in full force and effect until all Obligations then
outstanding (whether absolute or contingent) shall have been paid in full and
all rights of the Bank hereunder shall have been satisfied or other arrangements
for the securing of such rights satisfactory to the Bank shall have been made.
25. Any provision of this Agreement which may prove or be declared
invalid or unenforceable under any law shall not affect the validity of any
other provision hereof. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CHOICE
OF LAW RULES
7
EXHIBIT G(2)
The Chase Manhattan Bank L/C No. ________________
APPLICATION FOR IRREVOCABLE STANDBY LETTER OF CREDIT
If Delivered by Hand - Deliver to If Mailed - Address As Follows:
The Chase Manhattan Bank The Chase Manhattan Bank
Global Trade Operations - 17th Floor Global Trade Operations
00 Xxxxx Xxxxxx, Xxx Xxxx, XX X.X. Xxx 00
Xxx Xxxx, XX 00000
For Facsimile Transmissions: Fax No. (000) 000-0000.
When transmitting this Application by facsimile, all pages must be transmitted.
The undersigned represents and warrants that the terms and conditions contained
in this Application are the same as those in the diskette provided to us by
the Bank
Gentlemen:
Please issue an IRREVOCABLE Letter of credit and transmit it by:
[ ] Mail [ ] Teletransmission - Telex #/Answerback________________
[ ] Other (Please stipulate) _________ as follows:
----------------------------------- -----------------------------------------
ADVISING BANK, IF APPLICABLE FOR ACCOUNT OF APPLICANT(S))
(IF BLANK, YOUR CORRESPONDENT BANK) (NAME AND ADDRESS)
----------------------------------- -----------------------------------------
IN FAVOR OF (BENEFICIARY) AMOUNT
(NAME AND ADDRESS)
----------------------------------- -----------------------------------------
-----------------------------------------
DRAWINGS MUST BE PRESENTED FOR
NEGOTIATION OR PRESENTED TO DRAWEE ON OR
BEFORE
-----------------
(EXPIRATION DATE)
----------------------------------- -----------------------------------------
Available by drafts at sight drawn on you or your correspondent when accompanied
by the following document(s):
Beneficiary's dated statement purportedly signed by one of its officials reading
(Please state within the quotation marks the wording to appear on the statement
to be presented)
"The amount of this drawing $ under The Chase Manhattan Bank
L/C No. represents funds due us as
-------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[ ] See attached for further instructions
[ ] Our Account No. with The Chase Manhattan Bank
-----------------------------
[ ] Our Contact (Account Officer) with The Chase Manhattan Bank
----------------
AGREEMENT
IN CONSIDERATION OF YOUR ISSUING, AT THE REQUEST OF THE APPLICANT(S), YOUR
IRREVOCABLE LETTER OF CREDIT (HEREINAFTER THE "CREDIT") SUBSTANTIALLY IN
ACCORDANCE WITH THE FOREGOING APPLICATION, THE APPLICANT(S) BY ITS/FHEIR
SIGNATURES BELOW HEREBY ACKNOWLEDGE(S) AND AGREE(S) JOINTLY AND SEVERALLY TO BE
BOUND BY THE TERMS AND CONDITIONS WHICH FOLLOW, ALL OF WHICH HAVE BEEN READ AND
UNDERSTOOD.
---- -------------- ---- --------------
DATE APPLICANT NAME DATE APPLICANT NAME
------------------------------ ------------------------------
AUTHORIZED SIGNATURE AND TITLE AUTHORIZED SIGNATURE AND TITLE
-------------
BANK USE ONLY
-------------
V.S
-------------
TERMS AND CONDITIONS
PAYMENT TERMS:
1. The Applicant agrees to pay to you on demand in same day funds at
your main office in United States currency:
(a) as to drafts or claims payable in United States currency drawn or
made under the Credit, the amount paid thereon with interest from the date of
such payment at a fluctuating rate per annum equal to 2% above the rate publicly
announced by you from time to time in New York as your prime rate, which rate is
not intended to be the lowest rate of interest charged by you to your borrowers,
calculated on the basis of a 360 day year for the actual number of days elapsed;
(b) the equivalent of drafts or claims payable in currency other than
United States currency drawn or made under the Credit consisting of (i) the
amount paid on each draft or claim at your then applicable selling rate for
cable transfers to the place where and in the currency in which such draft or
claim is payable (if you have no such selling rate at such time, the Applicant
shall pay you the actual cost to you of settlement of your obligation with
respect to the draft or claim); and (ii) interest from the date of such payment
at the rate and on the terms set forth in subsection 1 (a) hereof; and (iii) any
and all other expenses or charges incurred by you in issuing or effecting
payment under the Credit in such foreign currency; and
(c) such commission for the issuance of the Credit and such fees at
such rate as you determine and any and all expenses, obligations, charges, and
liabilities paid or incurred by you or any of your correspondents, or for which
you or they may become liable, together with interest, from the date paid or
incurred, at the rate and on the terms set forth in subsection 1 (a) above.
Such payments shall be made free and clear of and without deduction for
any present or future foreign taxes, levies, imposts, deductions, charges,
withholdings, and all liabilities with respect thereto.
2. You are hereby authorized to charge the Applicant's account(s)
maintained with you for any and all amounts due to you hereunder.
EXTENSIONS, INCREASES, OR MODIFICATIONS OF THE CREDIT-.
3. In the event of any increase, extension, or other modification of
the terms of the Credit at the request or with the consent of any Applicant, the
request shall be binding upon all Applicants and guarantors with regard to: (a)
the Credit so increased, extended, or otherwise modified; (b) drafts or claims,
required statements, and documents covered thereby; and (c) any action taken by
you in accordance with such increase, extension, or other modification.
RESPONSIBILITIES AND LIABILITIES:
4. (a) Neither you nor any of your correspondents shall be responsible
for, and the Applicant's obligation to reimburse you shall not be affected by:
(i) the form, validity, accuracy, sufficiency, legal effect, or genuineness of
drafts, claims, documents, or required statements, even if such drafts, claims,
documents, or statements should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent, or forged; (ii) failure of any
draft or claim to bear any reference or adequate reference to the Credit; (iii)
omissions, interruptions, or delays in transmission or delivery of any message
by mail or teletransmission; (iv) any act, error, default, omission, or failure
in business of any correspondent or for any consequences arising from causes
beyond your control; or (v) any payment against presentation of drafts, claims,
documents, or required statements which do not strictly comply with the terms of
the Credit provided such drafts, claims, documents, or required statements
substantially comply with the terms of the Credit. You shall have sole
discretion to decide whether to pay against drafts, claims, documents, or
required statements which substantially comply with the terms of the Credit.
(b) You are authorized to accept an authenticated teletransmission
claim from the beneficiary containing any required statement(s) in lieu of any
required draft and any required signed statement(s). Unless the Credit expressly
provides to the contrary, the Applicant agrees that you may pay or pay against,
as complying with the terms of the Credit, any draft, claim, required statement,
or other document otherwise in order or which substantially complies with the
terms of the Credit, even if any draft, claim, required statement, or other
document may be purportedly signed or issued by an administrator, trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
liquidator, receiver, successor, legal representative, or any other party
succeeding de facto or de jure to the powers, rights, or privileges of the party
who is authorized under the Credit to draw or issue any drafts, claims, required
statements, or other documents.
(c) In case of any variation between the Applicant's instructions and
the requirements of the Credit or between documents or required statements
accepted by you or your correspondents and the requirements of the Credit for
which you are otherwise responsible hereunder, the Applicant shall be
conclusively deemed to have waived any right to object to such variation unless
immediately upon any Applicant's receipt of a copy of the Credit or of such
documents or required statements or notice of such variation the Applicant files
written objection with you specifying each variation to which objection is made.
No legal proceeding or action shall be brought by Applicant against you arising
from any such variation unless (i) the Applicant shall have given the written
notice as required in this subsection (c) and (ii) such legal proceeding or
action shall be commenced in a court of competent jurisdiction sitting in the
State of New York within one year after the date when such copy of the Credit or
documents or required statements were delivered or mailed to the Applicant.
2
(d) Any action, inaction, or omission taken or suffered by you or by
any of your correspondents under or in connection with the Credit or any
relative drafts, claims, documents, or property, if in good faith and in
conformity with foreign or U.S. laws, regulations, or customs applicable
thereto, shall be binding upon the Applicant, shall not affect the Applicant's
obligation hereunder to reimburse you, and shall not place you or any of your
correspondents under any resulting liability to the Applicant.
(e) You and your correspondents may act in reliance upon any oral,
written, or teletransmitted request or notice believed by you in good faith to
have been authorized by the Applicant, whether or not given or signed by an
authorized person.
(f) In no event shall you be liable for any indirect, special or
consequential damages, even if you are advised of the possibility thereof in
advance.
INCREASED COSTS:
5. If any change in any law or regulation or in the interpretation or
application thereof by any court or administrative or governmental authority
charged with the administration thereof shall either (a) impose, modify, or make
applicable any reserve, special deposit, assessment, insurance premium, or
similar requirement in connection with letters of credit issued by you or (b)
impose on you any other condition regarding the Application or the Credit, and
the result of any event referred to in subsection (a) or (b) above shall be to
increase the cost to you of issuing or maintaining the Credit (which increase in
cost shall be the result of your reasonable allocation of the aggregate of such
cost increases resulting from such events), then, upon demand by you, the
Applicant shall immediately pay to you, from time to time as specified by you,
additional amounts which shall be sufficient to compensate you for such
increased cost, together with interest on each such amount from the date
demanded until payment in full thereof at the rate and on the terms set forth in
subsection I(a) above. A certificate as to such increased cost incurred by you
as a result of any event mentioned in subsection (a) or (b) above, submitted by
you to the Applicant, shall be conclusive, absent manifest error, as to the
amount thereof.
COLLATERAL:
6. As collateral security for the payment of any obligation or
liability of the Applicant to you arising under or in connection with the Credit
or this Application ("Obligations"), the Applicant hereby grants you a security
interest in and you are hereby given a continuing lien for the amount of the
Obligations upon any property of the Applicant in your actual or constructive
possession or control.
EFFECT OF RELEASES, EXTENSIONS,
MODIFICATIONS, OR RENEWALS:
7. The Applicant consents that, without notice to or further assent by
the Applicant, the liability of any Applicant for or upon any Obligation may
from time to time, in whole or in part, be renewed, extended, modified,
released, or settled by you without affecting or releasing in any way the
liability of any other Applicant.
EVENTS OF DEFAULT OR FAILURE OF PERFORMANCE:
8. If any Applicant defaults in the punctual payment of any sum payable
upon Obligations or fails to perform any agreement entered into with you or
another, or upon the happening with respect to any Applicant or guarantor of the
Obligations of any of the following: the commencement of any voluntary or
involuntary proceedings for reorganization, dissolution, or liquidation;
suspension or liquidation of its/ their usual business; insolvency; application
for, or appointment of, a conservator, rehabilitator, or receiver of any of them
or their property in any jurisdiction death. termination of existence; offering
a composition or extension to creditors; assignment for the benefit of
creditors; the making or sending notice of an intended bulk transfer; the making
of any misrepresentation to you for the purpose of obtaining credit; or, in your
opinion, impairment of financial responsibility of any of them; then, in any of
those events, all the Obligations, although contingent and not mature, shall,
without notice or demand, be immediately due and payable.
CHANGE IN OWNERSHIP/CONTROL OR
FUNDAMENTAL CHANGE:
9. If either (a) a person or entity or combination of persons or
entities acting in unison purchases a majority of the voting shares of the
Applicant (or of any guarantor or other provider of credit support for the
Obligations) or any direct or indirect parent of Applicant (or any such
guarantor or other provider of credit support) or otherwise acquires direct or
indirect control of the Applicant (or any such guarantor or other provider of
credit support) or the ability to direct the operation of the Applicant (or any
such guarantor or other provider of credit support) or (b) a Fundamental Change
(as hereinafter defined) occurs, the Applicant shall on demand deposit with you,
and pledge to you and grant to you a security interest in, an amount deemed
sufficient by you, in your discretion, to secure the Obligations. The Applicant
(i) shall execute ail such documentation which you request to evidence, perfect,
and maintain such deposit, pledge, and security interest and (ii) irrevocably
authorizes you to act as the Applicant's agent and attorney-in-fact to execute
such documentation in the Applicant's name, with or without designation of your
authority, and acknowledges that the Applicant shall be obligated in respect of
such documentation as if executed by one of its authorized signatories.
"Fundamental Change" means the sale or transfer of, or the creation or
incurrence of a lien over, all or substantially all of the business assets of
the Applicant or its subsidiaries (or of any guarantor or other provider of
credit support for the Obligations), in one transaction or series of
transactions, or the occurrence of any transaction or event (in the nature of a
special dividend, share repurchase program or recapitalization or an exchange of
equity for debt or other similar transaction or event), as a result of which
there is a reduction in the consolidated shareholder's equity (or partnership
capital, net worth or similar equivalent term) of the Applicant (or any such
guarantor or other provider of credit support), in the manner determined on the
date hereof, of 50% or more.
3
NOTICES AND WAIVERS:
10. (a) Any notice to you shall be deemed effective only if in writing
sent to and received at your branch, division, or department conducting the
transaction or transactions hereunder. If this Application or any amendments or
notices with respect thereto or with respect to the Credit is received by you by
means of a facsimile transmission, the Applicant hereby authorizes you to accept
and to act in reliance upon such Application, amendment or notice and the
Applicant shall be bound by the terms of such Application, amendment or notice
as if it were the original executed version thereof. The transmission of the
Application, any amendments, thereto and any notice with respect to the Credit
by facsimile transmission will be entirely at the risk of the Applicant and you
shall not be liable for any mistake or omission in such transmission nor for the
fact that such transmission was unauthorized or fraudulent. Any notice to or
demand on any Applicant shall be binding on all Applicants and shall be deemed
effective when, made to the person whose name appears first above by mail,
teletransmission, telephone or otherwise, to the last address or telephone
number of such person appearing on your records. No waiver hereunder shall be
valid unless in writing, signed by you, and then only to the extent set forth
therein. None of the terms or conditions set forth in this Application may be
changed orally and no executory agreement unless 'in writing and signed by you,
and no course of dealing between the Applicant and you, shall be effective to
change, modify, or discharge in whole or in part this Application.
(b) You and the Applicant in any litigation in which you and any
Applicant shall be adverse parties hereby waive trial by jury and the Applicant,
in addition, waives the right to interpose any claim, setoff, or counterclaim,
of any nature or description, however denominated, and any defense based upon
any Statute of Limitations, laches, waiver, estoppel, or setoff, however
denominated.
ENFORCEMENT OF RIGHTS AND CLAIMS:
11. (a) The Applicant will bear and pay all expenses of every kind for
the enforcement, protection, or defense of any of your rights mentioned herein
or of any claim or demand by you against any Applicant, including reasonable
attorney's fees.
(b) In the event any Applicant or any guarantor of Obligations acts in
any way, including but not limited to seeking an injunction or temporary
restraining order, to prevent or delay payment by you of a draft or claim, the
Applicant (i) shall on demand deposit with you, and pledge to you and grant to
you a security interest in, an amount deemed sufficient by you, in your
discretion, to secure the Obligations, shall execute all such documentation
which you request to evidence, perfect, and maintain such deposit, pledge, and
security interest, irrevocably authorizes you to act as the Applicant's agent
and attorney-in-fact to execute such documentation in the Applicant's name, with
or without designation of your authority, and acknowledges that the Applicant
shall be obligated in respect of such documentation as if executed by one of its
authorized signatories: (ii) agrees to bear and pay all expenses on every kind
incurred by you, including reasonable attorney's fees, in connection with said
action to prevent or delay payment by you of a draft or claim, (iii) consents to
your exclusive determination to pay or compromise any claim or obligations of
any nature or description relating to the Credit including, without limitation,
for costs, attorney's fees, fines, interest, damages, or any other charge,
expense, or liability, and (iv) agrees to indemnify you and to reimburse you on
demand for the amount of such payments or compromises together with interest at
the rate and on the terms set forth in subsection 1 (a) above.
(c) The Applicant submits, in any, legal proceeding related to this
agreement, the Application, or the Credit, to the non-exclusive in personam
jurisdiction or any court of competent jurisdiction sitting in the State of New
York and agrees to suit being brought in any such court; waives any objection
that it may now or hereafter have to the venue of such proceeding in any such
court or that such proceeding was brought in an inconvenient court; agrees that
service of process in any such legal proceeding may be made, and shall be
conclusively deemed sufficient and adequate, by mailing of copies thereof (by
registered or certified mail, if practicable) postage prepaid, or by
teletransmission, to the Applicant at its address set forth herein or such other
address of which you shall have been notified in writing, in which event,
service shall be deemed complete, upon the filing with the court of a copy of
the process mailed or sent and an affidavit attesting to the mailing or sending;
agrees that nothing herein shall affect your right to effect service of process
in any other manner permitted by law; and agrees to commence and maintain any
such proceeding in any such court.
CONSTRUCTION:
12. If the Application is signed by more than one Applicant, the term
"Applicant" shall be read throughout as "Applicants" as the case may be. If
signed by more than one Applicant, this Application shall be the joint and
several agreement of all such Applicants. This Application shall, in addition,
be binding upon the Applicant and its respective representatives, successors,
and assigns. The term "you", as used throughout this Application, shall be
deemed to include THE CHASE MANHATTAN BANK and its branches and departments, any
individual, partnership, or corporation acting as nominee or agent for THE CHASE
MANHATTAN BANK, any subsidiary of THE CHASE MANHATTAN BANK and any company which
is owned or controlled directly or indirectly by THE CHASE MANHATTAN
CORPORATION. The term "Application" shall be deemed to include the first page
hereof and all terms and conditions set forth herein.
GOVERNING LAW:
13. This Application shall be governed by and construed in accordance
with laws of the State of New York.
14. Any provision hereof which may prove unenforceable under any law
shall not affect the validity of any other provision hereof.
THE CREDIT SHALL BE SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500
AND ANY AMENDMENTS OR REVISIONS THEREOF, provided, however, that notwithstanding
Article 41 thereof, if drawings within given periods are stipulated in the
Credit and any installment is not drawn within the period allowed for that
installment, the Credit will not cease to be available for any subsequent
installment.
4
EXHIBIT H
Dated as of __________________
Certificate #
WEINER'S STORES, INC.
BORROWING BASE CERTIFICATE
1 Inventory at Book Value in any of the locations listed in Schedule
1.01(A) to the Revolving Credit Agreement before deductions in Line 2
below $
2 The sum of A-H below:
A. Inventory subject to any Lien, security interest or prior
assignments except to the extent permitted by the Revolving
Credit Agreement
B. Inventory held on consignment
C. Reserves for markdown
D. Reserves for shrinkage
E. Reserves for layaways and pack-a-ways
F. Reserves for displays and open stock
G. Reserves for rejected, damaged, aged or other unsalable
inventory
H. Other reserves required by CIT
3 Line 1 minus Line 2
4 LC Inventory
5 70% of the sum of Line 3 and Line 4
6 Borrowing Base Adjustments:
A. Westview Property
B. Miscellaneous
7 Borrowing Base (Line 5 plus Line 6)
8 Maximum amount of Revolving Credit Commitment
9 Amount of Loans outstanding plus Letter of Credit Exposure (Sum of A
through C below)
A. Direct Borrowings
B. Documentary letters of credit (aggregate Unreimbursed Draws
under documentary Letters of Credit plus aggregate Undrawn
(documentary) Letter of Credit
C. Standby letters of credit (aggregate Unreimbursed Draws under
standby Letters of Credit plus aggregate Undrawn Availability)
10 Availability: The lesser of Line 7 or Line 8 minus Line 9 $
11 Cash to be collected by CIT on sweep $
$
EXHIBIT I
CREDIT CARD BANK DEPOSITORY ACCOUNT AGREEMENT
---------------------------------------------
[DATE]
[Name and
Address of Credit Card
Depository Bank]
Ladies and Gentlemen:
We refer to that certain [Credit Card Agreement] dated
_______________, (as amended, modified or supplemented from time to time, the
"Credit Card Agreement") between you and Weiner's Stores, Inc. (the "Company").
The Company has entered into a Debtor-In-Possession Revolving Credit Agreement,
dated as of October __, 2000 (as amended or otherwise modified from time to
time, the "Credit Agreement"), with the financial institutions from time to time
party thereto (collectively, the "Lenders" and individually, a "Lender"), and
The CIT Group/Business Credit, Inc., as a Lender and as agent for the Lenders
(in such capacity, the "Agent"), pursuant to which the Lenders have agreed to
make loans to the Company and assist the Company in obtaining letters of credit.
By signing this letter agreement, you agree that from and
after the date hereof, all monies, instruments or other property owing under the
Credit Card Agreement to the Company shall be held for the benefit of the Agent.
You hereby further agree, and the Company hereby irrevocably instructs you, to
transfer all amounts owing to the Company in accordance with the terms of the
Credit Card Agreement, in same day funds, to the following account maintained
with Chase Bank of Texas, N.A., Houston, Texas:
For the account of: The CIT Group/Business Credit, Inc.
(Weiner's Cash Concentration Account)
Account #:
-------------------------------
(the "Cash Concentration Account") or such other account designated in writing
by the Agent.
1
From and after the date hereof, no officer or agent of the
Company shall have the authority to withdraw or transfer any funds owing under
the Credit Card Agreement and the Agent shall have the sole authority to give
you instructions with respect to the withdrawal or transfer of any funds owing
under the Credit Card Agreement including, without limitation, the authority to
designate a new Cash Concentration Account. The instructions set forth in this
letter agreement may only be changed upon written instruction from the Agent.
Any correspondence with the Agent should be to:
The CIT Group/Business Credit, Inc.
Two Lincoln Centre
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Regional Credit Manager
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Very truly yours,
WEINER'S STORES, INC.
By:________________________________
Name:
Title:
Consented to:
THE CIT GROUP/BUSINESS CREDIT, INC.
By: _____________________________
Name:
Title:
2
Acknowledged and agreed to as of the date first above written:
_________________________ [Date]
[Credit Card Depository Bank]
By: _____________________
Name:
Title:
3
