EXHIBIT 10.6
EXECUTION COPY
MAY 25, 1996
CREDIT AGREEMENT
Dated as of May 25, 1996
among
WILSONS LEATHER HOLDINGS INC.,
as Borrower,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent, Lender and Swing Line Lender
This CREDIT AGREEMENT, dated as of May 25, 1996 among WILSONS LEATHER
HOLDINGS INC., a Minnesota corporation ("Borrower"), GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (in its individual capacity, "GE Capital"),
for itself, as Lender, as Swing Line Lender and as Agent for Lenders, and the
other Lenders signatory hereto from time to time.
RECITALS
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WHEREAS, Borrower desires that Lenders extend a revolving credit
facility to Borrower of up to One Hundred Fifty Million Dollars ($150,000,000)
in the aggregate for working capital purposes, including capital expenditures;
and for these purposes, Lenders are willing to make certain loans and other
extensions of credit to Borrower of up to such amount upon the terms and
conditions set forth herein;
WHEREAS, Borrower desires to secure all of its obligations under the
Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon all of its existing and after-acquired
personal property other than equipment and fixtures as set forth in the Security
Agreement;
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Schedule A. All Schedules, Disclosure Schedules,
Exhibits and other attachments (collectively, "Appendices") hereto, or expressly
identified to this Agreement, are incorporated herein by reference, and taken
together, shall constitute but a single agreement. These Recitals shall be
construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility. (i) Subject to the terms and conditions
hereof, each Lender agrees to make available from time to time until the
Commitment Termination Date its Pro Rata Share of advances (each, a "Revolving
Credit Advance"). The obligations of each Lender hereunder shall be several and
not joint. The aggregate amount of Revolving Credit Advances outstanding shall
not exceed at any time the lesser of (A) the Maximum Amount less the sum of 100%
of the Letter of Credit Obligations, 100% of the eligible Trade L/C Obligations
and the Swing Line Loan outstanding and (B) the Borrowing Base, less the sum of
100% of the Letter of Credit Obligations, 35% of the Eligible Trade L/C
Obligations and the Swing Line Loan outstanding at such time ("Borrowing
Availability"). Furthermore, the Pro Rata Share of the Revolving Loan of any
Lender shall not at any time exceed its separate Revolving Loan Commitment.
Until the Commitment Termination Date, Borrower may from time to time
borrow, repay and reborrow under this Section 1.1(a). Each Revolving Credit
Advance shall be made on notice by Borrower to the representative of the Agent
identified on Schedule 1.1 at the address specified thereon. Those notices must
be given no later than (1) 11:00 a.m. (Chicago time) on the Business Day of the
proposed Revolving Credit Advance, in the case of an Index Rate Loan, or (2)
11:00 a.m. (Chicago time) on the date which is three (3) Business Days prior to
the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such
notice (a "Notice of Revolving Credit Advance") must be substantially in the
form of Exhibit 1.1(a)(i), and must specify the requested date, the amount and
type of the requested Revolving Credit Advance, and such other information as
may be required by Agent and must be given in writing (by telecopy or overnight
courier) or by telephone confirmed immediately in writing. Revolving Credit
Advances in the form of Index Rate Loans must be in a minimum amount of $25,000
and multiples of $10,000 in excess of such amount; minimum advances and integral
multiples for LIBOR Loans are set forth in Section 1.5(e). Notwithstanding the
foregoing, any Revolving Credit Advance to Borrower which is to be used solely
to repay the Swing Line Loan to Borrower may be in the aggregate principal
amount of the Swing Line Loan even if less than the foregoing minimums. If
Borrower desires to have the Revolving Loan bear interest by reference to a
LIBOR Rate, it must comply with Section 1.5(e).
(ii) Borrower shall execute and deliver to each Lender a promissory
note to evidence the Revolving Loan. Each note shall be in the principal amount
of the Revolving Loan Commitment of the applicable Lender, dated the Closing
Date and substantially in the form of Exhibit 1.1(a)(ii) (each a "Revolving
Note" and, collectively, the "Revolving Notes"). The Revolving Notes shall
represent the obligation of Borrower to pay the amount of the Revolving Loan
Commitment or, if less, the applicable Lender's Pro Rata Share of the aggregate
unpaid principal amount of all Revolving Credit Advances made by the applicable
Lender to Borrower together with interest thereon as prescribed in Section 1.5.
The entire unpaid balance of the Revolving Loan and all other non-contingent
Obligations shall be immediately due and payable in full in immediately
available funds in Dollars on the Commitment Termination Date.
(iii) In its discretion the Agent may (but shall have absolutely no
obligation to) make Revolving Credit Advances to Borrower on behalf of the
Lenders in amounts which cause the outstanding principal balance of the
aggregate Revolving Credit Advances to exceed Borrowing Availability (any such
excess Revolving Credit Advances are herein referred to collectively as
"Overadvances"), and no such event or occurrence shall cause or constitute a
waiver by Agent or Lenders of any Default or Event of Default that may result
therefrom or of their right to refuse to make any further Overadvances,
Revolving Credit Advances or Swing Line Advances or incur any Letter of Credit
Obligations or Eligible Trade L/C Obligations at any time that an Overadvance
exists or would result therefrom. In addition, Overadvances may be made even if
the conditions to lending set forth in Section 2 have not been met. The
authority of the Agent to make Overadvances is limited to an aggregate amount
not to exceed $1,500,000 at any time, shall not cause the sum of the Revolving
Loan plus the Swing Line Loan to exceed the Maximum Amount, and may be revoked
prospectively by a written notice to Agent signed by Lenders holding fifty
percent (50%) or more of the Revolving Loan Commitments. The aggregate
principal balance of all Overadvances shall bear interest at the Default Rate
then
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applicable to Index Rate Loans. Each Overadvance shall be payable by Borrower
as and when specified by Agent at the time that such Overadvance is made or, if
not so specified by Agent, shall be payable on demand.
(b) Swing Line Facility. (i) Subject to the terms and conditions
hereof, the Swing Line Lender agrees to make available from time to time until
the Commitment Termination Date advances (each, a "Swing Line Advance");
provided that no Swing Line Advance may be made after the occurrence and during
the continuance of an Event of Default unless such Swing Line Advance is
approved by Requisite Lenders. The aggregate amount of Swing Line Advances
outstanding shall not exceed the lesser of (A) the Swing Line Commitment and (B)
the Borrowing Base less the sum of the outstanding balance of the Revolving
Credit Advances plus 100% of outstanding Letter of Credit Obligations and 35%
of outstanding Eligible Trade L/C Obligations as of any date of determination
("Swing Line Availability"). Until the Commitment Termination Date, Borrower
may from time to time borrow, repay and reborrow under this Section 1.1(b). In
order to minimize fluctuations in the Revolving Loan balance, it is intended
that the Swing Line Loan shall be the first Loan borrowed and the first Loan
repaid. Each Swing Line Advance shall be made on notice by Borrower to the
representative of the Agent identified on Schedule 1.1 at the address specified
thereon. Those notices must be given no later than 11:00 a.m. (Chicago time) on
the Business Day of the proposed Swing Line Advance. Each such notice (a
"Notice of Swing line Advance") must be substantially in the form of Exhibit
1.1(b)(i), and must specify the requested date, the amount of the requested
Swing Line Advance, and such other information as may be required by Agent or
the Swing Line Lender and must be given in writing (by telecopy or overnight
courier) or by telephone confirmed immediately in writing.
(ii) Borrower shall execute and deliver to the Swing Line Lender a
promissory note to evidence the Swing Line Loan. Such note shall be in the
principal amount of the Swing Line Commitment of the Swing Line Lender, dated
the Closing Date and substantially in the form of Exhibit 1.1(b)(ii) (the "Swing
Line Note"). The Swing Line Note shall represent the obligation of Borrower to
pay the amount of the Swing Line Commitment or, if less, the aggregate unpaid
principal amount of all Swing Line Advances made to Borrower together with
interest thereon as prescribed in Section 1.5. The entire unpaid balance of the
Swing Line Loan and all other non-contingent Obligations shall be immediately
due and payable in full in immediately available funds on the Commitment
Termination Date if not sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing Line Leader, at any
time and from time to time in its sole and absolute discretion and otherwise at
Borrower's request, may on behalf of Borrower (and Borrower hereby irrevocably
authorizes the Swing Line Lender to so act on its behalf) request by telephone
or telecopy each Lender (including the Swing Line Lender) to make a Revolving
Credit Advance to Borrower (which initially shall be an Index Rate Loan, but may
be converted to a LIBOR Loan) in an amount equal to such Lender's Pro Rata Share
of the principal amount of the Swing Line Loan (the "Refunded Swing Line Loan")
outstanding on the date such notice is given. Unless any of the events
described in Sections 8.1(h) or 8.1(i) shall have occurred (in which event the
procedures of Section 1.1(b)(iv) shall apply) and regardless of whether the
conditions precedent set forth in this Agreement to the
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making of a Revolving Credit Advance are then satisfied, each Revolving Lender
shall make the proceeds of its Revolving Credit Advance available to the Swing
Line Lender prior to 1:00 p.m. (Chicago time), in immediately available funds on
the Business Day that such notice is given. The proceeds of such Revolving
Credit Advances shall be immediately applied to repay the Refunded Swing Line
Loan.
(iv) Participation in Swing Line Loans. If, prior to refunding a Swing
Line Loan with a Revolving Credit Advance pursuant to Section 1.1(b)(iii), one
of the events described in Sections 8.1(h) or 8.1(i) shall have occurred with
respect to Borrower, then, subject to the provisions of Section 1.1(b)(v) below,
each Lender will, on the date such Revolving Credit Advance was to have been
made to Borrower, purchase from the Swing Line Lender an undivided participation
interest in the Swing Line Loan in an amount equal to its Pro Rata Share of such
Swing Line Loan. Upon request, each Lender will promptly transfer to the Swing
Line Lender, in immediately available funds, the amount of its participation and
upon receipt thereof the Swing Line Lender will deliver to such Lender a Swing
Line Loan Participation Certificate, substantially the form of Exhibit
1.1(b)(iv), dated the date of receipt of such funds and in such amount.
(v) Lenders' Obligations Unconditional. Each Revolving Lender's
obligation to make Revolving Credit Advances in accordance with Section
1.1(b)(iii) and to purchase participating interests in accordance with Section
1.1(b)(iv) shall be absolute and unconditional (unless the Swing Line Advance
was not made to fund a Letter of Credit Obligation or Eligible Trade L/C
Obligation, an Event of Default had occurred and was continuing at the time the
underlying Swing Line Advance was made and the Swing Line Lender was aware of
the same at the time of the relevant Swing Line Advance) and shall not be
affected by any of the following circumstances: (A) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the Swing
Line Lender, Borrower or any other Person for any reason whatsoever; (B) the
occurrence or continuance of any Default or Event of Default; (C) any inability
of Borrower to satisfy the conditions precedent to borrowing set forth in this
Agreement on the date upon which such participating interest is to be purchased
or (D) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing. If any Revolving Lender does not make available
to the Swing Line Lender the amount required pursuant to Section 1.1(b)(iii) or
1.1(b)(iv), as the case may be, the Swing Line Lender shall be entitled to
recover such amount on demand from such Lender, together with interest thereon
for each day from the date of non-payment until such amount is paid in full at
the federal funds rate for the first two Business Days and at the Index Rate
thereafter.
(c) Reliance on Notices. Agents shall be entitled to rely upon, and shall
be fully protected in relying upon, any Notice of Revolving Credit Advance,
Notice of Conversion/Continuation, Notice of Swing Line Advance or similar
notice believed by Agent to be genuine. Agent may assume that each Person
executing and delivering such a notice was duly authorized, unless the
responsible individual acting thereon for Agent has actual knowledge to the
contrary.
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1.2 Letters of Credit. Subject to and in accordance with the terms
and conditions contained herein and in Schedule B, Borrower shall have the right
to request, and the Lenders agree to incur, Eligible Trade L/C Obligations and
Letter of Credit Obligations in respect of Borrower. The aggregate Letter of
Credit Obligations and Eligible Trade L/C Obligations outstanding at any time
shall not exceed as of any date of determination, the lesser of (A) $90,000,000
and (B) $150,000,000 less the then outstanding Revolving Credit Advances and
Swing Line Loan. In addition, 100% of the Letter of Credit Obligations plus 35%
of the Eligible Trade L/C Obligations outstanding as of any date of
determination shall not exceed the Borrowing Base, less the then outstanding
Revolving Credit Advances and Swing Line Loan. The determination of availability
described in the preceding two sentences is herein referred to as "L/C
Availability."
1.3 Prepayment. (a) If at any time Borrowing Availability of L/C
Availability is less than zero, Borrower shall immediately repay the aggregate
outstanding Revolving Credit Advances and Swing Line Advances (in such order as
shall minimize the aggregate of LIBOR breakage costs and the interest costs on
the Revolving Loan and/or Swing Line Loan that remains outstanding) to the
extent required to eliminate such deficit. If any deficit remains after
repayment in full of the aggregate outstanding Revolving Credit Advances and
Swing Line Advances, Borrower shall provide cash collateral for the Letter of
Credit Obligations and Eligible Trade L/C Obligations in the manner set forth in
Schedule B to the extent required to eliminate such deficit. Notwithstanding the
foregoing, the repayment requirements of any Overadvance made pursuant to
Section 1.1(a)(iii) shall be determined as set forth therein.
(b) Except as set forth in Section 6.14 hereof, if Newco issues
Stock, no later than the Business Day following the date of receipt of the
proceeds thereof, Borrower shall prepay the Loans in an amount equal to all such
proceeds, net of underwriting discounts and commissions and other reasonable
costs paid to non-Affiliates in connection therewith. Any such prepayment
shall be applied in accordance with clause (d) below.
(c) Borrower may at any time on at least five (5) days' (sixty (60)
days' in the case of prepayment in full of the Loans) prior written notice to
Agent voluntarily prepay all or part of the Revolving Loan and/or the Swing Line
Loan and permanently reduce or terminate the Revolving Loan Commitment or the
Swing Line Commitment, as applicable; provided that (a) any such prepayments or
reductions shall be in a minimum amount of $1,000,000 and integral multiples of
$250,000 in excess of such amount, (b) such voluntary prepayments or reductions
may be made or effected no more frequently than once per year following the
Closing Date, (c) any partial reduction of the Revolving Loan Commitment shall
result in a ratable reduction in the Swing Line Commitment and (d) any partial
reduction of the Revolving Loan Commitment to $120,000,000 or less shall result
in a ratable reduction in the L/C Sublimit. Any such voluntary prepayment and
any such reduction or termination of the Revolving Loan Commitment must be
accompanied by the payment of the fee required by Section 1.9(c), if any, plus
the payment of any LIBOR funding breakage costs in accordance with Section
1.13(b). Upon any such prepayment in full and termination in full of the
Revolving Loan Commitment and the Swing Line Commitment, Borrower's right to
request Revolving Credit Advances, request that Letter of
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Credit Obligations or Eligible Trade L/C Obligations be incurred on its behalf,
or request Swing Line Advances shall simultaneously be permanently terminated.
(d) Any prepayments made by Borrower pursuant to clause (b) above or
pursuant to Section 5.4(c) shall be applied in the following order of priority,
in each instance until all Obligations having a higher priority have been paid
in full: first, to accrued Fees and expenses reimbursable hereunder; second, to
accrued interest on the Swing Line Loan; third, to the principal balance of the
Swing Line Loan; fourth, to the accrued interest on the Index Rate Loans; fifth,
to the principal balance of the Index Rate Loans; sixth, if L/C Availability is
less than zero, to any Letter of Credit Obligations and Eligible Trade L/C
Obligations of Borrower to provide cash collateral therefor in the manner set
forth in Schedule B, until all such Letter of Credit Obligations and Eligible
Trade L/C Obligations have been cash collateralized to the extent so required;
and seventh, in the case of a prepayment pursuant to clause (b) above to
eliminate any Seasonal Over-Advance outstanding (if not eliminated under clause
third above) as required by Section 6.14. If an Event of Default shall have
occurred and be continuing, the remainder of any such prepayments shall be
applied to outstanding Obligations in such order as Agent may deem appropriate,
including the cash collaterization of Letter of Credit Obligations and Eligible
Trade L/C Obligations. Otherwise the remainder of such prepayments shall be
returned to Borrower and held by Borrower in a Disbursement Account or other
account as permitted by Section 6.2 subject to a Control Letter. Neither the
Revolving Loan Commitment nor the Swing Line Commitment shall be permanently
reduced by the amount of any prepayments applied to the Revolving Loan or the
Swing Line Loan pursuant to the foregoing.
1.4 Use of Proceeds. Borrower shall utilize the proceeds of the
Revolving Credit Advances and the Swing Line Advances solely for the financing
of Borrower's ordinary working capital needs, including Capital Expenditures
(but excluding in any event the making of any Restricted Payment not
specifically permitted by Section 6.14). Schedule 1.4 contains a description of
Borrower's sources and uses of funds as of the Closing Date, including Loans,
Letter of Credit Obligations and Eligible Trade L/C Obligations to be made or
incurred on that date.
1.5 Interest. (a) Borrower shall pay interest to Agent, for the
ratable benefit of Lenders, in arrears on each applicable Interest Payment Date,
at the following rates: (i) with respect to the Revolving Credit Advances
bearing interest at the Index Rate, at a per annum rate equal to the Index Rate
plus the Applicable Index Margin, or at the election of Borrower, at a per annum
rate equal to the applicable LIBOR Rate plus the Applicable LIBOR Margin, based
on the aggregate Revolving Credit Advances outstanding from time to time; and
(ii) with respect to the Swing Line Loan at a per annum rate equal to the Index
Rate plus the Applicable Swing Line Margin.
(b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
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(c) All computations of interest with respect to LIBOR Loans shall be made
by Agent on the basis of a three hundred sixty (360) day year, for the actual
number of days occurring in the period for which such interest is payable. All
computations of interest with respect to Index Rate Loans, shall be made by
Agent on the basis of a three hundred sixty-five (365) day year for the actual
number of days elapsed. The Index Rate shall be determined each day based upon
the Index Rate as in effect each day. Each determination by Agent of an interest
rate hereunder shall be conclusive, absent manifest error.
(d) So long as any Event of Default shall have occurred and be continuing,
and at the election of Agent (or upon the written request of Requisite Lenders)
after written notice from Agent to Borrower, the interest rates applicable to
the Revolving Loan, the Swing Line Loan and the Letter of Credit Fees shall be
increased by two percentage points (2%) per annum above the rate of interest or
the rate of such Fees otherwise applicable hereunder ("Default Rate"), and all
outstanding Obligations shall bear interest at the Default Rate applicable to
such Obligations. If such notice is issued, interest and Letter of Credit Fees
at the Default Rate shall accrue from the initial date of such Event of Default
for so long as that Event of Default shall continue and shall be payable upon
demand.
(e) So long as no Default or Event of Default shall have occurred and be
continuing, Borrower shall have the option to (i) request that any Revolving
Credit Advance (other than an Overadvance) be made as a LIBOR Loan, (ii) convert
at any time all or any part of outstanding Revolving Credit Advances (including
a Refunded Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert
any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs
in accordance with Section 1.13(b) if such conversion is made prior to the
expiration of the LIBOR Period applicable thereto, or (iv) continue all or any
portion of any LIBOR Loan as a LIBOR Loan upon the expiration of the applicable
LIBOR Period and the succeeding LIBOR Period of that continued Loan shall
commence on the last day of the LIBOR Period of the Loan to be continued. Any
Loan to be made or continued as, or converted into, a LIBOR Loan must be in a
minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of
such amount. Any such election must be made by 11:00 a.m. (Chicago time) on the
third (3rd) Business Day prior to (1) the date of any proposed Advance which is
to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with
respect to any LIBOR Loans to be continued as such, or (3) the date on which
Borrower wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR
Period designated by Borrower in such election. If no election is received with
respect to a LIBOR Loan by 11:00 a.m. (Chicago time) on the third (3rd) Business
Day prior to the end of the LIBOR Period with respect thereto (or if a Default
or an Event of Default shall have occurred and be continuing), that LIBOR Loan
shall be converted to an Index Rate Loan at the end of its LIBOR Period.
Borrower must make such election by notice to Agent in writing, by telecopy or
overnight courier. In the case of any conversion or continuation, such election
must be made pursuant to a written notice (a "Notice of Conversion/
Continuation") in the form of Exhibit 1.5(e). Unless Agent shall otherwise
consent, no Loan may be made as or converted into a LIBOR Loan until forty-five
(45) days after the Closing Date. Furthermore, Borrower shall not be entitled to
request or continue any Revolving
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Loan as, or convert any Revolving Loan into, a LIBOR Loan unless at the time of
such request, conversion or continuation, the aggregate outstanding principal
balance of the Revolving Credit Advances plus the amount of the Swing Line
Advances equals or exceeds $5,000,000 and Borrower reasonably anticipates that
the aggregate outstanding principal balance of the Revolving Credit Advances
will continue to equal or exceed such amount for the duration of the LIBOR
Period selected by Borrower.
(f) Notwithstanding anything to the contrary set forth in this
Section 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest which would have been received had
the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, the interest rate payable hereunder
shall be the rate(s) of interest provided in Sections 1.5(a) through (e) above,
unless and until the rate of interest again exceeds the Maximum Lawful Rate, and
at that time this paragraph shall again apply. In no event shall the total
interest received by any Lender pursuant to the terms hereof exceed the amount
which such Lender could lawfully have received had the interest due hereunder
been calculated for the full term hereof at the Maximum Lawful Rate. If the
Maximum Lawful Rate is calculated pursuant to this paragraph, such interest
shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by
the number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.
1.6 Applicable Margins. The Applicable Swing Line Margin, Applicable
Index Margin, Applicable LIBOR Margin and Applicable L/C Margin will be adjusted
(up or down) quarterly based on Newco's consolidated financial performance for
the trailing four quarters as evidenced by its quarterly consolidated Financial
Statements in accordance with the following grid:
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If EBIT/Cash Applicable Applicable Applicable Applicable
Interest Swing Line Index LIBOR L/C
Coverage is: Margin is: Margin is: Margin is: Margin is:
------------ ---------- ---------- ---------- ----------
less than 2.0 1.00% 1.25% 2.75% 1.75%
2.0 up to but not including 3.0 .75% 1.00% 2.50% 1.50%
3.0 up to but not including 4.0 .25% .50% 2.00% 1.25%
4.0 or more 0.0% .25% 1.75% 1.25%
The Applicable Swing Line Margin, Applicable Index Margin, Applicable
LIBOR Margin and Applicable L/C Margin will be 1.0%, 1.25%, 2.75% and 1.75%,
respectively, as of the Closing Date and will first be subject to adjustment on
February 1, 1997, based on Parent's quarterly consolidated Financial Statements
for February 1, 1996, through the Closing Date and Newco's quarterly
consolidated Financial Statements from the day following the Closing Date
through the last day of the Fiscal Quarter ending on the Saturday closest to
January 31, 1997 (collectively the "Measuring Period"), subject to the following
conditions. To adjust the margins for the periods commencing February 1, 1997,
Borrower must deliver to Agent and Lenders before February 28, 1997, internally
prepared consolidated Financial Statements for the Measuring Period,
demonstrating that a reduction has been earned. If earned, margin reductions
will be implemented for all interest and Letter of Credit Fee payments accrued
during the month of February 1997 and due on or after March 1, 1997; provided
that such consolidated Financial Statements are received before February 28,
1997; otherwise margin reductions will be implemented on the date such Financial
Statements are received. Newco's consolidated Financial Statements for the
period commencing on the day following the Closing Date and ending on the last
day of the Fiscal Quarter ending on the Saturday closest to January 31, 1997,
shall be reviewed by Newco's outside auditors and subsequently delivered to
Agent. If those Financial Statements demonstrate that margin reductions were
not, in fact, earned as of the last day of the Measuring Period, Borrower shall
pay to Agent for the ratable benefit of Lenders a make-up payment within five
(5) days after delivery of those Financial Statements. The make-up payment will
equal the difference between interest and Letter of Credit Fees that should have
been paid for the period commencing February 1, 1997, and those actually paid.
After February 1, 1997, adjustments in the Applicable Swing Line
Margin, Applicable Index Margin, Applicable LIBOR Margin and Applicable L/C
Margin shall be prospective only and shall be based on Newco's consolidated
financial performance for the trailing four quarters as of the last day of each
Fiscal Quarter as evidenced by Newco's unaudited consolidated Financial
Statements for the first three Fiscal Quarters of each Fiscal Year and Newco's
audited consolidated Financial Statements for each Fiscal Year. Each increase or
decrease in the above-referenced margins shall become effective starting (i) in
the case of the Swing Line Loan, Index Rate Loans and Letter of Credit Fees on
the first day of the first calendar month after delivery of the applicable
Financial Statements and (ii) in the case of LIBOR Loans on
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the first day of each LIBOR Period commencing after delivery of the applicable
Financial Statements.
1.7 Eligible Inventory. Based on the most recent Borrowing Base
Certificate delivered by Borrower to Agent and on other information available to
Agent, Agent shall in its reasonable credit judgment determine which Inventory
of Borrower shall be "Eligible Inventory" for purposes of this Agreement. In
determining whether any particular Inventory of Borrower constitutes Eligible
Inventory, Agent shall not include any such Inventory to which any of the
exclusionary criteria set forth in Schedule D applies. Agent reserves the right,
at any time and from time to time after the Closing Date, to adjust any such
criteria, and to establish new criteria, and to establish Reserves against the
Borrowing Base in its reasonable credit judgment based on changes in the
salability of Inventory, Liens, unpaid liabilities or other changed
circumstances arising after the Closing Date, subject to the approval of Lenders
in the case of adjustments or new criteria which have the effect of making more
credit available; provided that if any such adjustment in criteria or the
establishment of new criteria or Reserves (other than Reserves specifically
described in the definition of Reserves, Section 1.11(c), Section 5.4(c), or
Section 5.9) materially reduces Borrowing Availability, Borrower may prepay the
Revolving Loan (including the Swing Line Loan) within one (1) year thereafter
without payment of a prepayment fee.
1.8 Cash Management Systems. On or prior to the Closing Date,
Borrower will establish and will maintain until the Termination Date, the cash
management systems described on Schedule E (the "Cash Management Systems").
1.9 Fees. (a) Borrower shall pay to GE Capital, individually, the
Fees specified in that certain Fee Letter dated as of April 29, 1996 (the "GE
Capital Fee Letter"), at the times specified for payment therein.
(b) As additional compensation for the Lenders having Revolving Loan
Commitments, Borrower agrees to pay to Agent, for the ratable benefit of such
Lenders, in arrears, on the first Business Day of each month prior to the
Commitment Termination Date and on the Commitment Termination Date, a fee for
Borrower's non-use of available funds (the "Non-Use Fee") in an amount equal to
three-eights of one percent (.375%) per annum (calculated on the basis of a 365
day year for actual days elapsed) of the difference between the respective daily
averages of (x) the Maximum Amount (as it may be reduced from time to time) and
(y) the amount of the Revolving Loan outstanding during the period for which the
Non-Use Fee is due.
(c) Except as otherwise provided herein, if Borrower prepays the
Revolving Loan and in connection therewith reduces or terminates the Revolving
Loan Commitment, whether voluntarily or involuntarily and whether before or
after acceleration of the Obligations, Borrower shall pay to the Agent, for the
benefit of Lenders as liquidated damages and compensation for the costs of being
prepared to make funds available hereunder an amount determined by multiplying
the Applicable Percentage by the amount of the reduction of the Revolving Loan
Commitment. As used herein, the term "Applicable Percentage" shall mean (x) two
percent (2.0%), in the case of a prepayment on or prior to the second
anniversary of the
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Closing Date, and (y) one percent (1.0%), in the case of a prepayment after the
second anniversary of the Closing Date but on or prior to the third anniversary
of the Closing Date. Notwithstanding the foregoing, no prepayment fee shall be
payable by Borrower upon a mandatory prepayment made pursuant to Section 1.3(b)
so long as the transaction giving rise to such prepayment is expressly permitted
under Section 6 and so long as Borrower does not permanently reduce the
Revolving Loan Commitment.
1.10 Receipt of Payments. Terms used and not otherwise defined in
this Section shall have the respective meanings given such terms in Schedule E.
Pursuant to the Blocked Account Agreement, Agent and Borrower have directed the
Concentration Account Bank to sweep the balance of funds on deposit in the
Concentration Account at 11:00 a.m. (Chicago time) each day into the Collection
Account. For purposes of computing interest and Fees and determining the amount
available for borrowing by Borrower pursuant to Section 1.1, all payments shall
be deemed received on the day of receipt of immediately available funds therefor
in the Collection Account. So long as Borrower and the Store Guarantors have
cash or cash equivalents (consisting of investments permitted under clause (a)
of Section 6.2) on hand or on deposit of $7,000,000 or more in the aggregate,
Borrower shall not request (and Lenders are not obligated to make) any Revolving
Credit Advance or Swing Line Advance. To the extent not applied to the Revolving
Loan or Swing Line Loan and so long as no Event of Default shall have occurred
and be continuing and so long as L/C Availability exceeds zero, good funds
received by Agent in its Collection Account before 2:00 p.m. (Chicago time) on
each Business Day will be transferred to Borrower's Disbursement Account on that
Business Day. Notwithstanding any provision herein contained to the contrary, so
long as no Default or Event of Default has occurred and is continuing, and
Borrowing Availability and L/C Availability are greater than the amount of the
funds transfer described below, Agent will transfer good funds to Borrower's
Disbursement Account based on assurances from Borrower's Concentration Account
Bank that good funds in a corresponding amount will be transferred to Agent's
Collection Account on the same Business Day as such assurances are given. If
Agent makes such a transfer under the foregoing circumstances and does not
receive such funds from Borrower's Concentration Account Bank prior to 1:00 p.m.
(Chicago time), Agent shall promptly notify Borrower. If Agent does not receive
corresponding good funds from Borrower's Concentration Account Bank prior to
2:00 p.m. (Chicago time), Agent's transfer of funds to Borrower as described
above shall be deemed to constitute a Swing Line Advance to the extent that such
transfer would not cause the Swing Line Loan to exceed the Swing Line
Commitment, and a Revolving Credit Advance to the extent of such excess.
1.11 Application and Allocation of Payments. (a) Borrower hereby
irrevocably waives as to all payments from and after the Commitment Termination
Date, the right to direct the application of such payments received from or on
behalf of Borrower, and Borrower hereby irrevocably agrees that Agent shall have
the continuing exclusive right to apply any and all such payments against the
Obligations as Agent may deem advisable notwithstanding any previous entry by
Agent in the Loan Account or any other books and records. In the absence of a
specific determination by Agent with respect thereto after the Commitment
Termination Date and in all other instances (except as otherwise expressly
provided herein), payments shall be applied in the
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following order of priority, in each instance until all Obligations having a
higher priority have been paid in full: (1) to Fees and Agent's expenses
reimbursable hereunder; (2) to accrued interest on the Swing Line Loan; (3) to
the outstanding principal balance of the Swing Line Loan; (4) to accrued
interest on the Index Rate Loans; (5) to the principal balance of Index Rate
Loans; (6) to accrued interest on LIBOR Rate Loans; (7) to the principal balance
of LIBOR Rate Loans; (8) if the Commitment Termination Date has occurred or if
L/C Availability is less than zero, to cash collateralize Letter of Credit
Obligations and Eligible Trade L/C Obligations in the manner described in
Schedule B and (9) to all other Obligations then due and payable including
expenses of Lenders reimbursable under Section 11.3.
(b) Agent is authorized to, and at its sole election may, charge to
the Swing Line Loan to the extent such charge would not cause the Swing Line
Loan balance to exceed the Swing Line Commitment and then to Revolving Loan
balance on behalf of Borrower and cause to be paid all Fees, expenses, Charges,
costs (including insurance premiums in accordance with Section 5.4(a)) and
interest owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to promptly pay any such amounts
as and when due, even if such charges would cause the Revolving Loan to exceed
Borrowing Availability. At Agent's option and to the extent permitted by law,
any charges so made shall constitute part of the Swing Line Loan or Revolving
Loan hereunder.
(c) If a Default or an Event of Default has occurred and is
continuing, Agent may in its sole and absolute discretion, impose a Reserve
against Borrowing Availability for interest, Fees and expenses due and payable
or which will become due and payable hereunder on the next respective payment
dates therefor.
(d) If Borrower pays less than all of the interest due hereunder on
any Interest Payment Date, Agent shall apply such partial payment ratably to all
interest then due hereunder.
1.12 Loan Account and Accounting. Agent shall maintain a loan
account (the "Loan Account") on its books to record: (a) all Advances (b) all
payments made by Borrower, and (c) all other debits and credits as provided in
this Agreement with respect to the Loans or any other Obligations. All entries
in the Loan Account shall be made in accordance with Agent's customary
accounting practices as in effect from time to time. The balance in the Loan
Account, as recorded on Agent's most recent printout or other written statement,
shall be presumptive evidence of the amounts due and owing to Agent and Lenders
by Borrower; provided that any failure to so record or any error in so recording
shall not limit or otherwise affect Borrower's duty to pay the Obligations.
Agent shall render to Borrower a monthly accounting of transactions with respect
to the Loans setting forth the balance of the Loan Account. Unless Borrower
notifies Agent in writing of any objection to any such accounting (specifically
describing the basis for such objection), within thirty (30) days after the date
thereof, each and every such accounting shall (absent manifest error) be deemed
final, binding and conclusive upon Borrower in all respects as to all matters
reflected therein. Only those items expressly objected to in such notice shall
be deemed to be disputed by Borrower.
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1.13 Indemnity. (a) Borrower shall indemnify and hold harmless each
of Agent, Lenders and their respective Affiliates, and each such Person's
respective officers, directors, employees, attorneys, agents and representatives
(each, an "Indemnified Person"), from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other
Loan Documents, and in connection with or arising out of the transactions
contemplated hereunder and thereunder and any actions or failures to act in
connection therewith, including any and all Environmental Liabilities and Costs
and legal costs and expenses arising out of or incurred in connection with
disputes between or among any parties to any of the Loan Documents; provided,
that Borrower shall not be liable for any indemnification to an Indemnified
Person to the extent that any such suit, action, proceeding, claim, damage,
loss, liability or expense results solely from that Indemnified Person's gross
negligence or willful misconduct, as finally determined by a court of competent
jurisdiction. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY
OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED
UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or is the
result of acceleration, by operation of law or otherwise); (ii) Borrower shall
default in payment when due of the principal amount of or interest on any LIBOR
Loan; (iii) Borrower shall default in making any borrowing of, conversion into
or continuation of LIBOR Loans after Borrower has given notice requesting the
same in accordance herewith; or (iv) Borrower shall fail to make any prepayment
of a LIBOR Loan after Borrower has given a notice thereof in accordance
herewith, Borrower shall indemnify and hold harmless each Lender from and
against all losses, costs and expenses resulting from or arising from any of the
foregoing. Such indemnification shall include, without limitation, any loss
(including, without limitation, loss of margin) or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate deposits
from which such funds were obtained. For the purpose of calculating amounts
payable to a Lender under this subsection, each Lender shall be deemed to have
actually funded its relevant LIBOR Loan through the purchase of a deposit
bearing interest at the LIBOR Rate in an amount equal to the amount of that
LIBOR Loan and having a maturity comparable to the relevant Interest Period;
provided, however, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As
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promptly as practicable under the circumstances, each Lender shall provide
Borrower and Agent with its written calculation of all amounts payable pursuant
to this Section 1.13(b), and such calculation shall be binding on the parties
hereto unless Borrower shall object in writing within ten (10) Business Days of
receipt thereof, specifying the basis for such objection in detail. All amounts
payable pursuant to this Section 1.13(b) shall be made payable to Agent for the
benefit of the requesting Lender and shall then be funded by Agent to such
Lender.
1.14 Access. (a) Borrower shall, and in accordance with the
Guaranties, shall cause each other Credit Party who is a signatory thereto to,
during normal business hours, from time to time upon one (1) Business Day's
prior notice as frequently as Agent reasonably determines to be appropriate: (a)
provide Agent and any of its officers, employees and agents access to its
properties, facilities, advisors and employees (including officers) of each
Credit Party and to the Collateral, (b) permit Agent, and any of its officers,
employees and agents, to inspect, audit and make extracts from any Credit
Party's books and records, and (c) permit Agent, and its officers, employees and
agents, to inspect, review and evaluate the Accounts, Inventory and other
Collateral of any Credit Party. If a Default or Event of Default shall have
occurred and be continuing, Borrower, Parent, First Intermediate Parent, Second
Intermediate Parent and Newco shall provide such access at all times and without
advance notice. Borrower, Parent, First Intermediate Parent, Second Intermediate
Parent and Newco shall make available to Agent and its counsel, as quickly as is
possible under the circumstances, originals or copies of all books and records
which Agent may request. Borrower, Parent, First Intermediate Parent, Second
Intermediate Parent and Newco shall deliver any document or instrument necessary
for Agent, as it may from time to time request, to obtain records from any
service bureau or other Person which maintains records for Borrower, Parent,
First Intermediate Parent, Second Intermediate Parent or Newco, and shall
maintain duplicate records or supporting documentation on media, including
computer tapes and discs owned by Borrower, Parent, First Intermediate Parent,
Second Intermediate Parent and Newco.
(b) Borrower shall pay Agent a Fee of $500 per day per individual
(plus all out-of-pocket costs and expenses) in connection with Agent's field
examinations permitted under Section 1.14(a) above and Section 4(c) of the
Security Agreement, including the cost of verifying Eligible In-Transit
Inventory in the possession of Approved Shippers; provided that such Fees and
expenses shall not be reimbursable by Borrower with respect to more than two
field examinations during any period of twelve consecutive months unless an
Event of Default shall have occurred and be continuing at the time of those
field examinations that exceed two during any period of twelve consecutive
months.
1.15 Taxes. (a) Any and all payments by Borrower hereunder or under
the Notes shall be made, in accordance with this Section 1.15, free and clear of
and without deduction for any and all present or future Taxes. Except as
provided in Section 1.16(d), if Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder under the Notes, (i) the
sum payable shall be increased as much as shall be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 1.15) Agent or Lenders, as applicable, receive
an amount equal to the sum they
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would have received had no such deductions been made, (ii) Borrower shall make
such deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within
thirty (30) days after the date of any payment of Taxes, Borrower shall furnish
to Agent the original or a certified copy of a receipt evidencing payment
thereof.
(b) Borrower shall indemnify and, within ten (10) days of demand
therefor, pay, Agent and each Lender for the full amount of Taxes (including any
Taxes imposed by any jurisdiction on amounts payable under this Section 1.15)
paid by Agent or such Lender, as appropriate, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted.
1.16 Capital Adequacy; Increased Costs; Illegality. (a) If any
Lender shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law) from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by such Lender and thereby reducing the
rate of return on such Lender's capital as a consequence of its obligations
hereunder, then Borrower shall from time to time upon demand by such Lender
(with a copy of such demand to Agent) pay to Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of that reduction and showing the
basis of the computation thereof submitted by such Lender to Borrower and to
Agent shall, absent manifest error, be final, conclusive and binding for all
purposes.
(b) If, due to either (i) the introduction of or any change in any
law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining any Loan, then Borrower shall from time to time, upon demand by such
Lender (with a copy of such demand to Agent), pay to Agent for the account of
such Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost, submitted
to Borrower and to Agent by such Lender, shall be conclusive and binding on
Borrower for all purposes, absent manifest error. Each Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances referred to
above which would result in any such increased cost, the affected Lender shall,
to the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrower pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation
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thereof) shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for any Lender to agree to make or
to make or to continue to fund or maintain any LIBOR Loan, then, unless that
Lender is able to make or to continue to fund or to maintain such LIBOR Loan at
another branch or office of that Lender without, in that Lender's opinion,
adversely affecting it or its Loans or the income obtained therefrom, on notice
thereof and demand therefor by such Lender to Borrower through Agent, (i) the
obligation of such Lender to agree to make or to make or to continue to fund or
maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith prepay in
full all outstanding LIBOR Loans owing by Borrower to such Lender, together with
interest accrued thereon (but without LIBOR breakage costs), unless Borrower,
within five (5) Business Days after the delivery of such notice and demand,
converts all such Loans into a Loan bearing interest based on the Index Rate
(which conversion shall be without LIBOR breakage costs).
(d) Foreign Lenders. Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower and Agent a properly completed and executed IRS Form 4224 or Form 1001
or other applicable form, certificate or document prescribed by the IRS or the
United States certifying as to such Foreign Lender's entitlement to such
exemption (a "Certificate of Exemption"). Prior to becoming a Lender under this
Agreement and within fifteen (15) days after a reasonable written request of
Agent or Borrower from time to time thereafter, each Foreign Lender that becomes
a Lender under this Agreement shall provide a Certificate of Exemption to
Borrower and Agent. No Person may become a Lender hereunder if such Person is
unable to deliver a Certificate of Exemption. If a Foreign Lender does not
provide a Certificate of Exemption to Agent and Borrower within the time periods
set forth above, Borrower shall withhold taxes from payments to such Foreign
Lender at the applicable statutory rate and Borrower shall not be required to
pay any additional amounts as a result of such withholding; provided, that all
such withholding shall cease upon delivery by such Foreign Lender of a
Certificate of Exemption to Agent and Borrower.
(e) Replacement of Lender in Respect of Increased Costs. Within
fifteen (15) days after receipt by Borrower of written notice and demand from
any Lender or a participant that has purchased a participation from such Lender
(an "Affected Lender") for payment of taxes, additional amounts or increased
costs as provided in Section 1.15 or Section 1.16(a) or (b), Borrower may, at
its option, notify Agent and such Affected Lender of its intention to replace
the Affected Lender as follows: So long as no Default or Event of Default shall
have occurred and be continuing, Borrower, with the consent of Agent, may
obtain, at Borrower's expense, a replacement Lender ("Replacement Lender") for
the Affected Lender, which Replacement Lender must be reasonably satisfactory to
Agent. If Borrower obtains a Replacement Lender within ninety (90) days
following notice of its intention to do so, the Affected Lender must sell and
assign its Loans and Commitments to such Replacement Lender provided that
Borrower reimbursed such Affected Lender for the additional amounts or increased
costs that it is entitled to receive under this Agreement through the date of
such sale and assignment.
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Notwithstanding the foregoing, Borrower shall not have the right to
obtain a Replacement Lender, if the Affected Lender rescinds its demand for
increased costs or additional amounts within fifteen (15) days following its
receipt of Borrower's notice of intention to replace such Affected Lender.
Furthermore, if Borrower gives a notice of intention to replace and does not so
replace such Affected Lender within ninety (90) days thereafter, Borrower's
rights under this Section 1.16(e) shall terminate and Borrower shall promptly
pay all increased costs or additional amounts demanded by such Affected Lender
pursuant to Sections 1.15, 1.16(b) and (c).
1.17 Single Loan. All Loans to Borrower and all of the other
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower secured, until the
Termination Date, by all of its Collateral.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans.
No Lender shall be obligated to make any Loan or incur any Eligible
Trade L/C Obligations or Letter of Credit Obligations on the Closing Date, or to
take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied, in Agent's sole discretion, or waived in writing
by Agent and those Lenders present at the closing on the Closing Date:
(a) Credit Agreement; Loan Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrower, Agent and
Lenders; and Agent shall have received such documents, instruments, agreements
and legal opinions as Agent shall request in connection with the transactions
contemplated by this Agreement and the other Loan Documents, including all those
listed in the Schedule of Documents attached hereto as Schedule F, each in form
and substance satisfactory to Agent.
(b) Repayment of Prior Loans. Agent shall have received a fully
executed original of a pay-off letter satisfactory to Agent confirming that all
intercompany loans, if any, owing to Seller or its Affiliates by Parent or any
Subsidiary of Parent have been paid, discharged or canceled other than the
Subordinated Note. In addition, Agent shall have received evidence satisfactory
to it of the termination of borrowing arrangements with The First National Bank
of Boston ("Bank of Boston"), other than an unsecured overdraft facility
provided by Bank of Boston not to exceed $25,000.
(c) Governmental Approvals. Agent shall have received (i)
satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons including, but not limited to, all
requisite Governmental Authorities, to the execution, delivery and performance
of this Agreement and the other Loan Documents and the consummation of the
Related Transactions or (ii) an officer's certificate in form and substance
satisfactory to Agent affirming that no such consents or approvals are required.
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(d) Working Capital. Newco and its Subsidiaries shall have estimated
net working capital of not less than $85,000,000, subject to purchase accounting
adjustments, including payments of expenses of the Related Transactions and
subject to post-closing gross-up of short-falls by Seller.
(e) Net Borrowing Availability. Borrower's Net Borrowing
Availability plus Newco's, Parent's, Borrower's and the Store Guarantors'
aggregate cash on hand and on deposit shall equal or exceed $28,000,000 after
giving effect to the consummation of the Related Transactions and the payment of
all expenses with respect thereto.
(f) Payment of Fees. Borrower shall have paid the Fees required to be
paid on the Closing Date in the respective amounts specified in Section 1.9
(including without limitation the Fees specified in the GE Capital Fee Letter),
and shall have reimbursed Agent for all fees, costs and expenses of closing to
the extent statements therefor are presented at closing (including fees of
consultants and special loan counsel to Agent presented as of the Closing Date).
(g) Compliance with Laws. Each Credit Party shall be in compliance
in all material respects with all applicable foreign, federal, state and local
laws and regulations, including those specifically referenced in Section 5.5.
(h) Capital Structure: Other Indebtedness. The capital structure of
each Credit Party and the terms and conditions of all Indebtedness of each
Credit Party shall be acceptable to Agent in its sole discretion.
(i) Consummation of Related Transactions. Agent shall have received
fully executed copies of the Acquisition Agreement and each of the other Related
Transactions Documents, each of which shall be in form and substance
satisfactory to Agent and its counsel. The Acquisition and the other Related
Transactions shall have been consummated in accordance with the terms of the
Acquisition Agreement and the other Related Transactions Documents.
(j) Equity Contributions. Third party investors shall have purchased
for $10,000,000 in cash common and preferred stock of Newco from Seller; and
management employees of Newco or the other Loan Parties shall have paid at least
$2,000,000 in cash for the purchase of common stock of Newco.
(k) Subordinated Note. Newco shall have issued the Subordinated Note
in the amount of $55,811,000 to Seller on terms and conditions satisfactory to
Newco and Agent. Agent shall have entered into a subordination agreement with
Seller on mutually satisfactory terms.
(l) Transfers of Assets. On the Closing Date and immediately after
the closing, each Store Guarantor shall have sold by xxxx of sale all of its
Inventory to Borrower and Borrower shall be the owner thereof free and clear of
all Liens other than Liens in favor of Agent and Seller.
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(m) Lease. As of the Closing Date and immediately after the closing,
Bermans shall have entered into a three year lease of the Distribution Center to
Borrower in form and substance satisfactory to Agent in its sole discretion or
shall have sold the Distribution Center to Borrower.
(n) Transaction Expenses. Aggregate costs and expenses incurred in
connection with the Related Transactions shall not exceed $5,000,000.
(o) Consolidation of Closing Stores. As of the Closing Date,
Inventory previously located at any Stores closed more than ten (10) days prior
to the Closing Date shall have been consolidated at Stores that remain open as
of the Closing Date.
(p) Compensation/Management Structure. Agent shall be reasonably
satisfied with Newco's compensation and equity incentive plans for management,
the management structure of Newco and its Subsidiaries, the composition of their
respective boards of directors and their board selection procedures.
(q) Consignment Agreement. Borrower and all of the Store Guarantors
shall have entered into and executed the Consignment Agreement in form and
substance satisfactory to Agent.
(r) Bank Accounts. The Concentration Account in the name of House of
Suede shall have been transferred to Borrower and Borrower shall have
established a funding Disbursement Account in its name.
(s) Borrower shall have been added as a named insured on all
liability and casualty insurance policies maintained by Credit Parties.
2.2 Further Conditions to Each Loan. It shall be a further condition
to the initial and each subsequent Loan and to the incurrence of the initial and
any subsequent Letter of Credit Obligations or Eligible Trade L/C Obligations
that the following statements shall be true on the date of each such advance or
incurrence, as the case may be:
(a) All of each Credit Party's representations and warranties
contained herein or in any of the other Loan Documents shall be true and correct
in all material respects as though made on and as of such date, except to the
extent that any such representation or warranty expressly relates to an earlier
date and except for changes therein expressly permitted or expressly
contemplated by this Agreement.
(b) No event or circumstance having a Material Adverse Effect shall
have occurred since the date hereof.
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(c) No Event of Default shall have occurred and be continuing or
would result from the making of any Loan (or the incurrence of any Letter of
Credit Obligations or Eligible Trade L/C Obligations).
(d) After giving effect to any Revolving Credit Advance or Swing Line
Advance, Net Borrowing Availability shall be greater than zero. After giving
effect to the incurrence of any Letter of Credit Obligations or Eligible Trade
L/C Obligations, L/C Availability shall be greater than zero.
(e) In the case of a Revolving Credit Advance, only, Borrower and the
Store Guarantors shall have cash and cash equivalents on hand or on deposit of
less than $7,000,000.
The request and acceptance by Borrower of the proceeds of any Loan or the
incurrence of any Letter of Credit Obligations or Eligible Trade L/C Obligations
shall be deemed to constitute, as of the date of such request or acceptance, (i)
a representation and warranty by Borrower that the conditions in this Section
2.2 have been satisfied and (ii) a reaffirmation by Borrower of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations and Eligible Trade L/C Obligations, the Loan Parties, jointly and
severally, make the following representations and warranties to Agent and each
Lender, each and all of which shall survive the execution and delivery of this
Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a)
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation; (b) is duly qualified to conduct
business and is in good standing in each other jurisdiction where its ownership
or lease of property or the conduct of its business requires such qualification
except where the failure to so qualify would not have a Material Adverse Effect;
(c) has the requisite corporate power and authority and the legal right to own,
pledge, mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease and to conduct its business as now, heretofore
and proposed to be conducted; (d) has all material licenses, permits, consents
or approvals from or by, and has made all filings with, and has given all
notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (e) is in compliance with
its charter and by-laws; and (f) is in compliance with all applicable provisions
of law to the extent required by Section 5.5.
3.2 Executive Offices; FEIN. As of the Closing Date, the current
location of each Credit Party's chief executive office and principal place of
business is set forth in Disclosure Schedule 3.2. In addition, the Disclosure
Schedule 3.2 lists the federal employer identification number of each Credit
Party.
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3.3 Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's corporate power; (b) have been duly authorized by all
necessary or proper corporate and shareholder action; (c) do not contravene any
provision of such Person's charter or bylaws; (d) do not violate any law or
regulation, or any order or decree of any court or Governmental Authority; (e)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate any performance required by, any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which such
Person is a party or by which such Person or any of its property is bound; (f)
do not result in the creation or imposition of any Lien upon any of the property
of such Person other than those in favor of Agent, on behalf of itself and
Lenders, pursuant to the Loan Documents; and (g) do not require the consent or
approval of any Governmental Authority or any other Person, except those
referred to in Section 2.1(c), all of which will have been duly obtained, made
or complied with prior to the Closing Date. On or prior to the Closing Date,
each of the Loan Documents shall have been duly executed and delivered by each
Credit Party thereto and each such Loan Document shall then constitute a legal,
valid and binding obligation of such Credit Party enforceable against it in
accordance with its terms.
3.4 Financial Statements and Projections. Except for the
Projections, all Financial Statements concerning Parent and its Subsidiaries
which are referenced below have been prepared in accordance with GAAP
consistently applied throughout the periods covered (except as disclosed therein
and except, with respect to unaudited Financial Statements, for the absence of
footnotes and normal year-end audit adjustments) and present fairly in all
material respects the financial condition of the Persons covered thereby as at
the dates thereof and the results of their operations for the periods then
ended.
(a) The following Financial Statements attached hereto as Disclosure
Schedule 3.4(A) have been delivered on the date hereof:
(i) The audited consolidated balance sheets at December 31, 1994
and 1995 and the related statements of income and cash flows of First
Intermediate Parent and its Subsidiaries for the Fiscal Years then
ended, certified by KPMG Peat Marwick, LLP.
(ii) The unaudited consolidated balance sheet at March 31, 1996
and the related consolidated statement of income and cash flows of
Parent and its Subsidiaries for the Fiscal Quarter then ended.
(b) Pro Forma. The Pro Forma delivered on the date hereof and
attached hereto as Disclosure Schedule 3.4(B) was prepared by Borrower giving
pro forma effect to the Related Transactions, was based on the unaudited
consolidated balance sheets of Parent and its Subsidiaries dated March 31, 1996,
and was prepared in accordance with GAAP, with only such adjustments thereto as
would be required in accordance with GAAP.
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(c) Projections. The Projections delivered on the date hereof and
attached hereto as Disclosure Schedule 3.4(C) have been prepared by Parent in
light of the past operations of its Subsidiaries' businesses, but including
future payments of known contingent liabilities, and reflect projections for the
three year period beginning on January 1, 1996 on a month by month basis. The
Projections are based upon estimates and assumptions stated therein, all of
which Parent believes to be reasonable and fair in light of current conditions
and current facts known to Parent and, as of the Closing Date, reflects Parent's
good faith and reasonable estimates of the future financial performance of
Parent and its Subsidiaries and of the other information projected therein for
the period set forth therein.
3.5 Material Adverse Effect. Between December 31, 1995 and the
Closing Date, (a) except for the Related Transactions, no Credit Party has
incurred any obligations, contingent or non-contingent liabilities, liabilities
for Charges, long-term leases or unusual forward or long-term commitments which
are not reflected in the Pro Forma and which, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, (b) except for the
Related Transaction Documents, no contract, lease or other agreement or
instrument has been entered into by any Credit Party or has become binding upon
any Credit Party's assets and no law or regulation applicable to any Credit
Party has been adopted which has had or could reasonably be expected to have a
Material Adverse Effect, and (c) no Credit Party is in default and to the best
of the Credit Parties' knowledge no third party is in default under any material
contract, lease or other agreement or instrument, which alone or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
Since December 31, 1995, no event has occurred, which alone or
together with other events could reasonably be expected to have a Material
Adverse Effect.
3.6 Ownership of Property; Liens. (a) As of the Closing Date, the
real estate ("Real Estate") listed on Disclosure Schedule 3.6 constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned real
estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule 3.6. Disclosure Schedule 3.6
further describes any Real Estate with respect to which any Credit Party is a
lessor, sublessor or assignor as of the Closing Date. Each Credit Party also has
good and marketable title to, or valid leasehold interests in, all of its
personal properties and assets. As of the Closing Date, none of the properties
and assets of any Credit Party are subject to any Liens, except Permitted
Encumbrances. Disclosure Schedule 3.6 also describes any purchase options,
rights of first refusal or other similar contractual rights pertaining to any
Real Estate. As of the Closing Date, no portion of any Credit Party's Real
Estate has suffered any material damage by fire or other casualty loss or a
Release which has not heretofore been completely repaired and restored to its
original condition or otherwise remedied. As of the Closing Date, all permits
required to have been issued or appropriate to enable the Real Estate to be
lawfully occupied (other than municipal store licenses) and used for all of the
purposes for which they are currently occupied and used have been lawfully
issued and are in full force and effect.
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3.7 Labor Matters. As of the Closing Date (a) no strikes or other
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party in all material respects comply with the Fair Labor
Standards Act and each other federal, state, local or foreign law applicable to
such matter; (c) all material payments due from any Credit Party for employee
health and welfare insurance have been paid or accrued as a liability on the
books of such Credit Party; (d) except as set forth in Disclosure Schedule 3.7,
no Credit Party is a party to or bound by any collective bargaining agreement,
management agreement, consulting agreement or any employment agreement providing
for payments in excess of $100,000 annually (and true and complete copies of any
agreements described on Disclosure Schedule 3.7 have been delivered to Agent);
(e) there is no organizing activity involving any Credit Party pending or, to
any Credit Party's knowledge, threatened by any labor union or group of
employees; (f) there are no representation proceedings pending or, to any Credit
Party's knowledge, threatened with the National Labor Relations Board, and no
labor organization or group of employees of any Credit Party has made a pending
demand for recognition; and (g) except as set forth in Disclosure Schedule 3.7,
there are no complaints or charges against any Credit Party pending or
threatened to be filed with any Governmental Authority or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment or
termination of employment by any Credit Party of any employee, other than
routine, non-material claims by individual employees or former employees.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule 3.8, no Credit Party
has any Subsidiaries, is engaged in any joint venture or partnership with any
other Person, or is an Affiliate of any other Person. All of the issued and
outstanding Stock of each Credit Party is owned by each of the stockholders and
in the amounts set forth on Disclosure Schedule 3.8. There are no outstanding
rights to purchase, options, warrants or similar rights or agreements pursuant
to which any Credit Party may be required to issue, sell, repurchase or redeem
any of its Stock or other equity securities or any Stock or other equity
securities of its Subsidiaries. All outstanding Indebtedness of each Credit
Party as of the Closing Date is described in Section 6.3 (including Disclosure
Schedule 6.3).
3.9 Government Regulation. No Credit Party is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940 as amended. No Credit Party is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, or any
other federal or state statute that restricts or limits its ability to incur
Indebtedness or to perform its obligations hereunder. The making of the Loans by
Lenders to Borrower, the incurrence of the Letter of Credit Obligations and the
Eligible Trade L/C Obligations on behalf of Borrower, the application of the
proceeds thereof and repayment thereof and the consummation of the Related
Transactions will not violate any provision of any such statute or any rule,
regulation or order issued by the Securities and Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose
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of "purchasing" or "carrying" any "margin security" as such terms are defined in
Regulation U or G of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") as now and from time to time hereafter in effect (such
securities being referred to herein as "Margin Stock"). No Credit Party owns any
Margin Stock, and none of the proceeds of the Loans or other extensions of
credit under this Agreement will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of reducing
or retiring any Indebtedness which was originally incurred to purchase or carry
any Margin Stock or for any other purpose which might cause any of the Loans or
other extensions of credit under this Agreement to be considered a "purpose
credit" within the meaning of Regulation G, T, U or X of the Federal Reserve
Board. No Credit Party will take or permit to be taken any action which might
cause any Loan Document to violate any regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including, but
not limited to, information returns, required by any Governmental Authority to
be filed by any Credit Party have been filed with the appropriate Governmental
Authority and all Charges have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof (or
any such fine, penalty, interest, late charge or loss has been paid), excluding
Charges or other amounts being contested in accordance with Section 5.2(b) or
for which Seller is solely liable. Proper and accurate amounts have been
withheld by each Credit Party from its respective employees for all periods in
full and complete compliance with all applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
Governmental Authorities. Disclosure Schedule 3.11 sets forth as of the Closing
Date those taxable years for which any Credit Party's tax returns are currently
being audited by the IRS or any other applicable Governmental Authority and any
assessments or threatened assessments in connection with such audit, or
otherwise currently outstanding. Except as described on Disclosure Schedule
3.11, no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
None of the Credit Parties and their respective predecessors are liable for any
Charges: (a) under any agreement (including, without limitation, any tax sharing
agreements) or (b) to the best of each Credit Party's knowledge, as a
transferee. As of the Closing Date, no Credit Party has agreed or been requested
to make any adjustment under IRC Section 481(a), by reason of a change in
accounting method or otherwise, which would have a Material Adverse Effect.
3.12 ERISA. (a) Disclosure Schedule 3.12 lists and separately
identifies all Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare
Plans. Copies of all such listed Plans, together with a copy of the latest form
5500 for each such Plan, have been delivered to Agent. Each Qualified Plan has
been determined by the IRS to qualify under Section 401 of the IRC (or will have
been so determined within the applicable remedial amendment period), and the
trusts created thereunder have been (or will be) determined to be exempt from
tax under the provisions of Section 501 of the IRC, and nothing has occurred
which would cause the loss of such qualification or tax-exempt status. Each Plan
is in compliance in all material respects with the applicable provisions of
ERISA and the IRC, including the filing of reports required under the IRC or
ERISA. No Credit Party or ERISA Affiliate has failed to make any material
contribution
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or pay any material amount due as required by either Section 412 of the IRC or
Section 302 of ERISA or the terms of any such Plan. No Credit Party or ERISA
Affiliate has engaged in a prohibited transaction, as defined in Section 4975 of
the IRC, in connection with any Plan, which would subject any Credit Party to a
material tax on prohibited transactions imposed by Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule 3.12: (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) no material ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
and (iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects
to incur any material liability as a result of a complete or partial withdrawal
from a Multiemployer Plan.
3.13 No Litigation. No action, claim or proceeding is now pending or,
to the knowledge of any Credit Party, threatened against any Credit Party,
before any court, board, commission, agency or instrumentality of any federal,
state, local or foreign government or of any agency or subdivision thereof, or
before any arbitrator or panel of arbitrators (collectively, "Litigation"), (a)
which challenges any Credit Party's right or power to enter into or perform any
of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) which is reasonably likely to be determined adversely to any Credit Party
and which, if so determined, would have a Material Adverse Effect. Except as set
forth on Disclosure Schedule 3.13, as of the Closing Date there is no Litigation
pending or threatened which seeks damages in excess of $100,000 or injunctive
relief.
3.14 Brokers. No broker or finder acting on behalf of any Credit
Party brought about the obtaining, making or closing of the Loans or the
transactions contemplated by the Related Transactions Documents, except CS First
Boston and Crown Financial Corporation. No Credit Party has any obligation to
any Person in respect of any finder's or brokerage fees in connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit Party
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule 3.15 hereto. Each Credit Party conducts and will continue to conduct
its business and affairs without infringement of or interference with any
Intellectual Property of any other Person.
3.16 Full Disclosure. No information contained in this Agreement, any
of the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other reports from time to time delivered hereunder or any written
statement furnished by any Material
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Credit Party with respect to any Credit Party to Agent or any Lender pursuant to
the terms of this Agreement contains any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. The Liens granted to Agent, on behalf of itself and
Lenders, pursuant to the Collateral Documents will at all times be fully
perfected first priority Liens in and to the Collateral described therein,
subject only to Permitted Encumbrances with respect to the Collateral.
3.17 Hazardous Materials. (a) Except as set forth in Disclosure
Schedule 3.17, as of the Closing Date, the Real Estate is free of contamination
from any Hazardous Material. In addition, Disclosure Schedule 3.17 discloses
material environmental liabilities of any Credit Party (i) that could result in
Environmental Liabilities and Costs, or (ii) associated with the Real Estate. No
Credit Party has caused or suffered to occur any Release with respect to any
Hazardous Material at, under, above or upon any of its Real Estate. No Credit
Party is involved in operations that are likely to result in the imposition of
any Lien on its assets or any material liability under any Environmental Law,
and no Credit Party has permitted any tenant or occupant of such premises to
engage in any such operations. The Credit Parties have provided to Agent copies
of all existing environmental reports, reviews and audits and all written
information pertaining to actual or potential Environmental Liabilities and
Costs, in each case relating to any Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that Agent (i)
is not now, and has not ever been, in control of any of the Real Estate or any
Credit Party's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to influence any Credit Party's
conduct with respect to the ownership, operation or management of any of its
Real Estate.
3.18 Insurance. Disclosure Schedule 3.18 lists all insurance policies
of any nature maintained, as of the Closing Date, for current occurrences by
each Credit Party, as well as a summary of the terms of each such policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule 3.19
lists all banks and other financial institutions at which any Credit Party
maintains deposits and/or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number.
3.20 Government Contracts. Except as set forth in Disclosure Schedule
3.20, as of the Closing Date, no Credit Party is a party to any contract or
agreement with the federal government and no Credit Party's Accounts are subject
to the Federal Assignment of Claims Act (31 U.S.C. Section 3727).
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3.21 Landlords and Trade Relations. As of the Closing Date, there
exists no actual or threatened termination or cancellation of, or any material
adverse modification or change in (a) the Store leases between any Landlord and
any Store Guarantor as to any Store with an annual positive Contribution greater
than $50,000 or (b) the business relationship of any Credit Party with any
supplier material to its operations.
3.22 Agreements and Other Documents. As of the Closing Date, each
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which it is subject and each of which are listed on Disclosure
Schedule 3.22: (a) manufacturing agreements or purchase agreements not
terminable by such Credit Party within ninety (90) days following written notice
issued by such Credit Party and which provide for payments in excess of $250,000
per year; (b) any lease of Equipment having a remaining term of one year or
longer and requiring aggregate rental and other payments in excess of $100,000
per annum; (c) material licenses and permits necessary for the conduct of such
Credit Party's business (other than municipal Store licenses); (d) instruments
or documents evidencing Indebtedness of such Credit Party and any security
interest granted by such Credit Party with respect thereto; and (e) instruments
and agreements evidencing the issuance of any equity securities, warrants,
rights or options to purchase equity securities of such Credit Party other than
us delivered in accordance with Schedule F.
3.23 Solvency. Both before and after giving effect to (a) the
Revolving Loan, Eligible Trade L/C Obligations and Letter of Credit Obligations
to be made or incurred on the Closing Date, (b) the disbursement of the proceeds
of such Loans pursuant to the instructions of Borrower, (c) the consummation of
the Related Transactions and (d) the payment and accrual of all transaction
costs in connection with the foregoing, each Material Credit Party is Solvent.
3.24 Acquisition Agreement As of the Closing Date, Borrower has
delivered to Agent a complete and correct copy of the Acquisition Agreement
(including all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in connection
therewith). No Credit Party and no other Person party thereto is in default in
the performance or compliance with any provisions thereof. The Acquisition
Agreement complies with, and the Acquisition has been consummated in accordance
with, all applicable laws. The Acquisition Agreement is in full force and effect
as of the Closing Date, and has not been terminated, rescinded or withdrawn. All
requisite approvals by Governmental Authorities having jurisdiction over Seller,
any Credit Party and other Persons referenced therein, with respect to the
transactions contemplated by the Acquisition Agreement, have been obtained, and
no such approvals impose any conditions to the consummation of the transactions
contemplated by the Acquisition Agreement or to the conduct by any Credit Party
of its business thereafter. To the best of each Credit Party's knowledge, none
of the Seller's representations or warranties in the Acquisition Agreement
contain any untrue statement of a material fact or omit any fact necessary to
make the facts therein not misleading. Each of the representations and
warranties given by each applicable Credit Party in the Acquisition Agreement is
true and correct in all material respects. Notwithstanding anything contained in
the Acquisition Agreement to the contrary, such representations and warranties
of the Credit Parties are incorporated into this
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Agreement by this Section 3.24 and shall, solely for purposes of this Agreement
and the benefit of the Agent and the Lenders, survive the consummation of the
Acquisition.
3.25 Subordinated Debt. As of the Closing Date, Borrower has
delivered to Agent a complete and correct copy of the Subordinated Note
(including all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in connection
therewith). Newco has the corporate power and authority to incur the
Indebtedness evidenced by the Subordinated Note. The subordination provisions
applicable to the Subordinated Note are enforceable against the holders of the
Subordinated Note by the Agent and Lenders. All Obligations, including the
Obligations to pay principal of and interest on the Loans and to reimburse
Eligible Trade L/C Obligations and Letter of Credit Obligations, constitute
senior Indebtedness entitled to the benefits of the subordination provisions
contained in the Subordinated Notes. The principal of and interest on the Notes,
all Eligible Trade L/C Obligations, Letter of Credit Obligations and all other
Obligations will constitute "senior debt" as that or any similar term is or may
be used in any other instrument evidencing or applicable to any other
Subordinated Debt. Borrower acknowledges that the Agent and each Lender are
entering into this Agreement and are extending the Commitments in reliance upon
the subordination provisions applicable to the Subordinated Note and this
Section 3.25.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. (a) Borrower hereby agrees that from and
after the Closing Date and until the Termination Date, it shall deliver or cause
to be delivered to Agent and/or Lenders, as required, Financial Statements,
notices, Projections and other information at the times, to the Persons and in
the manner set forth in Schedule G.
(b) Borrower hereby agrees that from and after the Closing Date and
until the Termination Date, it shall deliver or cause to be delivered to Agent
and/or Lenders, as required, the various Collateral Reports (including, without
limitation, Borrowing Base Certificates in the form of Exhibit 4.1(b)) at the
times, to the Persons and in the manner set forth in Schedule H.
4.2 Communication with Accountants. Parent authorizes Agent to
communicate directly with its independent certified public accountants,
including KPMG Peat Marwick, LLP and authorizes and shall instruct those
accountants and advisors to disclose and make available to Agent any and all
Financial Statements and other supporting financial documents, schedules and
information relating to any Credit Party (including, without limitation, copies
of any issued management letters) with respect to the business, financial
condition and other affairs of any Credit Party. On or before the Closing Date,
the Credit Parties shall obtain a letter from such accountants, on which the
Agent shall be designated as a recipient, acknowledging that Lenders may rely
upon such certification.
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5. AFFIRMATIVE COVENANTS
Each Loan Party jointly and severally agrees that it shall and shall
cause all Credit Parties from and after the date hereof and until the
Termination Date to do the following:
5.1 Maintenance of Existence and Conduct of Business. Each Credit
Party shall: (a) do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and its rights and
franchises (except for mergers, sales, dispositions and other transactions
permitted in Section 6 hereof and liquidations of Store Guarantors that are not
Material Credit Parties following such dispositions and transactions); (b)
continue to conduct its business substantially as now conducted or as otherwise
permitted hereunder; (c) except as permitted in Section 6.8 hereof, at all times
maintain, preserve and protect all of its assets and properties used or useful
in the conduct of its business, and keep the same in good repair, working order
and condition (taking into consideration ordinary wear and tear) and from time
to time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices; and
(d) transact business only in such corporate and trade names as are set forth in
Disclosure Schedule 5.1 and as otherwise disclosed to Agent in accordance with
the Loan Documents.
5.2 Payment of Obligations. (a) Subject to Section 5.2(b), each
Credit Party shall pay and discharge or cause to be paid and discharged promptly
all Charges payable by it, including (A) Charges imposed upon it, its income and
profits, or any of its property (real, personal or mixed) and all Charges with
respect to tax, social security and unemployment withholding with respect to its
employees, and (B) lawful claims for labor, materials, supplies and services or
otherwise, before any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges or claims described in
Section 5.2(a); provided, that (i) the imposition of such Charge does not
otherwise constitute an Event of Default under Section 8.1 hereof, (ii) adequate
reserves with respect to such contest are maintained on the books of such Credit
Party, in accordance with GAAP, (iii) such contest is maintained and prosecuted
continuously and with diligence, (iv) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest, (v) no Lien shall be filed or
imposed to secure payment of such Charges or claims which would, with the
passage of time or otherwise, have priority over Agent's Liens with respect to
the Collateral, (vi) such Credit Party shall promptly pay or discharge such
contested Charges or claims and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Agent evidence acceptable to Agent of
such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Credit Party or the conditions set forth in this
Section 5.2(b) are no longer met, and (vii) Agent has not advised Borrower in
writing that Agent reasonably believes that nonpayment or nondischarge thereof
could have or result in a Material Adverse Effect.
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5.3 Books and Records. Each Credit Party shall keep adequate books
and records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as Disclosure Schedule
3.4(A).
5.4 Insurance; Damage to or Destruction of Collateral. (a) The Credit
Parties shall, at their sole cost and expense, maintain the policies of
insurance described on Disclosure Schedule 3.18 or substantially equivalent
coverage in form and with insurers reasonably recognized as adequate by Agent.
If Borrower at any time or times hereafter shall fail to obtain or maintain any
of the policies of insurance required above or to pay all premiums relating
thereto, Agent may at any time or times thereafter obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which Agent deems reasonably advisable. Agent shall have no
obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default or
Event of Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
attorneys' fees, court costs and other charges related thereto, shall be payable
on demand by Borrower to Agent and shall be additional Obligations hereunder
secured by the Collateral.
(b) Agent reserves the right at any time upon any material change in
any Credit Party's risk profile (including, without limitation, any change in
the product mix maintained by any Credit Party or any laws affecting the
potential liability of such Credit Party) to require additional forms and limits
of insurance to, in Agent's opinion, adequately protect both Agent's and
Lender's interests in all or any portion of the Collateral and to ensure that
each Credit Party is protected by insurance in amounts and with coverage
customary for its industry. If requested by Agent, each Credit Party shall
deliver to Agent from time to time a report of a reputable insurance broker,
satisfactory to Agent, with respect to its insurance policies.
(c) Borrower shall deliver or cause to be delivered to Agent, in form
and substance satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and Lenders,
as loss payee, and (ii) all general liability and other liability policies
naming Agent, on behalf of itself and Lenders, as additional insured. Each Loan
Party irrevocably makes, constitutes and appoints Agent (and all officers,
employees or agents designated by Agent) as its true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" policies of insurance, endorsing the name of each such Credit
Party on any check or other item of payment for the proceeds of such "All Risk"
policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance; provided that so long as no
Event of Default shall have occurred and be continuing, Borrower shall have the
right to participate in any such settlements and adjustments. The Credit Parties
that are signatories hereto shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $250,000 or more, whether or not
covered by insurance. Agent is hereby authorized to collect all insurance
proceeds relating to the Collateral. After deducting from such proceeds the
expenses, if any, incurred by Agent in the collection or handling thereof, Agent
may, at its option, apply such proceeds to the reduction of
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the Obligations in accordance with Section 1.3(d), or permit or require Borrower
to use such money, or any part thereof, to replace the Collateral in a diligent
and expeditious manner. Notwithstanding the foregoing, if the casualty giving
rise to such insurance proceeds would not reasonably be expected to have a
Material Adverse Effect and such insurance proceeds do not exceed $1,000,000 in
the aggregate, Agent shall permit Borrower to replace the Collateral so long as
no Event of Default shall have occurred and be continuing at the time of any
requested release of funds; provided that, if Borrower shall not have completed
the replacement of the Collateral within 60 days of such casualty, Agent may
apply such insurance proceeds to the Obligations in accordance with Section
1.3(d). Except as otherwise provided in this Section, all insurance proceeds
which are to be made available to Borrower to replace the Collateral shall first
be applied by Agent in accordance with Section 1.3(d) and any excess shall be
held by Borrower in a cash collateral account (which application in accordance
with Section 1.3(d) shall not result in a permanent reduction of the
Commitments) and upon such application in accordance with Section 1.3(d), Agent
shall establish a Reserve against the Borrowing Base in an amount equal to the
amount of such proceeds so applied. Thereafter, such funds shall be made
available to Borrower to provide funds to replace the Collateral as follows: (i)
Borrower shall request a Swing Line Advance or Revolving Credit Advance be made
to Borrower in the amount requested to be released; (ii) so long as the
conditions set forth in Section 2.2 have been met, Agent shall make such Swing
Line Advance or Revolving Credit Advance; and (iii) the Reserve established with
respect to such insurance proceeds shall be reduced by the amount of such Swing
Line Advance or Revolving Credit Advance.
5.5 Compliance with Laws. Each Credit Party shall comply with all
federal, state and local laws and regulations applicable to it, including those
relating to ERISA, customs import and export laws and labor matters and
Environmental Laws, except to the extent that the failure to so comply would not
have a Material Adverse Effect.
5.6 Supplemental Disclosure. From time to time as may be requested by
Agent, but in any event at least on each anniversary of the Closing Date, the
Credit Parties shall supplement each Disclosure Schedule hereto, or any
representation herein or in any other Loan Document, with respect to any matter
hereafter arising which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such Disclosure
Schedule or as an exception to such representation or which is necessary to
correct any information in such Disclosure Schedule or representation which has
been rendered inaccurate thereby (and, in the case of any supplements to any
Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to
show the changes made therein); provided, however, that Disclosure Schedules
pertaining to representations and warranties that relate only to the Closing
Date need not be updated; provided, further, that no such supplement to any such
Disclosure Schedule or representation shall be or be deemed a waiver of any
Default or Event of Default resulting from the matters disclosed therein, except
as consented to by Agent and Requisite Lenders in writing.
5.7 Employee Plans. Each Credit Party shall promptly notify Agent of
(a) any violation of ERISA or the IRC with respect to any Plan which results in
a material increase in any
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Credit Party's obligations with respect thereto; (b) the occurrence or likely
occurrence of an ERISA Event resulting in a material increase in Borrower's
fixed liabilities under ERISA; (c) the filing for a funding waiver under Section
412 of the IRC with respect to any Plan; (d) the occurrence of an "accumulated
funding deficiency" under Section 412 of the IRC with respect to any Plan; (e) a
material increase in the Unfunded Pension Liability of any Title IV Plan or a
material increase in the aggregate Unfunded Pension Liability of all Title IV
Plans, but only taking into account Title IV Plans with Unfunded Pension
Liability at the time of reference; and (f) a material increase in any Credit
Party's obligations under any Retiree Welfare Plan. For purposes of clauses (e)
and (f) above and Sections 6.9(d) and (e), a "material increase" shall mean the
lesser of (i) 50% or (ii) $500,000, in each case measured from the Closing Date.
In addition, the Credit Parties shall promptly furnish to the Agent copies of
the annual form 5500 filed for each Title IV Plan.
5.8 Environmental Matters. Each Credit Party shall (a) notify Agent
promptly after such Credit Party becomes aware of any Release upon or at any
Real Estate which is reasonably likely to result in Environmental Liabilities
and Costs in excess of $100,000, and (b) promptly forward to Agent a copy of any
order, notice, permit, application, or any communication or report received by
such Credit Party in connection with any such Release, its compliance with
Environmental Laws and Environmental Permits or any other matter relating to the
Environmental Laws that may affect such premises or such Credit Party, in each
case whether or not the Environmental Protection Agency, any other federal
agency or any state, local or foreign environmental agency has taken or
threatened any action in connection with any such Release or other matter. So
long as any Event of Default shall have occurred and be continuing, Borrower
shall permit Agent or its representatives to have access to all premises owned
or occupied by it for the purpose of conducting such environmental audits and
testing as Agent deems appropriate, including phase 2 environmental testing.
Borrower shall reimburse Agent for the costs of such audits and tests and the
same will constitute a part of the Obligations secured hereunder.
5.9 Landlords' Agreements, and Bailee Letters. Borrower shall obtain
a landlord's agreement, or bailee letter, from Bermans (if Borrower has not
acquired the Distribution Center from Bermans) with respect to the Distribution
Center and from each other lessor of a warehouse or bailee in possession of
collateral property or with respect to any other warehouse where Collateral is
located. After the Closing Date, no warehouse space shall be leased or acquired
by any Credit Party, unless and until a landlord agreement or bailee letter, as
appropriate, shall first have been obtained with respect to such location.
Although the Credit Parties are not required to obtain landlord waivers as to
Store locations, if an Event of Default shall have occurred and be continuing,
Agent may impose a Reserve against Borrowing Availability equal to one month's
rent as to all Store locations and if any Store Guarantor shall default in the
payment of rent under its Store Lease, Agent may impose a Reserve against
Borrowing Availability in the amount of those defaulted rent obligations (which
may exceed one month's rent). All such landlord and bailee letters shall be in
form and substance satisfactory to Agent. Each Credit Party shall timely and
fully pay and perform its obligations under all leases
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and other agreements with respect to each leased location or public warehouse
where any Collateral is or may be located.
5.10 Ownership of Assets. So long as this Agreement shall remain in
effect, Borrower shall own all Inventory held for sale by each Store Guarantor.
No Store Guarantor shall execute any agreement or take any action inconsistent
with the foregoing.
5.11 Additional Pledges. Within one-hundred eighty (180) days after
the Closing Date, the Credit Parties signatory hereto shall pledge or cause to
be pledged to Agent for the benefit of Lenders the Stock of the Store Guarantors
not pledged to Agent as of the Closing Date, on terms reasonably satisfactory to
Agent.
6. NEGATIVE COVENANTS
The Loan Parties jointly and severally covenant and agree that without
the prior written consent of Agent and the Requisite Lenders, from and after the
date hereof until the Termination Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or capital stock of, or otherwise combine with or acquire, any
Person, except (i) one or more Store Guarantors may be merged with any other
Store Guarantor or Parent so long as Parent is the survivor in any merger
involving Parent; (ii) cash and financial assets may be transferred among the
Loan Parties; provided that such financial assets shall be subject to Control
Letters and cash shall be subject to blocked account agreements in favor of
Agent; (iii) the Stock or fixed assets, Trademarks and Trademark Licenses of
Store Guarantors may be transferred to other Store Guarantors or to Parent,
Borrower or Newco; (iv) the Credit Parties may form new wholly-owned domestic
Subsidiaries to operate new Stores; provided that (x) the aggregate initial cash
investment in each new domestic Subsidiary in the form of equity shall not
exceed $100,000 and (y) the Credit Parties and each new domestic Subsidiary
shall execute and deliver to Agent forms of the Loan Documents executed by or
with respect to the Loan Parties as of the Closing Date; and (v) the Credit
Parties may form new Foreign Subsidiaries after the Closing Date provided that
the aggregate equity contributions with respect to all such Foreign Subsidiaries
shall not exceed $250,000.
6.2 Investments; Loans and Advances. Except as otherwise expressly
permitted by this Section 6, no Credit Party shall make any investment in, or
make or accrue loans or advances of money to, any Person, through the direct or
indirect lending of money, holding of securities or otherwise, except that (a)
First Intermediate Parent, Second Intermediate Parent and Borrower may, subject
to Control Letters satisfactory to Agent (in the case of investments
constituting "financial assets" purchased through or held by a "securities
intermediary" as such terms are defined in the Code), make investments in (i)
marketable direct obligations issued or unconditionally guaranteed by the United
States of America or any agency thereof maturing within one year from the date
of acquisition thereof, (ii) commercial paper maturing no more than
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one year from the date of creation thereof and having an investment rating of
A-2 or P-2 or better from either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc., (iii) time deposits, demand deposits and certificates
of deposit, maturing no more than one year from the date of creation thereof,
issued by commercial banks incorporated under the laws of the United States of
America, each having combined capital, surplus and undivided profits of not less
than $300,000,000 and having a senior secured rating of "A" or better by a
nationally recognized rating agency (an "A Bank"), (iv) time deposits, maturing
no more than 30 days from the date of creation thereof with an A Bank; and (v)
overnight repurchase obligations issued by an A Bank; and (b) each Credit Party
may (i) maintain its existing investments in its Subsidiaries as of the Closing
Date, (ii) make unlimited investments in Borrower, (iii) make investments in new
Subsidiaries in accordance with Section 6.1, (iv) upon prior written notice to
Agent, make equity investments in Store Guarantors necessary to maintain them as
Solvent in an aggregate amount not to exceed $1,000,000 and (v) make other
investments not exceeding $100,000 in the aggregate at any time outstanding. If
any bank or issuer refuses to enter into a Control Letter with Agent regarding
such investments, Borrower shall deposit the same with a brokerage or other
intermediary that will enter into a Control Letter agreement.
6.3 Indebtedness. No Credit Party shall create, incur, assume or
permit to exist any Indebtedness, except (a) Indebtedness secured by Permitted
Encumbrances, (b) the Loans and the other Obligations, (c) reimbursement
obligations owed by Borrower to the L/C Issuer with respect to Letters of Credit
and Eligible Trade L/Cs, (d) the Subordinated Note, (e) deferred taxes, (f)
unfunded pension fund and other employee benefit plan obligations and
liabilities to the extent they are permitted to remain unfunded under applicable
law, (g) existing Indebtedness set forth in Disclosure Schedule 6.3 and
refinancings thereof or amendments or modifications thereto on terms and
conditions no less favorable to any Credit Party, Agent or any Lender, as
determined by Agent, than the terms of the Indebtedness being refinanced,
amended or modified, (h) intercompany loans among the Loan Parties for operating
expenses incurred in the ordinary course of business, (i) intercompany loans by
Borrower, First Intermediate Parent or Second Intermediate Parent in the
ordinary course of business, to Store Guarantors and intercompany loans by Store
Guarantors to Borrower, First Intermediate Parent or Second Intermediate Parent
in the ordinary course of business, (j) intercompany loans to Borrower's three
Foreign Subsidiaries existing as of the Closing Date not to exceed $500,000 in
the aggregate and intercompany loans to Foreign Subsidiaries formed after the
Closing Date not to exceed $1,250,000 in the aggregate; provided that at the
time any such intercompany loan is made to a Foreign Subsidiary no Event of
Default shall have occurred and be continuing or would result after giving
effect thereto and Borrower shall have Borrowing Availability of at least
$1,000,000 after giving effect thereto, and (k) an unsecured $25,000 overdraft
line from Bank of Boston for the Foreign Subsidiaries.
6.4 Employee Loans and Affiliate Transactions.
(a) No Credit Party shall enter into or be a party to any transaction
with any other Credit Party or any Affiliate thereof except in the ordinary
course of and pursuant to the reasonable requirements of such Credit Party's
business and upon fair and reasonable terms that
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are no less favorable to such Credit Party than would be obtained in a
comparable arm's length transaction with a Person not an Affiliate of such
Credit Party, except intercompany loans permitted in clauses (h) and (i) of
Section 6.3 and the Consignment Agreement. In addition, if any such transaction
or series of related transactions involves payments in excess of $1,000,000 in
the aggregate, the terms of these transactions must be disclosed in advance to
Agent (which disclosure may be in the form of a request for issuance of an
Eligible Trade L/C). All such transactions existing as of the date hereof are
described on Disclosure Schedule 6.4(a).
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to their
respective employees on an arm's-length basis in the ordinary course of business
consistent with past practices for travel expenses, relocation costs and similar
purposes up to a maximum of $100,000 to any employee and up to a maximum of
$500,000 in the aggregate at any one time outstanding.
(c) No Credit Party shall increase the aggregate compensation of the
ten most highly compensated employees of the Credit Parties, taken as a whole
(excluding the Credit Parties' target bonus program), by more than 10% per annum
in excess of the current compensation level for those employees (expressed as an
aggregate dollar amount) as set forth in Disclosure Schedule 6.4(c).
6.5 Capital Structure and Business. No Credit Party shall (a) make
any changes in any of its business objectives, purposes or operations which
could in any way adversely affect the repayment of the Loans or any of the other
Obligations or could have or result in a Material Adverse Effect, (b) make any
change in its capital structure as described on Disclosure Schedule 3.8
(including the issuance of any shares of Stock, warrants or other securities
convertible into Stock or any revision of the terms of its outstanding Stock),
or (c) amend its charter or bylaws in a manner which would adversely affect the
Agent or Lenders or such Credit Party's duty or ability to repay the
Obligations. No Credit Party shall engage in any business other than the
businesses currently engaged in by it or businesses reasonably related thereto.
6.6 Guaranteed Indebtedness. No Credit Party shall incur any
Guaranteed Indebtedness except (a) by endorsement of instruments or items of
payment for deposit to the general account of any Credit Party, (b) for
Guaranteed Indebtedness incurred for the benefit of any other Credit Party
consisting of payments under the Store leases or if the primary obligation is
otherwise expressly permitted by this Agreement, and (c) a guaranty of the
$25,000 Bank of Boston overdraft line for the Foreign Subsidiaries.
6.7 Liens. No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or any of its other properties
or assets (whether now owned or hereafter acquired) except for Permitted
Encumbrances and those existing Liens set forth on Schedule 6.7. In addition, no
Credit Party shall become a party to any agreement, note, indenture or
instrument, or take any other action, which would prohibit the creation of a
Lien on any of its properties or other assets in favor of Agent, on behalf of
itself and Lenders, as
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additional collateral for the Obligations, except operating leases, Capital
Leases, purchase money obligations, or Licenses which prohibit Liens upon the
assets that are subject thereto.
6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets,
including its capital Stock or the capital Stock of any of its Subsidiaries
(whether in a public or a private offering or otherwise, other than a public
offering of the capital stock of Newco or Parent) or any of their Accounts,
other than as permitted under Section 6.1 and (a) the sale of Inventory in the
ordinary course of business, (b) the sale, transfer, conveyance or other
disposition by a Credit Party of equipment, fixtures or Real Estate that are
obsolete or no longer used or useful in such Credit Party's business and having
a value not exceeding $250,000 in any single transaction or $1,000,000 in the
aggregate in any Fiscal Year, (c) other equipment and fixtures having a value
not exceeding $500,000 in any single transaction or $2,000,000 in the aggregate
in any Fiscal Year, (d) Bermans may sell the Distribution Center to Borrower in
an arms'-length transaction; provided that the sale proceeds are transferred to
Second Intermediate Parent and invested subject to a Control Letter in
accordance with Section 6.2, and (e) the sale of the Store owned by Xxxxxx
Leather of Warwick, R.I., Inc., a Rhode Island corporation (the "Rhode Island
Store").
6.9 ERISA. No Credit Party shall cause or permit (a) the occurrence
of an ERISA Event which results, or could reasonably be expected to result, in a
distress termination of a Title IV Plan under Section 4041 of ERISA, an
involuntary termination of a Title IV Plan by the PBGC under Section 4042 of
ERISA, a Lien on any property of a Credit Party or ERISA Affiliate or a
liability in excess of $100,000 being assessed against any Credit Party or ERISA
Affiliate; (b) any Title IV Plan to incur an "accumulated funding deficiency"
under Section 412 of the IRC in excess of $100,000, regardless of any waiver;
(c) any Credit Party or ERISA Affiliate to apply for a funding waiver under
Section 412(d) of the IRC; (d) a material increase in the aggregate Unfunded
Pension Liability of all Title IV Plans, but only taking into account Title IV
Plans with Unfunded Pension Liability at the time of reference; or (e) a
material increase in any Credit Party's obligations under any Retiree Welfare
Plan.
6.10 Financial Covenants. Parent shall not breach or fail to comply
with any of the Financial Covenants (the "Financial Covenants") set forth in
Schedule I.
6.11 Hazardous Materials. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would violate in any material respect,
or form the basis for any material Environmental Liabilities under, any
Environmental Laws or Environmental Permits or would otherwise materially and
adversely impact the value or marketability of any of the Real Estate or any of
the Collateral.
6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-
leaseback, synthetic lease or similar transaction involving any of its assets,
except a sale-leaseback of the Rhode Island Store described in Section 6.8.
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6.13 Cancellation of Indebtedness. No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis or in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments. No Credit Party shall make any Restricted
Payment, except (a) asset or Stock transfers permitted under Section 6.1, (b)
intercompany loans permitted under Section 6.3, (c) restricted payments
consisting of cash dividends paid to to Newco for the purposes set forth in
clause (f) below and to Parent, First Intermediate Parent and Second
Intermediate Parent so long as no Event of Default shall have occurred and be
continuing and concurrently with the payment of each such dividend Parent, First
Intermediate Parent and Second Intermediate Parent (as applicable) shall pay a
dividend to Newco for the purposes set forth in clause (f) below or make an
intercompany loan or a cash contribution to equity in a corresponding amount of
Borrower, First Intermediate Parent or Second Intermediate Parent to be invested
subject to Control Letters in accordance with Section 6.2, (d) payments
consisting of payments of principal or interest with respect to the Subordinated
Note; provided that (i) no Event of Default shall have occurred and be
continuing as of the date of such payment or after giving effect thereto; (ii)
such payments shall be funded solely with the proceeds of a Qualified Public
Offering; (iii) Newco shall loan or contribute at least $9,000,000 of the
proceeds of that Qualified Public Offering to the capital of Borrower; (iv) any
Seasonal Over-Advance outstanding at the time of such payment shall be reduced
to zero; and (v) the Seasonal Over-Advance shall irrevocably cease to be
available, and Schedule A shall be deemed to be amended to delete all references
thereto, (e) payments to Seller in satisfaction of warranty claims by Seller
under the Acquisition Agreement and payment to Seller of the amount by which
Final Working Capital exceeds $85,000,000 under the terms of (and as defined in)
the Acquisition Agreement, and (f) Newco may redeem Stock of former employees of
any of the Loan Parties in accordance with Sections 3 and 4 of the Shareholder
Agreement in an amount not to exceed $250,000 in a period of 12 months. Nothing
contained in this Section shall affect the Borrower's right to a Seasonal Over-
Advance if no proceeds of a Qualified Public Offering are used to make any
payment with respect to the Subordinated Note.
6.15 Leases. No Credit Party shall enter into any operating lease
for equipment or personal property, if the aggregate of all such operating lease
payments payable in any Fiscal Year for all Credit Parties on a consolidated
basis would exceed $1,000,000.
6.16 Change of Corporate Name or Location; Change of Fiscal Year. No
Credit Party shall (a) change its corporate name, or (b) change its chief
executive office, principal place of business, corporate offices or warehouses
or Collateral locations, or the location of its records concerning the
Collateral, in any case without at least thirty (30) days prior written notice
to Agent and after Agent's written acknowledgment that any reasonable action
requested by Agent in connection therewith, including, without limitation, to
continue the perfection of any Liens in favor of Agent, on behalf of Lenders, in
any Collateral has been completed or taken, and provided that any such new
location shall be in the continental United States. Without limiting the
foregoing, no Credit Party shall change its name, identity or corporate
structure in any manner which might make any financing or continuation statement
filed in connection herewith seriously
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misleading within the meaning of Section 9.402(7) of the Code or any other then
applicable provision of the Code except upon prior written notice to Agent and
Lenders and after Agent's written acknowledgment that any reasonable action
requested by Agent in connection therewith, including, without limitation, to
continue the perfection of any Liens in favor of Agent, on behalf of Lenders, in
any Collateral has been completed or taken. The Credit Parties shall change
their Fiscal Year within ninety (90) days following the Closing Date to a fiscal
year having Fiscal Quarters ending on the Saturday closest to the last day of
January, April, July and October of each year.
6.17 No Impairment of Upstreaming. No Credit Party shall directly or
indirectly enter into or become bound by any agreement, instrument, indenture or
other obligation (other than this Agreement and the other Loan Documents) which
could directly or indirectly restrict, prohibit or require the consent of any
Person with respect to the payment of dividends or distributions or the making
of intercompany loans by a Subsidiary of Parent to any other Subsidiary of
Parent.
6.18 Changes Relating to Subordinated Debt. No Credit Party shall
(a) change or amend the terms of any Subordinated Debt (or any indenture or
agreement in connection therewith) if the effect of such amendment is to: (i)
increase the interest rate on such Subordinated Debt; (ii) change the dates upon
which payments of principal or interest are due on such Subordinated Debt other
than to extend such dates; (iii) change any default or event of default other
than to delete or make less restrictive any default provision therein, or add
any covenant with respect to such Subordinated Debt; (iv) change the redemption
or prepayment provisions of such Subordinated Debt other than to extend the
dates therefor or to reduce the premiums payable in connection therewith; (v)
grant any security or collateral to secure payment of such Subordinated Debt in
which Agent does not have a first priority perfected security interest for the
benefit of Lenders; or (vi) change or amend any other term if such change or
amendment would materially increase the obligations of the obligor or confer
additional material rights to the holder of such Subordinated Debt in a manner
adverse to any Credit Party, Agent or any Lender; or (b) prepay, defease or
purchase any Subordinated Debt except as permitted in Section 6.14.
6.19 Eligible Trade L/Cs. Agent shall have no obligation to approve
any request for a trade letter of credit for the purchase of finished goods
unless each of the following documents are required as conditions to any draw
thereon, unless Agent shall otherwise consent, and such deliveries must
constitute conditions to drawing for a trade letter of credit to constitute an
Eligible Trade L/C.
i) the original Eligible Trade L/C, if only one draw is permitted
thereunder or if multiple draws are permitted and the subject draw is the
final draw thereunder;
ii) any draft or pre-approved form of certificate executed by
Borrower's supplier, certifying that it has met the conditions for a draw
under the Eligible Trade L/C;
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iii) an inspection certificate substantially in the form attached
hereto as Schedule 6.19, executed by Borrower's employee or agent at the
point of origin of the finished goods;
iv) a commercial invoice with respect to the purchase order(s)
against which such finished goods are being delivered and a packaging list
with respect to such goods;
v) a non-negotiable ocean xxxx of lading, freight forwarders cargo
receipt, a house xxxx of lading or a copy of an airway xxxx of lading (a
"Document of Title") issued by an Approved Shipper with respect to the
finished goods being shipped and providing for the delivery thereof to
House of Suede or Borrower; and
vi) a certificate of origin.
7. TERM
7.1 Termination. The financing arrangements contemplated hereby
shall be in effect until the Commitment Termination Date, and the Loans and all
other Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair
the obligations, duties and liabilities of Borrower or the rights of Agent and
Lenders relating to any unpaid portion of the Loans or any other Obligations,
due or not due, liquidated, contingent or unliquidated or any transaction or
event occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date. Except
as otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon any Credit Party, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire, but rather shall
survive any such termination or cancellation and shall continue in full force
and effect until the Termination Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) (i) Borrower shall fail to make any payment of principal of, or
interest on, or Fees owing in respect of, the Revolving Loan, when due and
payable, or (ii) Borrower shall fail to pay or reimburse Agent or Lenders for
any expense reimbursable hereunder or under any other Loan Document or any other
Obligations within ten (10) days following Agent's demand for such reimbursement
or payment thereof.
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(b) Any Credit Party shall fail or neglect to perform, keep or observe
any of the provisions of Sections 1.4, 1.8, 5.4 or 6, or any of the provisions
set forth in Schedules E or I, respectively.
(c) Borrower shall fail or neglect to perform, keep or preserve any of
the provisions of Section 4 or any provisions set forth in Schedules G or H,
respectively, and the same shall remain unremedied for ten (10) days or more.
(d) Any Credit Party shall fail or neglect to perform, keep or observe
any other provision of this Agreement or of any of the other Loan Documents
(other than any provision embodied in or covered by any other clause of this
Section 8.1) and the same shall remain unremedied for twenty (20) days or more
following notice to such Credit Party.
(e) A default or breach shall occur under any other agreement,
document or instrument to which any Credit Party is a party which is not cured
within any applicable grace period, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness (other than
the Obligations) of any Credit Party in excess of $1,000,000 in the aggregate,
or (ii) causes, or such permits any holder of such Indebtedness or a trustee to
cause, Indebtedness or a portion thereof in excess of $1,000,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, regardless of whether such right is exercised, by
such holder or trustee.
(f) Any representation or warranty herein or in any Loan Document or
in any written statement, report, financial statement or certificate made or
delivered to Agent or any Lender by any Credit Party shall be untrue or
incorrect in any material respect as of the date when made or deemed made.
(g) Assets of any Credit Party with a fair market value of $500,000 or
more shall be attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of any Credit Party and such condition
continues for thirty (30) days or more.
(h) A case or proceeding shall have been commenced against any
Material Credit Party seeking a decree or order in respect of any Material
Credit Party (i) under Title 11 of the United States Code, as now constituted or
hereafter amended or any other applicable federal, state or foreign bankruptcy
or other similar law, (ii) appointing a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) for any Material Credit
Party or of any substantial part of any such Person's assets, or (iii) ordering
the winding-up or liquidation of the affairs of any Material Credit Party, and
such case or proceeding shall remain undismissed or unstayed for sixty (60) days
or more or such court shall enter a decree or order granting the relief sought
in such case or proceeding.
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(i) Any Material Credit Party shall (i) file a petition seeking
relief under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) consent to the institution of proceedings thereunder or to the
filing of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of any Material Credit Party or of any substantial part of any such
Person's assets, (iii) make an assignment for the benefit of creditors, or (iv)
take any corporate action in furtherance of any of the foregoing.
(j) A final judgment or judgments for the payment of money in excess
of $500,000 in the aggregate at any time outstanding shall be rendered against
any Credit Party and the same shall not, within thirty (30) days after the entry
thereof, have been discharged or execution thereof stayed or bonded pending
appeal, or shall not have been discharged prior to the expiration of any such
stay.
(k) Any provision of any Loan Document shall for any reason cease to
be valid, binding and enforceable in accordance with its terms (or any Credit
Party shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any security
interest created under any Loan Document shall cease to be a valid and perfected
first priority security interest or Lien (except as otherwise permitted herein
or therein) in any of the Collateral purported to be covered thereby other than
as a result of Agent's failure to take any action within its control.
(l) Any "Change of Control" shall occur.
8.2 Remedies. (a) (i) If any Event of Default shall have occurred
and be continuing, Agent may (and at the written request of the Requisite
Lenders shall), without notice, suspend this facility with respect to further
Advances and/or the incurrence of further Letter of Credit Obligations and
Eligible Trade L/C Obligations whereupon any further Advances, Letter of Credit
Obligations, and Eligible Trade L/C Obligations shall be made or extended in
Agent's sole discretion (or in the sole discretion of the Requisite Lenders, if
such suspension occurred at their direction) so long as such Event of Default
is continuing and (ii) if any Event of Default shall have occurred and be
continuing, Agent may (and at the request of the Requisite Lenders shall),
following notice increase the rate of interest applicable to the Loans and the
Letter of Credit Fees to the Default Rate.
(b) If any Event of Default shall have occurred and be continuing,
Agent may (and at the written request of the Requisite Lenders shall), without
notice, (i) terminate this facility with respect to further Advances or the
incurrence of further Letter of Credit Obligations and Eligible Trade L/C
Obligations; (ii) declare all or any portion of the Obligations, including all
or any portion of any Loan to be forthwith due and payable, and require that
the Letter of Credit Obligations and Eligible Trade L/C Obligations be cash
collateralized as provided in Schedule B,
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all without presentment, demand, protest or further notice of any kind, all of
which are expressly waived by Borrower and each Credit Party that is a signatory
hereto; and (iii) exercise any rights and remedies provided to Agent under the
Loan Documents and/or at law or equity, including all remedies provided under
the Code; provided, however, that upon the occurrence of an Event of Default
specified in Sections 8.1(g), (h) or (i), Commitments to make further Advances
or the incurrence of further Letter of Credit Obligations and Eligible Trade L/C
Obligations shall automatically terminate and all of the Obligations, including
the Revolving Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in
this Agreement or by applicable law, each Credit Party waives (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent on which any Credit Party may in any way be
liable, and hereby ratifies and confirms whatever Agent may do in this regard,
(b) all rights to notice and a hearing prior to Agent's taking possession or
control of, or to Agent's replevy, attachment or levy upon, the Collateral or
any bond or security which might be required by any court prior to allowing
Agent to exercise any of its remedies, and (c) the benefit of all valuation,
appraisal and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations. (a) Any Lender may assign at any
time or times, any of the Loan Documents, any Commitment or of any portion
thereof or interest therein, including, without limitation, any Lender's rights,
title, interests, remedies, powers or duties thereunder, whether evidenced by a
writing or not, with Borrower's consent which shall not be unreasonably withheld
or delayed; provided that so long as any Event of Default shall have occurred
and be continuing Borrower's consent shall not be required. Any assignment by a
Lender shall (i) require the consent of Agent which shall not be unreasonably
withheld or delayed and the execution of a Lender Addition Agreement in form and
substance satisfactory to Agent; (ii) be conditioned on such assignee Lender
representing to the assigning Lender and the Agent that it is purchasing the
applicable Loans to be assigned to it for its own account, for investment
purposes and not with a view to the distribution thereof; (iii) if a partial
assignment, be in an amount at least equal to $5,000,000 and, after giving
effect to any such partial assignment, the assigning Lender shall have retained
Commitments in an amount at least equal to $5,000,000; and (iv) include a
payment by the assigning Lender to the Agent of an assignment fee of $3,000. In
the case of an assignment by a Lender under this Section 9.1, the assignee shall
have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were a Lender hereunder. The assigning Lender
shall be relieved of its obligations hereunder with respect to its Commitments
or assigned portion thereof from and after the date of such assignment.
Borrower hereby acknowledges and agrees that any assignment will give rise to
a direct obligation of Borrower to the assignee and that the assignee shall be
considered to be a "Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender's Pro Rata Share of the Commitment. In the event Agent or any
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Lender assigns or otherwise transfers all or any part of a Note, Agent or any
such Lender shall so notify Borrower and Borrower shall, upon the request of
Agent or such Lender, execute new Notes in exchange for the Notes being
assigned.
(b) Borrower consents to any Lender's sale of a participation, at any
time or times, in all or part of its Commitment. Any sale of a participation by
a Lender of all or any part of its Commitments shall be made with the
understandings that all amounts payable by Borrower hereunder shall be
determined as if that Lender had not sold such participation, except as provided
in the following sentence, and that the holder of any such participation shall
not be entitled to require such Lender to take or omit to take any action
hereunder except actions directly affecting (i) any reduction in the principal
amount of, or interest rate or Fees payable with respect to, any Loan in which
such holder participates, (ii) any extension of the final scheduled maturity
date of the principal amount of any Loan in which such holder participates, and
(iii) any release of all or substantially all of the Collateral (other than in
accordance with the terms of this Agreement, the Collateral Documents or the
other Loan Documents). Solely for purposes of Sections 1.13, 1.15, 1.16 and
9.8, Borrower acknowledges and agrees that a participation shall give rise to a
direct obligation of Borrower to the participant and the participant shall be
considered to be a "Lender". Except as set forth in the preceding sentence
neither Borrower nor any Credit Party shall have any obligation or duty to any
participant. Neither Agent nor any Lender (other than the Lender selling a
participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred.
(c) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.16(a),
increased costs under Section 1.16(b), an inability to fund LIBOR Loans under
Section 1.16(c), or withholding taxes in accordance with Section 1.16(d).
(d) Except as expressly provided in this Section 9.1, no Lender
shall, as between Borrower and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all
or any part of the Loans, the Notes or other Obligations owed to such Lender.
(e) Borrower shall assist any Lender permitted to sell assignments
under this Section 9.1 as reasonably required to enable the assigning or selling
Lender to effect any such assignment, including the execution and delivery of
any and all agreements, notes and other documents and instruments as shall be
requested, and the participation of management in meetings with, potential
assignees at Borrower's headquarters. Borrower shall certify the correctness,
completeness and accuracy of all descriptions of Borrower and its affairs
contained in any selling materials provided by it and all other information
provided by it and included in such materials, except that any Projections
delivered by Borrower shall only be certified by Borrower as having been
prepared by Borrower in compliance with the representations contained in
Section 3.4(c).
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(f) A Lender may furnish any information concerning Borrower in
the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall obtain
from assignees or participants confidentiality covenants substantially
equivalent to those contained herein.
(g) If (a) GE Capital assigns its Commitment or sells participations
in its Commitment so that its Commitment, net of participations sold by it, is
less than $30,000,000, or (b) resigns as Agent and is not replaced as Agent by
a Lender reasonably acceptable to Borrower, Borrower may, within one hundred
eighty (180) days thereafter terminate the Commitments, prepay the Revolving
Loans, Swing Line Loan and all other Obligations in full and cash collateralize
all outstanding Letter of Credit Obligations and Eligible Trade L/C Obligations,
without payment of any prepayment fee as to the Pro Rata Share of GE Capital.
9.2 Appointment of Agent. GE Capital is hereby appointed to act
on behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties
or responsibilities except for those expressly set forth in this Agreement and
the other Loan Documents. The duties of Agent shall be mechanical and
administrative in nature and Agent shall not have, or be deemed to have, by
reason of this Agreement, any other Loan Document or otherwise a fiduciary
relationship in respect of any Lender. Neither Agent nor any of its Affiliates
nor any of their respective officers, directors, employees, agents or
representatives shall be liable to any Lender for any action taken or omitted to
be taken by it hereunder or under any other Loan Document, or in connection
herewith or therewith, except for damages solely caused by its or their own
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.
If Agent shall request instructions from Requisite Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Loan Document, then Agent shall be entitled to refrain
from such act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders, and Agent shall not incur liability to any
Person by reason of so refraining. Agent shall be fully justified in failing or
refusing to take any action hereunder or under any other Loan Document (a) if
such action would, in the opinion of Agent, be contrary to law or the terms of
this Agreement or any other Loan Document, (b) if such action would, in the
opinion of Agent, expose Agent to Environmental Liabilities and Costs or (c) if
Agent shall not first be indemnified to its satisfaction against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any other Loan Document in
accordance with the instructions of Requisite Lenders.
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9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates
nor any of their respective directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Loan Documents, except for damages
solely caused by its or their own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction. Without limitation of
the generality of the foregoing, Agent: (a) may treat the payee of any Note as
the holder thereof until Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to Agent; (b) may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 GE Capital and Affiliates. With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity.
GE Capital and its Affiliates may lend money to, invest in, and generally engage
in any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of the Lenders holding disproportionate
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interests in the Loans, and expressly consents to, and waives any claim based
upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrower and without limiting the obligations of Borrower
hereunder), ratably according to their respective Pro Rata Shares, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any other
Loan Document or any action taken or omitted by Agent in connection therewith;
provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from Agent's gross negligence
or wilful misconduct as finally determined by a court of competent jurisdiction.
Without limiting the foregoing, each Lender agrees to reimburse Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
counsel fees) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and each other Loan
Document, to the extent that Agent is not reimbursed for such expenses by
Borrower.
9.7 Successor Agent. Agent may resign at any time by giving not less
than thirty (30) days' prior written notice thereof to Lenders and Borrower.
Upon any such resignation, the Requisite Lenders shall have the right to appoint
a successor Agent which shall be reasonably acceptable to Borrower. If no
successor Agent shall have been so appointed by the Requisite Lenders and shall
have accepted such appointment within 30 days after the resigning Agent's giving
notice of resignation, then the resigning Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a Lender, if a Lender is willing to
accept such appointment, or otherwise shall be a commercial bank or financial
institution organized under the laws of the United States of America or of any
State thereof having a combined capital and surplus of at least $300,000,000.
If no successor Agent has been appointed pursuant to the foregoing, by the 30th
day after the date such notice of resignation was given by the resigning Agent,
such resignation shall become effective and the Requisite Lenders shall
thereafter perform all the duties of Agent hereunder until such time, if any,
as the Requisite Lenders appoint a successor Agent (which shall be reasonably
acceptable to Borrower) as provided above. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning Agent, and the resigning Agent shall be discharged from its
duties and obligations under this Agreement and the other Loan Documents, except
that any indemnity rights or other rights in favor of such resigning Agent shall
continue. After any resigning Agent's resignation hereunder, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement and the other Loan
Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now
or hereafter granted under applicable law and not by way of limitation of such
rights, upon the occurrence and
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during the continuance of any Event of Default, each Lender and each holder of
any Note is hereby authorized at any time or from time to time, without notice
to Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all balances held by
it at any of its offices for the account of Borrower (regardless of whether such
balances are then due to Borrower) and any other properties or assets any time
held or owing by that Lender or that holder to or for the credit or for the
account of Borrower against and on account of any of the Obligations which are
not paid when due. Any Lender or holder of any Note exercising a right to set
off shall purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
set off with each other Lender or holder in accordance with their respective Pro
Rata Shares. Borrower agrees, to the fullest extent permitted by law, that (a)
any Lender or holder may exercise its right to set off with respect to amounts
in excess of its Pro Rata Share of the Obligations and may sell participations
in such amount so set off to other Lenders and holders and (b) any Lender or
holders so purchasing a participation in the Loans made or other Obligations
held by other Lenders or holders may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender or holder were a direct holder of the Loans and the other
Obligations in the amount of such participation. Notwithstanding the foregoing,
if all or any portion of the set-off amount is thereafter recovered from the
Lender that has exercised the right of set-off, the purchase of participations
by that Lender shall be rescinded and the purchase price restored without
interest.
9.9 Advances; Payments; Information; Non-Funding Lender.
(a) Advances; Payments; Fee Payments.
(i) The parties hereto agree that, whenever possible, the Swing Line
Loan shall be the first Loan advanced and the first Loan repaid so as to
minimize fluctuations in the Revolving Loan balance. Furthermore, for ease of
administration, Agent may, on behalf of Lenders, disburse funds to Borrower for
requested Revolving Credit Advances and the Revolving Loan balance may fluctuate
from day to day through Agent's disbursement of funds to, and receipt of funds
from, Borrower. In order to minimize the frequency of transfers of funds
between Agent and each Lender, Revolving Credit Advances and payments in respect
thereof will be settled according to the procedures described in Sections
9.9(a)(ii) and 9.9(a)(iii) below. Notwithstanding these procedures, each
Lender's obligation to fund its portion of any Revolving Credit Advances made
by Agent to Borrower will commence on the date such Advances are made by Agent.
Such payments will be made by each Lender without setoff, counterclaim or
reduction of any kind.
(ii) Not later than 11:00 a.m. (Chicago time) on the second (2nd) and
fifth (5th) Business Day of each week, or more frequently (including daily) if
Agent so elects (each such day being a "Settlement Date"), Agent will advise
each Lender by telephone or telecopy of the amount of such Lender's Pro Rata
Share of the balance of the Revolving Loan as of the close of business on the
first (1st) Business Day immediately preceding the Settlement
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Date. In the event that payments are necessary to adjust the amount of such
Lender's portion of the Revolving Loan to such Lender's Pro Rata Share of the
Revolving Loan as of any Settlement Date, the party from which such payment is
due will pay the other, in same day funds, by wire transfer to the other's
account not later than 2:00 p.m. (Chicago time) on the Settlement Date.
Notwithstanding the foregoing, if Agent so elects, Agent may require that each
Lender make its Pro Rata Share of any requested Revolving Credit Advance
available to Agent for disbursement prior to the funding of such Advance. If
Agent elects to require that such funds be so made available, Agent shall advise
each Lender by telephone or telecopy of the amount of such Lender's Pro Rata
Share of the requested Revolving Credit Advance no later than 11:00 a.m.
(Chicago time) on the date of funding thereof, and each such Lender shall pay
Agent such amount in same day funds, by wire transfer to the Collection Account
not later than 2:00 p.m. (Chicago time) on the date of funding such Advance.
(iii) For purposes of this Section 9.9(a)(iii), the following
terms will have the following meanings:
(A) "Daily Loan Balance" means, with respect to the Revolving
Credit Advances, an amount calculated as of the end of each
calendar day by subtracting (i) the cumulative principal amount
paid by Agent to a Lender with respect to the Revolving Credit
Advances from the Closing Date through and including such
calendar day, from (ii) the cumulative principal amount of the
Revolving Credit Advances advanced by such Lender to Agent from
the Closing Date through and including such calendar day.
(B) "Daily Interest Rate" means, with respect to the Revolving
Credit Advances, an amount calculated by dividing the interest
rate payable to a Lender on the Revolving Credit Advances (as
determined pursuant to Sections 1.5 and 1.6) as of each
calendar day by three hundred sixty (360) days in the case of
LIBOR Loans and three hundred sixty-five (365) days in the case
of Index Rate Loans.
(C) "Daily Interest Amount" means, with respect to the
Revolving Loan, an amount calculated by multiplying the Daily
Loan Balance of the Revolving Credit Advances by the associated
Interest Rate applicable to such Revolving Credit
Advances.
(D) "Interest Ratio" means, with respect to the Revolving
Credit Advances, a number calculated by dividing the total
amount of interest on the Revolving Credit Advances received by
Agent during the immediately preceding month by the total
amount of interest on the Revolving Credit Advances due from
Borrower during the immediately preceding month.
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On the first (1st) Business Day of each calendar month (an "Interest Settlement
Date"), Agent will advise each Lender by telephone or telecopy of the amount of
such Lender's Pro Rata Share of principal, interest and Fees paid for the
benefit of Lenders with respect to the Revolving Credit Advances as of the end
of the last day of the immediately preceding month. Provided that such Lender
has made all payments required to be made by it under this Agreement and the
other Loan Documents, Agent will pay to such Lender such Lender's Pro Rata Share
of principal, interest and Fees paid for the benefit of Lenders on the Revolving
Loans. Such payments shall be made by wire transfer to such Lender's account (as
specified by such Lender to Agent in writing, as amended by such Lender from
time to time after the date hereof pursuant to the notice provisions contained
herein or in the applicable Lender Addition Agreement) not later than 12:00 noon
(Chicago time) on the next Business Day following the Interest Settlement Date.
Such Lender's Pro Rata Share of interest on Revolving Credit Advances will be
calculated by adding together such Lender's Pro Rata Share of the Daily Interest
Amounts for each calendar day of the prior month for the Revolving Credit
Advances and multiplying the total thereof by the Interest Ratio for the
Revolving Credit Advances. Consistent with the foregoing, during those periods
between Settlement Dates in which Agent has advanced more than its Pro Rata
Share of the Revolving Credit Advances, the Daily Interest Amounts allocable to
the Lenders will be reduced and the interest accrued on such amounts shall be
for the account of Agent.
(b) Availability of Lender's Pro Rata Share. Agent may assume that
each Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each Settlement Date. If such Pro Rata Share is not, in
fact, paid to Agent by such Lender when due, Agent will be entitled to recover
such amount on demand from such Lender without set-off, counterclaim or
deduction of any kind. If any Lender fails to pay the amount of its Pro Rata
Share forthwith upon Agent's demand, Agent shall promptly notify Borrower and
Borrower shall immediately repay such amount to Agent. Nothing in this Section
9.9 or elsewhere in this Agreement or the other Loan Documents shall be deemed
to require Agent to advance funds on behalf of any Lender or to relieve any
Lender from its obligation to fulfill its Commitments hereunder or to prejudice
any rights that Borrower may have against any Lender as a result of any default
by such Lender hereunder.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that
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Agent has distributed to such Lender, together with interest at such rate, if
any, as Agent is required to pay to Borrower or such other Person, without set-
off, counterclaim or deduction of any kind.
(d) Non-Funding Lenders.
The failure of any Lender (such Lender, a "Non-Funding Lender") to
make any Revolving Credit Advance to be made by it on the date specified
therefor shall not relieve any other Lender (each such other Lender, an "Other
Lender") of its obligations to make a Revolving Credit Advance on such date, but
neither any Other Lender nor Agent shall be responsible for the failure of any
Non-Funding Lender to make a Revolving Credit Advance to be made by such Non-
Funding Lender, and no Other Lender shall have any obligation to Agent or any
Other Lender for the failure by such Non-Funding Lender. Notwithstanding
anything set forth herein to the contrary so long as any Lender continues to be
a Non-Funding Lender, such Non-Funding Lender shall not have any voting or
consent rights under or with respect to any Loan Document or constitute a
"Lender" (or be included in the calculation of "Requisite Lenders" hereunder)
for any voting or consent rights under or with respect to any Loan Document.
(e) Dissemination of Information.
Agent will use reasonable efforts to provide Lenders with any notice
of Default or Event of Default received by Agent from, or delivered by Agent to,
any Credit Party, with notice of any Event of Default of which Agent has
actually become aware and with notice of any action taken by Agent following any
Event of Default; provided, however, that Agent shall not be liable to any
Lender for any failure to do so, except to the extent that such failure is
attributable solely to Agent's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. Lenders acknowledge that
Borrower is required to provide Financial Statements and Collateral Reports to
certain of the Lenders in accordance with Schedules G and H hereto and agree
that Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert.
Anything in this Agreement to the contrary notwithstanding, each
Lender hereby agrees with each other Lender that no Lender shall take any action
to protect or enforce its rights arising out of this Agreement or the Notes
(including, without limitation, exercising any rights of set-off) without first
obtaining the prior written consent of Agent or Requisite Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Notes shall be taken in concert and at the direction or with
the consent of the Agent.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party signatory hereto, Agent, Lenders and their respective successors and
assigns (including, in the case of any Credit Party, a
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debtor-in-possession on behalf of such Credit Party), except as otherwise
provided herein or therein. No Credit Party may assign, transfer, hypothecate or
otherwise convey its rights, benefits, obligations or duties hereunder or under
any of the other Loan Documents without the prior express written consent of
Agent and Requisite Lenders. Any such purported assignment, transfer,
hypothecation or other conveyance by any Credit Party signatory hereto without
the prior express written consent of Agent and Requisite Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party signatory hereto, Agent and
Lenders with respect to the transactions contemplated hereby and no Person shall
be a third party beneficiary of any of the terms and provisions of this
Agreement or any of the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in Section 11.2 below. Any letter of interest, commitment letter, fee
letter (other than the GE Capital Fee Letter) or confidentiality agreement
between any Credit Party and Agent or any Lender or any of their respective
affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.
11.2 Amendments and Waivers. (a) Except as otherwise provided below,
no amendment, modification, termination or waiver of any provision of this
Agreement or any of the Notes, or any consent to any departure by any Credit
Party therefrom, shall in any event be effective unless the same shall be in
writing and signed by Agent and each Credit Party signatory hereto, and by
Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement which (i) increases the
percentage advance rates set forth in the definition of Borrowing Base or (ii)
makes less restrictive the nondiscretionary criteria for exclusion from Eligible
Inventory set forth in Schedule D hereto, shall be effective unless the same
shall be in writing and signed by Agent, all Lenders and each Credit Party
signatory hereto.
(c) No amendment, modification, termination or waiver shall, unless
in writing and signed by Agent and each Lender directly affected thereby, do any
of the following: (i) increase the principal amount of the Commitment of any
Lender (and all Lenders shall be deemed to be affected thereby); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan,
Letter of Credit Obligations or Eligible Trade L/C Obligations of any affected
Lender; (iii) extend the final scheduled maturity date of the principal amount
of any Loan of any affected Lender; (iv) waive, forgive, defer, extend or
postpone any payment of interest or Fees as to any affected Lender; (v) release
any Guaranty of a Material Credit Party; (vi) except as otherwise permitted
herein or in the other Loan Documents, release the Agent's Liens upon, or permit
any Credit Party to sell or otherwise dispose of, any Collateral with a value
exceeding
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$5,000,000 in the aggregate other than sales of Inventory in the ordinary
course; (vii) increase the L/C Sublimit (and all Lenders shall be deemed to be
affected thereby); (viii) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be required for
Lenders or any of them to take any action hereunder; and (ix) amend or waive
this Section 11.2 or the definitions of the terms used in this Section 11.2
insofar as the definitions affect the substance of this Section 11.2.
Furthermore, no amendment, modification, termination or waiver affecting the
rights or duties of Agent under this Agreement or any other Loan Document shall
be effective unless in writing and signed by Agent, in addition to Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 11.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment, modification,
waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the consent
of Requisite Lenders is obtained, but the consent of other Lenders
whose consent is required is not obtained (each such Lender whose
consent is not obtained as described in this clause (i) or in clause
(ii) below being referred to as a "Non Consenting Lender"), or
(ii) requiring the consent of Requisite Lenders, the consent of
Lenders holding 50.1% of the aggregate Commitments is obtained, but
the consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, Agent shall have the
right in its sole discretion (but shall be under no obligation) to purchase from
such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they
shall, upon Agent's request, sell and assign to Agent, all of the Commitments of
such Non-Consenting Lender for an amount equal to the principal balance of all
Loans held by the Non-Consenting Lender and all accrued interest and Fees (other
than prepayment Fees) with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Lender Addition
Agreement.
(e) Upon indefeasible payment in full in cash and performance of all
of the Obligations (other than indemnification Obligations under Section 1.13)
and termination of the Commitments, and so long as no suits, actions,
proceedings or claims are pending or threatened against any Indemnified Person
asserting any damages, losses or liabilities that are Indemnified Liabilities,
Agent shall deliver to Borrower termination statements, termination letters
regarding bailee agreements, Control Letters and blocked account agreements and
other documents
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necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.
11.3 Fees and Expenses. Borrower shall reimburse Agent for all out-of-
pocket expenses incurred in connection with the preparation of the Loan
Documents (including the reasonable fees and expenses of all of its special loan
counsel, advisors, consultants and auditors retained in connection with the Loan
Documents and the Related Transactions and advice in connection therewith).
Borrower shall reimburse Agent (and, with respect to clauses (c), (d) and (e)
below, each Lender) for all fees, costs and expenses, including the fees, costs
and expenses of counsel (including the allocated cost of in-house counsel) or
other advisors (including environmental and management consultants) for advice,
assistance, or other representation in connection with:
(a) the forwarding to Borrower or any other Person on behalf of
Borrower by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or Related Transactions Documents or
advice in connection with the administration of the Loans made pursuant hereto
or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrower or any other Person) in any
way relating to the Collateral, any of the Loan Documents or any other agreement
to be executed or delivered in connection therewith or herewith, whether as
party, witness, or otherwise, including any litigation, contest, dispute, suit,
case, proceeding or action, and any appeal or review thereof, in connection with
a case commenced by or against Borrower or any other Person that may be
obligated to Agent by virtue of the Loan Documents;
(d) any attempt to enforce any rights of Agent or any Lender
against any or all of the Credit Parties or any other Person that may be
obligated to Agent or any Lender by virtue of any of the Loan Documents;
(e) any work-out or restructuring of the Loans during the
pendency of one or more Events of Default, but only as to Persons who are
Lenders as of the Closing Date and who continue to hold 7.5% or more of the
total Commitments;
(f) efforts to (i) consistent with the terms of the Loan
Documents, monitor the Loans or any of the other Obligations, (ii) consistent
with the terms of the Loan Documents verify, observe or assess any of the Credit
Parties or their respective affairs, and (iii) protect, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, without limitation, all the attorneys' and other professional and
service providers' fees arising from such services, including those in
connection with any appellate proceedings; and all expenses, costs, charges and
other fees incurred by such counsel and others in any way or respect
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arising in connection with or relating to any of the events or actions described
in this Section 11.3 shall be payable, on demand, by Borrower to Agent. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: fees, costs and expenses of accountants, environmental advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses; photocopying and duplication expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express charges;
telegram or telecopy charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal or other advisory services.
11.4 No Waiver. Agent's or any Lender's failure, at any time or times,
to require strict performance by the Credit Parties of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. None of the undertakings, agreements, warranties, covenants and
representations of any Credit Party contained in this Agreement or any of the
other Loan Documents and no Default or Event of Default by any Credit Party
shall be deemed to have been suspended or waived by Agent or any Lender, unless
such waiver or suspension is by an instrument in writing signed by an officer of
or other authorized employee of Agent and Requisite Lenders and directed to
Borrower specifying such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which Agent or any Lender may have under any other agreement, including the
other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
11.8 Authorized Signature. Until Agent shall be notified by Borrower
to the contrary, the signature upon any Notice of Revolving Credit Advance,
Notice of Swing Line Advance, Notice of Continuation/Conversion or other notice
or certificate delivered in accordance herewith delivered pursuant hereto of an
officer of Borrower listed on Schedule 11.8
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shall bind Borrower and be deemed to be the act of Borrower affixed pursuant to
and in accordance with resolutions duly adopted by Borrower's Board of
Directors.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF ILLINOIS (WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN XXXX
COUNTY, CITY OF CHICAGO, ILLINOIS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER, AGENT AND LENDERS PERTAINING
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, LENDERS AND BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF XXXX COUNTY,
CITY OF CHICAGO, ILLINOIS AND, PROVIDED, FURTHER NOTHING IN THIS AGREEMENT SHALL
BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF AGENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER
HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN SCHEDULE J OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to
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this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be deemed to
have been validly served, given or delivered (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the United States Mail,
registered or certified mail, return receipt requested, with proper postage
prepaid, (b) upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States Mail as otherwise provided in this
Section 11.10), (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid or (d) when delivered, if hand-
delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address or facsimile number indicated on Schedule J or
to such other address (or facsimile number) as may be substituted by notice
given as herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Failure or delay
in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to any Person (other than Borrower or Agent)
designated on Schedule J to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
11.11 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND BORROWER ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases. Each Credit Party agrees that neither it nor its
Affiliates will in the future issue any press release or other public disclosure
using the name of GE Capital or its affiliates or referring to this Agreement,
the other Loan Documents or the Related Transactions without at least two (2)
Business Days' prior notice to GE Capital and without the prior written consent
of GE Capital unless (and only to the extent that) such Credit Party or
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Affiliate is required to do so by law or regulation and then, in any event, such
Credit Party or Affiliate will consult with GE Capital before issuing such press
release or other public disclosure. Each Credit Party consents to the
publication by Agent of a tombstone or similar advertising material relating to
the financing transactions contemplated by this Agreement and after such
publication, Borrower may make public disclosure of the same information set
forth in the tombstone. Furthermore, Borrower may make private disclosures to
its suppliers of the existence of this Agreement, the Maximum Amount hereunder,
and the fact that GE Capital acts as Agent hereunder.
11.15 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Borrower for liquidation or reorganization, should Borrower become insolvent or
make an assignment of the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of Borrower's
assets, and shall continue to be effective or to be reinstated, as the case may
be, if at any time payment and performance of the Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
11.18 Confidentiality. Agent and Lenders shall maintain as
confidential all non-public information provided to them by the Credit Parties
for a period of two (2) years following the Commitment Termination Date,
provided that, Agent and Lenders may disclose such information (i) to Persons
employed or engaged by Agent or any Lender in evaluating, approving, structuring
or administering the Loans and the Commitments, (ii) to any bona fide assignee
or participant that has agreed to comply with the covenant contained in this
Section 11.18 (and any such bona fide assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (i)
above), (iii) as required or requested by any Governmental Authority, (iv)
pursuant to legal process, or (v) in connection with the exercise of any remedy
under the Loan Documents; provided further that, the foregoing restriction shall
cease to apply to any information that becomes publicly available other than by
the actions of Agent, Lenders or any Persons described in clauses (i) or (ii)
above.
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11.19 Effectiveness of this Agreement. This Agreement and the other
Loan Documents shall not become effective unless and until each of the
conditions set forth in Section 2.1 and on Schedule F hereto have been met or
satisfied, which shall occur on May 28, 1996, except for those items (such as
Approved Shippers' bailee letters) that are set forth in a Post-Closing Matters
Agreement dated as of the Closing Date between the Loan Parties and Agent.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
WILSONS LEATHER HOLDINGS INC.
By: _____________________________________
Title: __________________________________
Revolving Loan GENERAL ELECTRIC CAPITAL
Commitment: CORPORATION, as Agent, Lender and
$45,000,000 Swing Line Lender
(including $10,000,000
Swing Line Commitment) By: _____________________________________
Title: __________________________________
Revolving Loan THE FIRST NATIONAL BANK OF BOSTON,
Commitment: as Lender
$12,500,000 By: _____________________________________
Title: __________________________________
Revolving Loan SANWA BUSINESS CREDIT
Commitment: CORPORATION, as Lender
$20,000,000
By: _____________________________________
Title: __________________________________
Revolving Loan SIGNET BUSINESS CREDIT, as Lender
Commitment:
$5,000,000 By: _____________________________________
Title: __________________________________
Revolving Loan THE CIT GROUP/BUSINESS CREDIT, INC.,
Commitment: as Lender
$20,000,000 By: _____________________________________
Title:___________________________________
Revolving Loan TRANSAMERICA BUSINESS CREDIT
Commitment: CORPORATION, as Lender
$12,500,000 By: _____________________________________
Title:___________________________________
Revolving Loan CORESTATES BANK N.A., as Lender
Commitment:
$7,500,000 By: _____________________________________
Title: __________________________________
Revolving Loan BANKAMERICA BUSINESS CREDIT, INC.,
Commitment: as Lender
$20,000,000 By: _____________________________________
Title: __________________________________
Revolving Loan FIRST BANK NATIONAL ASSOCIATION,
Commitment: as Lender
$7,500,000 By: _____________________________________
Title: __________________________________
The undersigned are executing this Credit Agreement in their capacity as Credit
Parties, but only as to the representations, warranties and covenants contained
in Sections 3, 5 and 6:
BERMANS THE LEATHER EXPERTS INC. ROSEDALE WILSONS, INC.
By: By:
---------------------------- ------------------------------
Title: Title:
------------------------- ---------------------------
RIVER HILLS WILSONS, INC. WILSONS HOUSE OF SUEDE, INC.
By: By:
---------------------------- ------------------------------
Title: Title:
------------------------- ---------------------------
WILSONS THE LEATHER EXPERTS INC. WILSONS CENTER, INC.
By: By:
---------------------------- ------------------------------
Title: Title:
------------------------- ---------------------------
SCHEDULE A
DEFINITIONS
-----------
Capitalized terms used in the Agreement shall have (unless otherwise
provided elsewhere in the Agreement) the following respective meanings and all
section references in the following definitions shall refer to Sections of the
Agreement:
"Account Debtor" shall mean any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party and, in any event,
including, without limitation, (a) all accounts receivable, other receivables,
book debts and other forms of obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter
received or acquired by or belonging or owing to any Credit Party, whether
arising out of goods sold or services rendered by it or from any other
transaction (including, without limitation, any such obligations which may be
characterized as an account or contract right under the Code), (b) all of each
Credit Party's rights in, to and under all purchase orders or receipts now owned
or hereafter acquired by it for goods or services, (c) all of each Credit
Party's rights to any goods represented by any of the foregoing (including,
without limitation, unpaid sellers' rights of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
(d) all monies due or to become due to any Credit Party, under all purchase
orders and contracts for the sale of goods or the performance of services or
both by such Credit Party or in connection with any other transaction (whether
or not yet earned by performance on the part of such Credit Party) now or
hereafter in existence, including, without limitation, all rights to receive the
proceeds of said purchase orders and contracts, and (e) all collateral security
and guarantees of any kind, now or hereafter in existence, given by any Person
with respect to any of the foregoing.
"Acquisition" shall mean a series of related transactions by which (i)
the Management Investors invest $2,000,000 in cash equity in Newco, a
corporation formed by Seller; (ii) Newco acquires common stock of Parent for (1)
$2,000,000 in cash, (2) the Subordinated Note, (3) a warrant for 15% of the
common stock of Newco, (4) a management warrant for 12% of the common stock of
Newco which will be reduced share-for-share by the vesting in management of
performance restricted stock, (5) common stock of Newco, and (6) preferred stock
of Newco; and (iii) Seller sells its common and preferred stock of Newco for
$10,000,000 in cash to the Investors.
"Acquisition Agreement" means collectively, the Sale Agreement dated
as of May 24, 1996 among Seller, Newco and Parent; the Investor Stock Purchase
Agreement of even date herewith among Seller and the Investors; and the Manager
Stock Purchase Agreement of even date herewith among Seller and the Management
Investors.
S-A-1
"Advance" shall mean any Revolving Credit Advance or Swing Line
Advance, as the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the Stock
having ordinary voting power in the election of directors of such Person, (b)
each Person that controls, is controlled by or is under common control with such
Person or (c) each of such Person's officers, directors, joint venturers and
partners. For the purposes of this definition, "control" of a Person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise; provided, however, that the term
"Affiliate" shall specifically exclude Agent and each Lender.
"Agent" shall mean GE Capital or its successor appointed pursuant to
Section 9.7.
"Agreement" shall mean the Credit Agreement by and among Borrower, GE
Capital, as Lender, Swing Line Lender and Agent and the other Lenders signatory
from time to time to the Agreement.
"Appendices" shall have the meaning assigned to it in the recitals to
the Agreement.
"Applicable Index Margin" shall mean a per annum rate of interest
payable in addition to the Index Rate on Index Rate Loans, determined by
reference to Section 1.6.
"Applicable LIBOR Margin" shall mean a per annum rate of interest
payable in addition to the LIBOR Rate on LIBOR Rate Loans, determined by
reference to Section 1.6.
"Applicable L/C Margin" shall mean the per annum letter of credit fee
payable with respect to Letter of Credit Obligations and Eligible Trade L/C
Obligations, determined by reference to Section 1.6.
"Applicable Swing Line Margin" shall mean the per annum rate of
interest payable in addition to the Index Rate on Swing Line Loans, determined
by reference to Section 1.6.
"Approved Shipper" shall mean any reputable and creditworthy shipper
or freight forwarder transporting finished goods Inventory from overseas to
Borrower's Distribution Center or, at Borrower's direction, to Store Guarantors'
Stores that has entered into a bailee letter with Agent on terms acceptable to
Agent regarding the in-transit Inventory.
"Bermans" mean Bermans The Leather Experts Inc., a Delaware
corporation.
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"Borrower" shall have the meaning assigned thereto in the recitals to
the Agreement.
"Borrowing Availability" shall have the meaning assigned to it in
Section 1.1(a)(i).
"Borrowing Base" shall mean, as of any date of determination, the sum
of (i) sixty-five percent (65%) of the book value of Eligible Inventory (other
than Lay Away Inventory) valued on a first-in, first-out basis (at the lower of
cost or market), plus (ii) a seasonal over-advance of $7,500,000 during the
months of August and September of each year, plus (iii) sixty-five percent (65%)
of Lay Away Inventory valued as follows: (unpaid purchase price (divided by)
.625) x .50, minus (iv) Reserves.
"Borrowing Base Certificate" shall mean a certificate to be executed
and delivered from time to time by Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" shall mean any day that is not a Saturday, a Sunday or
a day on which banks are required or permitted to be closed in the State of
Illinois or the State of Minnesota and in reference to LIBOR Loans shall mean
any such day that is also a LIBOR Business Day.
"Capital Expenditures" shall mean all payments during any measuring
period (including the principal portion of payments under Capital Leases,
installment purchase agreements and other similar purchase money financing
arrangements) for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease or otherwise be disclosed in a note to such balance sheet.
"Cash Management Systems" shall have the meaning assigned to it in
Section 1.8.
"Change of Control" shall mean any event, transaction or occurrence as
a result of which (a) prior to a Qualified Public Offering Management Investors
shall cease to own and control all of the economic and voting rights associated
with ownership of at least twenty-two percent (22%) of the outstanding capital
Stock of all classes of Newco on a fully diluted basis, (b) Newco shall cease to
own and control all of the economic and voting rights associated with all of the
outstanding capital stock of Parent or (c) Parent shall cease to own and control
all of the
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economic and voting rights associated with all of the outstanding capital stock
of each of its Subsidiaries, except as permitted under Section 6.1 of the
Agreement.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including, without limitation, taxes
owed to the PBGC at the time due and payable), levies, assessments, charges,
liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit
Party, (b) any Credit Party's ownership or use of any properties or other
assets, or (e) any other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"Closing Date" shall mean May 25, 1996.
"Code" shall mean the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of Illinois; provided,
however, in the event that, by reason of mandatory provisions of law, any or all
of the attachment, perfection or priority of Agent's or any Lender's security
interest in any Collateral is governed by the Uniform Commercial Code as enacted
and in effect in a jurisdiction other than the State of Illinois, the term
"Code" shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
"Collateral" shall mean the property covered by the Security Agreement
and the other Collateral Documents and any other personal property, tangible or
intangible, now existing or hereafter acquired, that may at any time be or
become subject to a security interest or Lien in favor of Agent, on behalf of
itself and Lenders, to secure the Obligations.
"Collateral Documents" shall mean the Security Agreement, the
Consignment Agreement, the Pledge Agreements, the Guaranties, the Patent
Security Agreement, the Trademark Security Agreement, the Copyright Security
Agreement and all similar agreements entered into guaranteeing payment of, or
granting a Lien upon property as security for payment of, the Obligations.
"Collateral Reports" shall mean the reports with respect to the
Collateral referred to in Schedule H.
"Collection Account" shall mean that certain account of Agent, account
number 000-000-00 in the name of Agent at Bankers Trust Company in New York,
New York or any substitute Collection Account established in accordance with
Schedule E hereto.
"Commitments" shall mean (a) as to any Lender, the aggregate of such
Lender's Revolving Loan Commitment and/or Swing Line Commitment as set forth on
the signature page
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to the Agreement or in the most recent Lender Addition Agreement executed by
such Lender and (b) as to all Lenders, the aggregate of all Lenders' Revolving
Loan Commitments and Swing Line Commitment, which aggregate commitment shall be
One Hundred Fifty Million Dollars ($150,000,000) on the Closing Date, as such
amount may be adjusted, if at all, from time to time in accordance with the
Agreement.
"Commitment Termination Date" shall mean the earliest of (a) May 24,
1999, (b) the date of termination of Lenders' obligations to make Advances
and/or incur Letter of Credit Obligations and Eligible Trade L/C Obligations or
permit existing Loans to remain outstanding pursuant to Section 8.2(b), and (c)
the date of indefeasible prepayment in full by Borrower of the Loans and the
cancellation and return of all Letters of Credit or the cash collateralization
of all Letter of Credit Obligations and Eligible Trade L/C Obligations pursuant
to Schedule B, and the permanent reduction of the Revolving Loan Commitment and
the Swing Line Commitment to zero dollars ($0), in accordance with the
provisions of Section 1.3(c).
"Concentration Account" shall have the meaning assigned to it on
Schedule E.
"Consignment Agreement" shall mean the Master Consignment Agreement of
even date herewith among Borrower and all of the Store Guarantors.
"Contracts" shall mean all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including,
without limitation, any and all agreements relating to the terms of payment or
the terms of performance of any Account.
"Contribution" shall mean as to each Store, for any fiscal period,
revenues of that Store less direct operating expenses of that Store, including
advertising and supervisory allocated expenses.
"Control Letter" shall mean a letter agreement between the Agent and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (iii) a futures commission merchant or clearing house with
respect to commodity accounts and commodity contracts held by any Credit Party,
whereby, among other things, the issuer, securities intermediary or futures
commission merchant disclaims any security interest in the applicable financial
assets, acknowledges the Lien of the Agent, on behalf of itself and the Lenders,
on such financial assets, and agrees to follow the instructions or entitlement
orders of the Agent without further consent by such Credit Party.
"Credit Parties" shall mean Parent, Borrower, Newco and each Store
Guarantor.
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"Default" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in Section
1.5(d).
"Disbursement Accounts" shall have the meaning assigned to it on
Schedule E.
"Distribution Center" shall mean the warehouse and distribution center
owned by Borrower or owned by Bermans and leased to and operated by Borrower,
located at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxxx 00000.
"Documents" shall mean any "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars or $" shall mean lawful currency of the United States of
America.
"EBIT" shall mean, with respect to Newco for any fiscal period,
consolidated net income from operations before Interest Charges, income taxes
and non-cash charges relating to the vesting of restricted stock held by
employees of Newco and its consolidated Subsidiaries (without duplication)
determined in accordance with GAAP and in a manner consistent with the Financial
Statements attached as Disclosure Schedule 3.4(A).
"EBIT/Cash Interest Coverage" shall mean for any fiscal period or
periods of Newco, EBIT for such period(s) divided by cash Interest Charges for
such period(s).
"EBITDA" shall mean, with respect to Newco for any fiscal period
(without duplication), consolidated net income from operations (before Interest
Charges, income taxes, depreciation, amortization (including amortization of
capitalized costs relating to the Related Transactions), and non-cash charges
relating to the vesting of restricted stock held by employees, determined in
accordance with GAAP.
"Eligible In-Transit Inventory" shall mean Inventory which is not
excluded from being Eligible Inventory by any of the criteria set forth in
Schedule D, except that such Inventory is in-transit from the manufacturer
thereof to the Distribution Center or by drop shipment to one or more Stores
operated by a Store Guarantor. In furtherance of and without limiting the
foregoing: Eligible In-Transit Inventory shall be limited to finished goods (i)
in the possession of an Approved Shipper under contract with Borrower and in
which Borrower has good title; (ii) as to which Agent for the benefit of Lenders
has a first priority security interest through constructive possession by means
of a bailee agreement with an Approved Shipper; (iii) which have been accepted
by Borrower (F.O.B. shipping point) as conforming goods and as to which the L/C
Issuer has received an inspection certificate signed by Borrower's agent or
employee; (iv) which are fully insured against loss under insurance naming Agent
as loss payee for the benefit of Lenders; and (v) as to which the purchase price
has been paid to the manufacturer by a draw under the corresponding Eligible
Trade L/C.
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"Eligible Inventory" shall have the meaning assigned to it in Schedule
D to the Agreement. Unless the context otherwise requires, Eligible Inventory
shall include Eligible In-Transit Inventory.
"Eligible Trade L/C's" shall mean, subject to the further conditions
contained in Section 6.19 of the Agreement, trade letters of credit issued by
the L/C Issuer for the account of Borrower or prior to the Closing Date for the
account of House of Suede for payment of the purchase price of finished goods
inventory which will be Eligible In-Transit Inventory upon presentation of a
draft under that trade letter of credit.
"Eligible Trade L/C Obligations" shall mean all outstanding
obligations incurred by Agent and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of a reimbursement agreement or guaranty by Agent with respect to
any Eligible Trade L/C. The amount of any such Eligible Trade L/C Obligations
shall equal the maximum amount which may be payable by Agent or Lenders
thereupon or pursuant thereto.
"Environmental Laws" shall mean all federal, state, local and foreign
laws, statutes, ordinances and regulations, now or hereafter in effect, and in
each case as amended or supplemented from time to time, and any applicable
judicial or administrative interpretation thereof, including any applicable
judicial or administrative order, consent decree or judgment, relative to the
applicable real estate, relating to the regulation and protection of human
health, safety, the environment and natural resources (including ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include, but are
not limited to, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. (S)(S) 9601 et seq.) ("CERCLA");
the Hazardous Material Transportation Act, as amended (49 U.S.C. (S)(S) 1801 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7
U.S.C. (S)(S) 136 et seq.); the Resource Conservation and Recovery Act, as
amended (42 U.S.C. (S)(S) 6901 et seq.) ("RCRA"); the Toxic Substance Control
Act, as amended (15 U.S.C. (S)(S) 2601 et seq.); the Clean Air Act, as amended
(42 U.S.C. (S)(S) 740 et seq.); the Federal Water Pollution Control Act, as
amended (33 U.S.C. (S)(S) 1251 et seq.); the Occupational Safety and Health Act,
as amended (29 U.S.C. (S)(S) 651 et seq.) ("OSHA"); and the Safe Drinking Water
Act, as amended (42 U.S.C. (S)(S) 300(f) et seq.), and any and all regulations
promulgated thereunder, and all analogous state, local and foreign counterparts
or equivalents and any transfer of ownership notification or approval statutes.
"Environmental Liabilities and Costs" shall mean all liabilities,
obligations, responsibilities, remedial actions, removal actions, losses,
damages, punitive damages, consequential damages, treble damages, costs and
expenses (including all fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any person or entity, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute or
common law (including any thereof arising under any Environmental
S-A-7
Law, permit, order or agreement with any Governmental Authority) and which
relate to any health or safety condition regulated under any Environmental Law
or in connection with any other environmental matter or Release, threatened
Release or the presence of a Hazardous Material or threatened Release of a
Hazardous Material.
"Environmental Permits" shall mean all permits, licenses,
administrative orders, consent orders, consent decrees, governmental agency
agreements, or other written documents detailing required environmental
performance expected of or permitted by any Credit Party by Governmental
Authority.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any
trade or business (whether or not incorporated) which, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC with respect to any period after the Closing Date.
"ERISA Event" shall mean, with respect to any Credit Party or any
ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h)
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt status.
"ESOP" shall mean a Plan which is intended to satisfy the requirements
of Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section
8.1.
"Fees" shall mean any and all fees payable to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.
S-A-8
"Financial Statements" shall mean the consolidated income statements,
statements of cash flows and balance sheets of Newco and/or its Subsidiaries
delivered in accordance with Section 3.4 of the Agreement and Schedule G to the
Agreement.
"First Intermediate Parent" shall mean Rosedale Wilsons, Inc., a
Minnesota corporation.
"Fiscal Month" shall mean any of the monthly accounting periods of
Newco.
"Fiscal Quarter" shall mean any of the four 13 calendar week
accounting periods of Newco ending on or about the last day of January, April,
July and October of each year.
"Fiscal Year" shall mean any of the annual accounting periods of
Parent ending on December 31st of each year with respect to Fiscal Years ended
on or prior to December 31, 1995 and with respect to subsequent Fiscal Years any
of the annual accounting periods having Fiscal Quarters which end on the
Saturday closest to the last day of January, April, July, and October, of each
year in accordance with Section 6.16 of the Agreement.
"Fixed Charges" shall mean, for any fiscal period with respect to
Newco and its Subsidiaries on a consolidated basis, the aggregate of all
Interest Charges paid in cash during such period, plus (a) scheduled payments of
principal with respect to Indebtedness during such period, plus (b) lease
payments with respect to Stores (including base rent, percentage rent, common
area payments and real estate taxes) during such period, plus (c) the provision
for income taxes with respect to such period.
"Fixed Charges Coverage Ratio" shall mean, with respect to Newco and
its Subsidiaries on a consolidated basis for any fiscal period, the ratio of
(x) the sum of EBITDA, plus lease payments with respect to Stores (including
base rent, percentage rent, common area payments and real estate taxes) during
such period, less the unfinanced portion of Capital Expenditures during such
period to (y) Fixed Charges.
"Foreign Subsidiaries" shall mean Melville (U.K.) Holdings Ltd.,
Wilsons Leather Gatsland Limited and Wilsons Leather Gatsair Limited which
operate two stores in Great Britain as of the Closing Date and other
subsidiaries incorporated after the Closing Date under the laws of jurisdictions
outside of the United States to operate Stores in those jurisdictions.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as from time to time in effect, consistently applied.
"GE Capital" shall mean General Electric Capital Corporation, a New
York corporation.
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"GE Capital Fee Letter" shall mean that certain letter, dated as of
April 29, 1996, between GE Capital, Parent, and House of Suede with respect to
certain Fees to be paid from time to time by Borrower to GE Capital.
"General Intangibles" shall mean any "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, and, in any event, including, without limitation, all right, title and
interest which such Credit Party may now or hereafter have in or under any
Contract (including the Consignment Agreement, as amended or modified from time
to time) any Licenses, including, without limitation, all customer lists,
Trademarks, service marks, tradenames, business names, corporate names, trade
styles, logos and other source or business identifiers, and all applications
therefor and reissues, extensions or renewals thereof, rights in intellectual
property, interests in partnerships, joint ventures and other business
associations, licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including all goodwill associated with any
Trademark registration, or Trademark licensed under any Trademark License), all
rights and claims in or under insurance policies (including, without limitation,
insurance for fire, damage, loss and casualty, whether covering personal
property, tangible rights or intangible rights, all liability, life, key man and
business interruption insurance, and all unearned premiums), uncertificated
securities, choses in action, deposit, checking and other bank accounts, tax
refunds, rights to receive tax refunds and other payments and rights of
indemnification.
"Georgetown Subsidiaries" shall mean separate corporations each of
which operates an individual Store under the Georgetown name, consisting of 19
separate corporations as of the Closing Date.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation
of such Person guaranteeing any indebtedness, lease, dividend, or other
obligation ("primary obligations") of any other Person (the "primary obligor")
in any manner, including any obligation or arrangement of such Person (a) to
purchase or repurchase any such primary obligation, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
made or (y) the maximum amount for which such Person may be
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liable pursuant to the terms of the instrument embodying such Guaranteed
Indebtedness; or, if not stated or determinable, the maximum reasonably
anticipated liability (assuming full performance) in respect thereof.
"Guaranties" shall mean, collectively, the Parent Guaranty, the Store
Guarantors' Guaranty and any other guaranty executed by any Guarantor in favor
of Agent and Lenders in respect of the Obligations.
"Guarantors" shall mean Newco, Parent, each Store Guarantor, and each
other Person, if any, which executes a guarantee or other similar agreement in
favor of Agent in connection with the transactions contemplated by the Agreement
and the other Loan Documents.
"Hazardous Material" shall mean any substance, material or waste, the
generation, handling, storage, treatment or disposal of which is regulated by or
forms the basis of liability now or hereafter under, any Government Authority in
any jurisdiction in which Borrower or any Subsidiary thereof has owned, leased,
or operated real property or disposed of hazardous materials, or by any Federal
government authority, including, without limitation, any material or substance
which is (a) defined as a "solid waste," "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or "restricted
hazardous waste" or other similar term or phrase under any Environmental Laws,
(b) petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), any radioactive substance, methane, volative hydrocarbons or
any industrial solvent, (c) designated as a "hazardous substance" pursuant to
Section 311 of the Clean Water Act, 33 U.S.C. (S)(S) 1251 et seq. (33 U.S.C.
(S)(S) 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C.
(S) 1317), (d) defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901, et seq. (42 U.S.C.
(S) 6903), or (e) defined as a "hazardous substance" pursuant to Section 1012 of
the Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. (S) 9601 et seq. (42 U.S.C. (S) 9601).
"House of Suede" shall mean Wilsons House of Suede, Inc., a California
corporation.
"Indebtedness" of any Person shall mean without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or
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matured, (g) all obligations of such Person under any foreign exchange contract,
currency swap agreement, interest rate swap, cap or collar agreement or other
similar agreement or arrangement designed to alter the risks of that Person
arising from fluctuations in currency values or interest rates, in each case
whether contingent or matured, (h) all Indebtedness referred to above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations.
"Index Rate" shall mean the higher of (a) the highest of the most
recently published or announced prime, corporate base, reference or similar
benchmark rate, however designated, announced by any of the five (5) largest
member banks of the New York Clearing House Association and (b) one half of one
percent (.5%) per annum over the Federal funds rate, in each case as of any date
of determination. Changes in the rate of interest applicable to Index Rate
Loans shall occur simultaneously with changes in the Index Rate.
"Index Rate Loan" shall mean the Revolving Loan or any portion thereof
bearing interest by reference to the Index Rate.
"Individual Store Subsidiaries" shall mean separate corporations each
of which operates an individual Store, excluding Foreign Subsidiaries.
"Instruments" shall mean any "instrument," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
including, without limitation, all certificated securities, all certificates of
deposit, and all notes and other evidences of indebtedness, other than
instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Trademarks,
trade secrets and customer lists.
"Interest Charges" shall mean, with respect to any Person for any
fiscal period, the amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" (or any like caption) on a consolidated
income statement of such Person and all other Persons with which such Person's
Financial Statements are to be consolidated in accordance with GAAP for the
relevant period ended on such date, including without limitation, in the case of
Newco and its Subsidiaries, the L/C Fee and Non-Use Fee.
"Interest Payment Date" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding, and (b) as
to each LIBOR Loan, the last day of the LIBOR Period applicable thereto;
provided, however, that, in addition to the foregoing, each of (x) the date upon
which all of the Commitments have been terminated and the Loans have been paid
in full and (y) the Commitment Termination Date shall be deemed to be an
"Interest Payment Date" with respect to any interest which is then accrued under
the Agreement.
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"Inventory" shall mean any "inventory," as such term is defined in the
Code, now or hereafter owned or acquired by any Credit Party, wherever located,
and in any event including, without limitation, all inventory, merchandise,
goods and other personal property which are held by or on behalf of any Credit
Party for sale or lease or are furnished or are to be furnished under a contract
of service, or which constitute raw materials, work in process or materials used
or consumed or to be used or consumed in such Credit Party's business or in the
processing, production, packaging, promotion, delivery or shipping of the same,
including, without limitation, all other supplies.
"Investment Property" shall mean all "investment property," as such
term is defined in the Code, now or hereafter owned or acquired by, any Credit
Party, wherever located and, in any event, including, without limitation: (a)
all securities, whether certificated or uncertificated, including, without
limitation, stocks, bonds, interests in limited liability companies, partnership
interests, treasuries, certificates of deposit and mutual funds shares; (b) all
securities entitlements of any Credit Party, including, without limitation, all
rights of any Credit Party to any securities account and any free credit balance
or other money owing by any securities intermediary with respect to any such
account; (c) all securities accounts held by any Credit Party; (d) all commodity
contracts held by any Credit Party and (e) all commodity accounts held by any
Credit Party.
"Investors" shall mean as of the Closing Date, the following
individuals: Xxxx Xxxxxx and Xxxxxx Xxxxxxxx, Xxxx X. Sell, Ercu Ucan, and
Xxxxxx Xxxxxx through Leather Investors Limited Partnership I and II.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"L/C Issuer" shall have the meaning assigned to such term in Schedule
B.
"Lender Addition Agreement" shall mean an agreement in form and
substance acceptable to Agent or otherwise satisfactory to, and in any case
acknowledged by, Agent whereby a portion of any or all of the Commitments are
assigned to a Lender after the Closing Date.
"Lenders" shall mean GE Capital, the other Lenders named on the
signature page of the Agreement including without limitation the Swing Line
Lender, and, if any such Lender shall decide to assign all or any portion of the
Obligations, such term shall include such assignee.
"L/C Availability" shall have the meaning ascribed thereto in Section
1.2 of the Agreement.
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"L/C Fee" shall have the meaning ascribed thereto in Schedule B to
the Agreement.
"L/C Sublimit" shall mean $90,000,000.
"Lay Away Inventory" shall mean finished goods as to which retail
Store customers have made a deposit and possession of which is retained by a
Store Guarantor pending payment in full of the purchase price and has been
removed from inventory account records pursuant to the recording of a sale
transaction.
"Letter of Credit Obligations" shall mean all outstanding obligations
incurred by Agent and Lenders at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of a reimbursement agreement or guaranty by Agent with respect to any
Letter of Credit. The amount of such Letter of Credit Obligations shall equal
the maximum amount which may be payable by Agent or Lenders thereupon or
pursuant thereto. This term expressly excludes Eligible Trade L/C Obligations.
"Letters of Credit" shall mean trade or standby letters of credit
other than Eligible Trade L/Cs issued for the account of Borrower by L/C Issuer,
and bankers' acceptances issued by Borrower, for which Agent and Lenders have
incurred Letter of Credit Obligations.
"LIBOR Business Day" shall mean a Business Day on which banks in the
city of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing interest
by reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower pursuant to this
Agreement and ending one, two or three months thereafter, as selected by
Borrower in an irrevocable notice to Agent as set forth in Section 1.5(e);
provided that the foregoing provision relating to LIBOR Periods is subject to
the following:
(a) if any LIBOR Period would otherwise end on a day that is not a
LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be
to carry such LIBOR Period into another calendar month in which event such
LIBOR Period shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two (2) LIBOR Business Days prior to
such date;
(c) any LIBOR Period pertaining to a LIBOR Loan that begins on the
last LIBOR Business Day of a calendar month (or on a day for which there is
no numerically
S-A-14
corresponding day in the calendar month at the end of such LIBOR Period)
shall end on the last LIBOR Business Day of a calendar month;
(d) Borrower shall select LIBOR Periods so as not to require a
payment or prepayment of any LIBOR Loan during a LIBOR Period for such
Loan; and
(e) Borrower shall select LIBOR Periods so that there shall be no
more than seven (7) separate LIBOR Loans outstanding at any one time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of interest
equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period which appears on Telerate Page 3750 as of 11:00
a.m., London time, on the second full LIBOR Business Day next preceding the
first day of each LIBOR Period (unless such date is not a Business Day, in
which event the next succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including, without limitation,
basic, supplemental, marginal and emergency reserves under any regulations
of the Board of Governors of the Federal Reserve system or other
governmental authority having jurisdiction with respect thereto, as now and
from time to time in effect) for Eurocurrency funding (currently referred
to as "Eurocurrency liabilities" in Regulation D of such Board) which are
required to be maintained by a member bank of the Federal Reserve System.
If such interest rates shall cease to be available from Telerate News
Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to Agent and
Borrower.
"License" shall mean any Trademark License or other license of rights
or interests in Trademarks now held or hereafter acquired by any Credit Party.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any synthetic lease or title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, and the
filing of, or agreement to give, any financing statement perfecting a security
interest under the Code or comparable law of any jurisdiction).
"Litigation" shall have the meaning assigned to it in Section 3.13.
S-A-15
"Loan Account" shall have the meaning assigned to it in Section 1.12.
"Loan Documents" shall mean the Agreement, the Notes, the Collateral
Documents and all other agreements, instruments, documents and certificates
identified in the Schedule of Documents executed and delivered to, or in favor
of, Agent and/or Lenders and including (without limitation) all other pledges,
powers of attorney, consents, assignments, contracts, notices, and all other
written matter whether heretofore, now or hereafter executed by or on behalf of
any Material Credit Party, and delivered to Agent or any Lender in connection
with the Agreement or the transactions contemplated hereby. Any reference in
the Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to such Agreement as
the same may be in effect at any and all times such reference becomes operative.
"Loan Parties" shall mean Newco, Parent, Borrower, First Intermediate
Parent, Second Intermediate Parent, Bermans and House of Suede.
"Loans" shall mean the Revolving Loan and the Swing Line Loan.
"Management Investors" shall mean, as of the Closing Date, individuals
employed by Borrower or any Loan Party and who own Stock of Newco.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
the Loan Parties considered as a whole, (b) Borrower's ability to pay any of the
Loans or any of the other Obligations in accordance with the terms thereof, (c)
any material part of the Collateral or Agent's Liens, on behalf of itself and
Lenders, on such Collateral or the priority of such Liens, or (d) Agent's or any
Lender's rights and remedies under the Agreement and the other Loan Documents.
Without limiting the foregoing, any event or occurrence which results or could
reasonably be expected to result in costs or liabilities in excess of the lesser
of $3,000,000 or 10% of Borrowing Base as of any date of determination shall be
deemed to have a Material Adverse Effect.
"Material Credit Party" shall mean Newco, Parent, First Intermediate
Parent, Second Intermediate Parent, Borrower, Bermans, House of Suede, and each
other Store Guarantor that operates more than twelve (12) Stores.
"Maximum Amount" shall mean, at any particular time, an amount equal
to the Revolving Loan Commitment (including as a subpart thereof the Swing Line
Commitment) of all Lenders.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making or is obligated to make contributions on behalf of participants who are
or were employed by any of them after the Closing Date.
S-A-16
"Net Borrowing Availability" shall mean, as of any date of
determination thereof, the Borrowing Base at such time less the sum of (i) the
then outstanding aggregate Revolving Credit Advances, plus (ii) 100% of Letter
of Credit Obligations, plus (iii) 35% of Eligible Trade L/C Obligations, plus
(iv) the then outstanding Swing Line Loan.
"Net Worth" shall mean the book value of the assets of Newco on a
consolidated basis (inclusive of goodwill, patents, trademarks, tradenames,
copyrights, organization expenses, treasury stock, debt discount and expense,
deferred charges and other like intangibles), minus (a) reserves applicable
thereto, and (b) all of Newco's liabilities on a consolidated basis (including
accrued and deferred income taxes), all as determined in accordance with GAAP.
"Newco" shall mean Wilsons The Leather Experts Inc., a Minnesota
corporation.
"Non-use Fee" shall have the meaning assigned to it in Section 1.9(b).
"Notes" shall mean the Revolving Notes and the Swing Line Note,
collectively.
"Notice of Conversion/Continuation" shall have the meaning assigned to
it in Section 1.5(e).
"Notice of Revolving Credit Advance" shall have the meaning assigned
to it in Section 1.1(a).
"Notice of Swing Line Advance" shall have the meaning assigned to it
in Section 1.1(b)(i).
"Obligations" shall mean all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest
(including, without limitation, all interest which accrues after the
commencement of any case or proceeding in bankruptcy after the insolvency of, or
for the reorganization of any Credit Party, whether or not allowed in such
proceeding), Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.
"Overadvance" shall have the meaning assigned to it in Section
1.1(a)(iii).
"Parent" shall mean Wilsons Center, Inc., a Minnesota corporation.
S-A-17
"Parent Guaranty" shall mean the Guaranty executed by Newco, Parent,
First Intermediate Parent and Second Intermediate Parent, as amended, modified
or restated from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Encumbrances" shall mean the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges not yet due and
payable or which are being contested in accordance with Section 5.2(b); pledges
or deposits securing obligations under workmen's compensation, unemployment
insurance, social security or public liability laws or similar legislation; (c)
pledges or deposits securing bids, tenders, contracts (other than contracts for
the payment of money) or leases to which any Credit Party is a party as lessee
made in the ordinary course of business; (d) deposits securing statutory
obligations of any Credit Party; (e) workers', mechanics', suppliers' or similar
liens arising in the ordinary course of business; (f) carriers', warehousemen's
or other similar possessory liens arising in the ordinary course of business;
(g) deposits securing, or in lieu of, surety, appeal or customs bonds in
proceedings to which any Credit Party is a party; (h) any attachment or judgment
lien not constituting an Event of Default under Section 8.1(j) of the Agreement;
(i) zoning restrictions, easements, licenses, or other restrictions on the use
of any Real Estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (j) Liens existing on the Closing Date and
listed on Schedule 6.7 hereto; (k) presently existing or hereinafter created
Liens in favor of Agent, on behalf of Lenders; (l) Liens created after the date
hereof by conditional sale or other title retention agreements (including,
without limitation, Capital Leases) or in connection with purchase money
Indebtedness with respect to assets acquired by any Credit Party in the ordinary
course of business, involving the incurrence of an aggregate amount of purchase
money Indebtedness and Capital Lease Obligations of not more than $5,000,000
outstanding at any one time for all such Liens (provided that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within thirty (30) days following such purchase and does not exceed
100% of the purchase price of the subject assets); and (m) subordinated Liens
securing the Subordinated Note.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity
or government (whether federal, state, county, city, municipal, local, foreign,
or otherwise, including any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean, at any time after the Closing Date, an employee
benefit plan, as defined in Section 3(3) of ERISA, which any Credit Party
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any Credit Party.
S-A-18
"Pledge Agreements" shall mean the separate Pledge Agreements,
executed by each of Newco, Parent and First Intermediate Parent with respect to
the Stock of their respective Subsidiaries and by Second Intermediate Parent
with respect to the Stock of Borrower, House of Suede and Bermans, as amended,
modified or restated from time to time.
"Proceeds" shall mean "proceeds," as such term is defined in the Code
and, in any event, shall include (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Credit Party against third parties for past, present or future infringement
of any Trademark or Trademark License, or for injury to the goodwill associated
with any Trademark or Trademark License, (d) any recoveries by any Credit Party
against third parties with respect to any litigation or dispute concerning any
of the Collateral, and (e) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral upon disposition or
otherwise.
"Pro Forma" means the unaudited consolidated balance sheet of Newco
and its Subsidiaries as of May 25, 1996 after giving pro forma effect to the
Related Transactions.
"Projections" means Parent's forecasted consolidated: (a) balance
sheets; (b) profit and loss statements; (c) cash flow statements; and (d)
capitalization statements, prepared in a manner consistent with the historical
Financial Statements of Parent together with appropriate supporting details and
a statement of underlying assumptions.
"Pro Rata Share" shall mean with respect to all matters relating to
any Lender, or with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Revolving Loan Commitment and Swing Line Commitment of that
Lender by (ii) the aggregate Revolving Loan Commitments and Swing Line
Commitment of all Lenders.
"Qualified Plan" shall mean a Plan which is intended to be tax-
qualified under Section 401(a) of the IRC maintained by a Credit Party or ERISA
Affiliate after the Closing Date.
"Qualified Public Offering" shall mean a registered public offering of
common stock of Newco (on Form S-1 in the case of an initial public offering)
yielding at least $10,000,000 of net cash proceeds to Newco.
"Real Estate" shall have the meaning assigned to it in Section 3.6.
"Refunded Swing Line Loan" shall have the meaning assigned to it in
Section 1.1(b)(iii).
S-A-19
"Related Transactions" means each borrowing under the Revolving Loan
on the Closing Date, the Acquisition, the issuance of the Subordinated Note, the
payment of all fees, costs and expenses associated with all of the foregoing and
the execution and delivery of all of the Related Transactions Documents.
"Related Transactions Documents" shall mean the Loan Documents, the
Acquisition Agreement, the Subordinated Note and the warrants issued in
connection with the Acquisition Agreement and all stockholders agreements among
the Investors and/or the Management Investors.
"Release" shall mean, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials in the indoor or outdoor
environment by such Person, including the movement of Hazardous Materials
through or in the air, soil, surface water, ground water or property.
"Requisite Lenders" shall mean (a) Lenders having more than sixty-six
and two-thirds percent (66 2/3%) of the Commitments of all Lenders, or (b) if
the Commitments have been terminated, more than sixty-six and two-thirds percent
(66 2/3%) of the aggregate outstanding amount of the Loans (with Swing Line
Loans being attributed to the Lenders participating therein) and Letter of
Credit Obligations and Eligible Trade L/C Obligations.
"Reserves" shall mean, for purposes of calculating the Borrowing Base,
(a) reserves established by Agent from time to time against the Borrowing Base
pursuant to Section 5.9 of the Agreement, (b) reserves established pursuant to
Section 5.4(c) of the Agreement, (c) reserves established pursuant to Section
1.11(c) of the Agreement and (d) subject to Section 1.7 of the Agreement, such
other reserves which Agent may, in its reasonable credit judgment, establish
from time to time. Without limiting the generality of the foregoing, shrinkage
Reserves consistent with those established by Borrower under GAAP, Reserves
established to ensure the payment of accrued and unpaid customs and shipping
charges with respect to Eligible In-Transit Inventory, a lay-away payment refund
Reserve with respect to Lay-Away Inventory, and a sales and use tax Reserve for
sales and use taxes due within ninety (90) days shall be deemed to be a
reasonable exercise of Agent's credit judgment.
"Restricted Payment" shall mean (a) the declaration or payment of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other retirement of a Person's Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Person now or hereafter outstanding; (e)
any payment of a claim
S-A-20
for the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of, any shares of such Person's Stock or of a claim
for reimbursement, indemnification or contribution arising out of or related to
any such claim for damages or rescission; (f) any payment, loan, contribution,
or other transfer of funds or other property to any Stockholder of such Person;
and (g) any payment of management fees (or other fees of a similar nature) by
such Person to any Stockholder of such Person or their Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a
"welfare plan" as defined in Section 3(2) of ERISA, that provides for continuing
coverage or benefits for any participant or any beneficiary of a participant
after such participant's termination of employment, other than continuation
coverage provided pursuant to Section 4980B of the IRC and at the sole expense
of the participant or the beneficiary of the participant which is maintained by
a Credit Party, or an ERISA Affiliate after the Closing Date.
"Revolving Credit Advance" shall have the meaning assigned to it in
Section 1.1(a)(i).
"Revolving Loan" shall mean as the context may require, at any time,
the sum of (i) the aggregate amount of Revolving Credit Advances outstanding to
Borrower plus (ii) the aggregate Letter of Credit Obligations and Eligible Trade
L/C Obligations incurred on behalf of Borrower.
"Revolving Loan Commitment" shall mean (a) as to any Lender, the
aggregate commitment of such Lender to make Revolving Credit Advances, Swing
Line Advances and/or incur Letter of Credit Obligations and Eligible Trade L/C
Obligations as set forth in the signature page to the Agreement or in the most
recent Lender Addition Agreement executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make Revolving Credit
Advances, Swing Line Advances and/or incur Letter of Credit Obligations and
Eligible Trade L/C Obligations, which aggregate commitment shall be One Hundred
Fifty Million Dollars ($150,000,000) on the Closing Date, as such amount may be
adjusted, if at all, from time to time in accordance with the Agreement.
"Revolving Note" shall have the meaning assigned to it in Section
1.1(a)(ii).
"Schedule of Documents" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Schedule F.
"Seasonal Over-Advance" shall mean the $7,500,000 seasonal over-
advance described in clause (ii) of the term "Borrowing Base".
"Second Intermediate Parent" shall mean River Hills Wilsons, Inc., a
Minnesota corporation.
S-A-21
"Security Agreement" shall mean the Security Agreement of even date
herewith entered into among Agent, on behalf of itself and Lenders, and each
Credit Party thereto, as amended, modified or restated from time to time.
"Seller" shall mean Melville Corporation, a New York corporation.
"Shareholder Agreement" shall mean the Shareholder Agreement dated as
of the Closing Date among Newco, the Management Investors, and the Investors.
"Solvent" shall mean, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person on a going
concern basis is greater than the total amount of liabilities, including
contingent liabilities, of such Person; (b) the present fair salable value of
the assets of such Person on a going concern basis is not less than the amount
that will be required to pay the probable liability of such Person on its debts
as they become absolute and matured; (c) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature; and (d) such Person is not
engaged in a business or transaction, and is not about to engage in a business
or transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities (such as
litigation, guarantees and pension plan liabilities) at any time shall be
computed as the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can be reasonably be expected
to become an actual or matured liability.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
"Store" shall mean a retail leather specialty goods store operated by
a Store Guarantor and shall include kiosks and holiday stores temporarily
operated by any Store Guarantor during the Christmas holiday season and located
in the United States.
"Store Guarantor" shall mean any one of the First Intermediate Parent,
the Second Intermediate Parent, Bermans, House of Suede, the Individual Store
Subsidiaries, the Tannery or the Georgetown Subsidiaries, and "Store Guarantors"
shall mean all of the foregoing, collectively.
"Store Guarantors' Guaranty" shall mean the Guaranty executed by the
Store Guarantors (excluding the First Intermediate Parent and Second
Intermediate Parent) in favor of the Lenders, as amended, modified or restated
from time to time.
S-A-22
"Subordination Agreement" shall mean the Subordination Agreement of
even date herewith between Seller and Agent for the benefit of Lenders.
"Subordinated Debt" shall mean any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to the Agent
and the Lenders in their sole discretion, as to right and time of payment and as
to any other rights and remedies thereunder including without limitation the
Indebtedness of Newco evidenced by the Subordinated Note.
"Subordinated Note" shall mean the Senior Subordinated Note of even
date herewith issued by Newco to Seller in the initial principal amount of
$55,811,000, as the same may be amended, modified, renewed or extended.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority 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) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such Stock
whether by proxy, agreement, operation of law or otherwise, and (b) any
partnership or limited liability company in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than fifty
percent (50%) or of which any such Person is a general partner or may exercise
the powers of a general partner. Unless the context otherwise requires all
references to Subsidiaries in the Agreement or in the other Loan Documents shall
be deemed to refer to Subsidiaries of Parent.
"Swing Line Advance" has the meaning assigned to it in Section
1.1(b)(i).
"Swing Line Availability" has the meaning assigned to it in Section
1.1(b)(i).
"Swing Line Commitment" shall mean, as to the Swing Line Lender, the
commitment of the Swing Line Lender to make Swing Line Loans as set forth on the
signature page to the Agreement, which commitment constitutes a part of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean as the context may require, at any time,
the aggregate amount of Swing Line Advances outstanding to Borrower.
"Swing Line Loan Participation Certificate" shall mean a certificate
delivered pursuant to Section 1.1(b)(iv).
S-A-23
"Swing Line Note" has the meaning assigned to it in Section
1.1(b)(ii).
"Tannery" shall mean Wilsons Tannery West, Inc., a California
corporation.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the federal government
or any State or political subdivision thereof.
"Termination Date" shall mean the date on which the Loans have been
indefeasibly repaid in full and all other Obligations under the Agreement and
the other Loan Documents have been completely discharged and Borrower shall not
have any further right to borrow any monies thereunder.
"Title IV Plan" shall mean an employee pension benefit plan, as
defined in Section 3 (2) of ERISA (other than a Multiemployer Plan), which is
covered by Title IV of ERISA, and which any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to after the
Closing Date on behalf of participants who are or were employed by any of them.
"Trademark" or "Trademarks" shall mean any and all of the following
now owned or hereafter acquired by any Credit Party: (a) all trademarks, trade
names, corporate names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), now owned or existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including, without limitation, all
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or territory thereof, or any other country or any political subdivision
thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill
associated with or symbolized by any of the foregoing.
"Trademark License" shall mean any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Trademark.
"Trademark Security Agreements" shall mean the Trademark Security
Agreements made in favor of Agent, on behalf of Lenders, by each applicable
Credit Party, as amended, modified or restated from time to time.
"Unfunded Pension Liability" shall mean, at any time after the Closing
Date, the aggregate amount, if any, of the sum of (a) the amount by which the
present value of all accrued benefits under each Title IV Plan exceeds the fair
market value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent
valuation date for each such Title IV Plan using the actuarial assumptions for
funding
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purposes in effect under such Title IV Plan, and (b) for a period of five (5)
years following a transaction which might reasonably be expected to be covered
by Section 4069 of ERISA, the liabilities (whether or not accrued) that could be
avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction.
All other undefined terms contained in any of the Loan Documents
shall, unless the context indicates otherwise, have the meanings provided for by
the Code as in effect in the State of Illinois to the extent the same are used
or defined therein. The words "herein," "hereof" and "hereunder" and other words
of similar import refer to the Agreement as a whole, including all Exhibits and
Schedules, as the same may from time to time be amended, restated, modified or
supplemented, and not to any particular section, subsection or clause contained
in the Agreement or any such Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to Persons include their respective successors and assigns (to the
extent and only to the extent permitted by the Loan Documents) or, in the case
of governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of the same and any successor statutes and regulations.
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